AQUAPRO CORPORATION
1100 Highway 3
Sunflower, Mississippi 38778
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER ___, 1999
To Our Stockholders:
You are invited to attend the annual meeting of stockholders
of AquaPro Corporation, which will be held at 147 Highway 82 East,
Indianola, Mississippi, on _________, November ___, 1999, at 10:30
a.m., Mississippi time. The purpose of the meeting is to vote on
the following proposals:
Proposal 1: To elect five directors to serve for a one year
term, and until their successors are elected and
qualified.
Proposal 2: To amend our Articles of Incorporation to
authorize not less than 4 nor more than 7
directors.
Proposal 3: To approve the Aquapro Corporation 1999 Flexible
Incentive Plan.
Proposal 4: To ratify the selection of Ernst & Young LLP as
our independent auditors for the fiscal year
ending June 30, 2000.
Proposal 5: To transact any other business that may properly
be brought before the annual meeting or any
adjournments thereof.
Our Board of Directors has fixed the close of business on
October 1, 1999 as the record date for determining stockholders
entitled to notice of and to vote at the annual meeting. A form of
proxy card and a copy of our annual report to stockholders for the
fiscal year ended June 30, 1999 are enclosed with this notice of
annual meeting and proxy statement.
Your proxy vote is important. Accordingly, you are asked to
complete, date, sign and return the accompanying proxy whether or
not you plan to attend the annual meeting. If you plan to attend
the annual meeting to vote in person and your shares are in the name
of a broker or bank, you must secure a proxy from the broker or bank
assigning voting rights to you for your shares.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ George S. Hastings, Jr.
George S. Hastings, Jr.
Chairman of the Board, Chief
Executive Officer, President and
Principal Accounting Officer
October ___, 1999
Sunflower, Mississippi
PROXY
AQUAPRO CORPORATION
Annual Meeting of Stockholders
November ___, 1999
This Proxy is Solicited on Behalf of the Board of Directors
The stockholder of AquaPro Corporation, a Tennessee
corporation, whose name and signature appear on the reverse side
of this card, having received the notice of the annual meeting of
stockholders and the related proxy statement for AquaPro's annual
meeting of stockholders to be held at 147 Highway 82 East,
Indianola, Mississippi on _________, November ___, 1999, at
_______ a.m., Mississippi time, hereby appoints George S.
Hastings, Jr., and Joseph Duncan, Sr., or each of them, the
proxies of the stockholder, each with full power of
substitution, to vote at the annual meeting, and at any
adjournments of the annual meeting, all common stock that the
stockholder is entitled to vote, in the manner shown on the
reverse side of this card. This proxy is solicited by the Board
of Directors and the shares of common stock represented hereby
will be voted in accordance with the stockholder's directions on
the reverse side of this card. If no direction is given, then
the shares represented by this proxy will be voted FOR
proposals 1, 2, 3 and 4 and in the proxies' discretion on any
other matters that may properly come before the annual meeting
or any adjournments thereof, subject to limitations set forth in
applicable regulations under the Securities Exchange Act of 1934.
Please mark, sign, date, and return this proxy card promptly
using the enclosed envelope.
See reverse side
AquaPro Corporation
Please mark your vote in the following manner using dark ink only: [X].
This proxy, when properly executed and delivered, will be voted as specified
below. If no specification is made, this proxy will be voted for proposals 1,
2, 3 and 4. The proxies cannot vote your shares unless you sign and return
this card.
The Board of Directors recommends a vote FOR proposals 1, 2, 3 and 4.
1. Election of Directors.
FOR all nominees listed below Withhold Authority to vote
except as marked to the contrary [ ] for all nominees listed below [ ]
George S. Hastings, Jr., Joseph Duncan, Sr., Jimmy Grice, Don Moore and
Charles Porter.
INSTRUCTION: To withhold authority to vote for any individual nominee, list
the individual's name below.
2. Amendment of Article 9(a) of the Charter to increase number of directors
to not less than 4 nor more than 7.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the AquaPro Corporation 1999 Flexible Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Ratification of Ernst & Young LLP as our independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the proxies are authorized to vote upon all other
matters which may properly come before the annual meeting or any
adjournments of the annual meeting. The undersigned hereby revokes any
proxy previously given with respect to our common stock and hereby
ratifies and confirms all that the proxies, their substitutes or any
of them may lawfully do by virtue hereof.
Signature Date
Signature Date
Note: Please sign exactly as name(s) appear(s) on this card. When
shares are held jointly, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title
as such. When executed by a corporation or partnership, please sign in
full corporate or partnership name by a duly authorized officer or partner,
giving title. Please sign, date and mail this proxy promptly whether or not
you expect to attend the meeting. You may nevertheless vote in person if you
do attend.
See reverse side
PROXY STATEMENT
AQUAPRO CORPORATION
1100 Highway 3
Sunflower, Mississippi 38778
ANNUAL MEETING OF STOCKHOLDERS
November ___, 1999
Our Board, the Board of Directors of AquaPro Corporation is soliciting
proxies to be used at the 1999 annual meeting of stockholders to be held at
147 Highway 82 East, Indianola, Mississippi, on ___________, November ___,
1999, at ____ a.m., Mississippi time. This proxy statement, accompanying proxy
and annual report to stockholders for the fiscal year ended June 30, 1999 are
first being mailed to stockholders on or about October __, 1999. Although
the annual report is being mailed to stockholders with this Proxy Statement,
it does not constitute part of this Proxy Statement.
Who Can Vote
Only stockholders of record as of the close of business on October 1,
1999, are entitled to notice of and to vote at the annual meeting. As of
October 1, 1999, we had 4,890,481 shares of common stock outstanding. Each
common stockholder of record on the record date is entitled to one vote on
each matter properly brought before the annual meeting for each share of
common stock held.
How You Can Vote
Stockholders cannot vote at the annual meeting unless the stockholder is
present in person or represented by proxy. You are urged to complete, sign,
date and promptly return the proxy in the enclosed postage-paid envelope after
reviewing the information contained in this proxy statement and in the annual
report. Valid proxies will be voted at the annual meeting and at any
adjournments of the annual meeting as you direct in the proxy.
You may revoke your proxy at any time before it is exercised by:
writing to our Secretary, George S. Hastings, Jr., at AquaPro
Corporation, 1100 Highway 3, Sunflower, Mississippi 38778;
timely delivering a properly executed, later-dated proxy; or
voting in person at the annual meeting.
Voting by proxy will in no way limit your right to vote at the annual
meeting if you later decide to attend in person. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, to be able to vote at the annual meeting. If no
direction is given and the proxy is validly executed, the shares represented
by the proxy will be voted as recommended by our board of directors. The
persons authorized under the proxies will vote upon any other business that
may properly come before the annual meeting according to their best judgment
to the same extent as the person delivering the proxy would be entitled to
vote. At the time of mailing this proxy statement, we did not anticipate that
any other matters would be raised at the annual meeting.
Required Vote
The presence, in person or represented by proxy, of the holders of a
majority of our common stock (2,445,191 shares) entitled to vote at the annual
meeting is necessary to constitute a quorum at the annual meeting. However, if
a quorum is not present at the annual meeting, a majority of the stockholders,
present in person or represented by proxy, have the power to adjourn the
annual meeting until a quorum is present or represented.
The affirmative vote of the holders of a majority of the shares of our
common stock present in person or represented by proxy is required to elect
directors. Messrs. Hastings and Duncan served as our directors in 1998. The
other three nominees will serve for the first time on our Board.
The affirmative vote of the holders of a majority of the shares of our
common stock present in person or represented by proxy is required to approve
all other matters to be voted upon at our annual meeting.
Cost of Proxy Solicitation
The cost of soliciting proxies will be borne by us. Proxies may be
solicited on our behalf by our directors, officers or employees in person, by
telephone, facsimile or by other electronic means.
In accordance with SEC regulations, we will also reimburse brokerage
firms and other custodians, nominees and fiduciaries for their expenses
incurred in sending proxies and proxy materials and soliciting proxies from
the beneficial owners of shares of our common stock.
GOVERNANCE OF THE COMPANY
Pursuant to our articles of incorporation and our bylaws, our business,
property and affairs are managed under the direction of our board of
directors. Members of our board are kept informed of our business through
discussions with the Chairman of the Board and officers, by reviewing
materials provided to them and by participating in meetings of our board and
its committees. During fiscal year 1998, our board of directors held five
meetings. No director attended less than 80% of the total number of board of
directors and committee meetings.
Committees of the Board of Directors
Executive
Name Board Executive Audit Compensation
Officer Committee Committee
George S. Hastings, Jr. X* X X
Roger Daley X X
Joseph F. Duncan X X X
Kenneth Ostebo X X X
_______
* Chairman
During fiscal year 1998, our Board of directors had two ongoing
committees: an audit committee and a compensation committee.
The audit committee consists of three independent directors, Roger
Daley, Joseph Duncan and Kenneth Ostebo. The functions of the audit committee
include recommending to our board the appointment of independent auditors,
approving the services provided by the independent auditors, reviewing the
range of audit and nonaudit fees and considering the adequacy of our internal
accounting controls.
The compensation committee consists of four directors. The functions of
the compensation committee include establishing the compensation of executive
officers and key employees and administering management incentive compensation
plans.
Compensation of Directors
The Company pays its outside Directors an annual retainer of $1,000 each
September; $500 for each meeting attended in person and $250 for each
telephonic meeting. The Company also reimburses each outside Director for his
or her out-of-pocket expenses incurred in connection with attending meetings.
In addition, as of June 30, 1998, the Company annually awarded each Director
(including Directors who are officers of the Company) options for the purchase
of 3,000 Common Shares (the "Director Options"). The Director Options have a
term of seven years and are exercisable at a price equal to the fair market
value of the Common Shares on the date of issuance. These options have a term
of seven years. In August 1998, the Board voted to award each Director
(including Directors who are officers of the Company) options for the purchase
of 3,000 Common Shares each quarter at an option price equal to the closing
stock price on the first day following each calendar quarter.
During fiscal year 1998, each director, including Mr. Hastings, received
stock options for the purchase of 9,000 shares of our Company stock at prices
ranging from $0.6875 to $1.00 per share, the market price on the respective
date of grant. In addition, we reimbursed all of our directors for travel and
other expenses incurred in connection with their duties as directors.
SHARE OWNERSHIP OF MAJOR STOCKHOLDERS,
DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of October 1, 1999 by (1) each
person known by us to own beneficially more than 5% of our outstanding common
stock, (2) each current director, (3) each current named executive officer,
and (4) all current directors and current named executive officers as a group.
Unless otherwise indicated, the shares listed in the table are owned directly
by the individual, or by both the individual and the individual's spouse.
Except as otherwise noted, the individual had sole voting and investment power
as to shares shown or, the voting power is shared with the individual's
spouse.
Amount and Nature of
Name & Position Beneficial Ownership
Officers and Directors Number of Common Shares(%)(1)
George S. Hastings, Jr. 912,322(2) (16.13%)
Chairman of the Board, Chief Executive
Officer, President, Chief Financial
Officer and Secretary
Randle Willoughby 19,088(3) (0.34%)
Vice-President of Production
Roger Daley 73,373(4) -0-
Director
Joseph F. Duncan, Sr. 44,933(5) -0-
Director
Kenneth Ostebo 9,000(6) -0-
Director
All officers and directors as a group 1,058,716 (18.72%)
(six persons)
(1) In accordance with Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), Common Shares which
are not outstanding but which are subject to vested options, warrants,
rights or conversion privileges have been deemed to be outstanding
for the purpose of computing the percentage of outstanding Common Shares
owned by the individual having such right, but have not been deemed
outstanding for the purpose of computing the percentage for any other
person.
The number of Common Shares owned by each person equals the Common
Shares outstanding beneficially owned plus Common Shares issuable to the
beneficial holder upon the exercise of the rights, warrants and/or
options deemed to be outstanding.
The total number of Common Shares outstanding is 4,890,481 as of June
30, 1998. The total number of options outstanding is 765,000 as of such
date. Accordingly, the total number of outstanding Common Shares
considered outstanding for purposes of computing the above percentages
is 5,655,481.
(2) Includes the following Common Shares, warrants and options held of
record by Mr. Hastings: 233,322 Common Shares and 679,000 Common Shares
issuable upon the exercise of 658,000 Compensatory Options and 21,000
Director Options.
(3) Includes 4,088 Common Shares held of record and 15,000 Common Shares
issuable upon the exercise of Compensatory Options.
(4) Includes 55,373 Common Shares held of record and 18,000 Common Shares
issuable upon the exercise of Director Options.
(5) Includes 23,993 Common Shares held of record and 21,000 Common Shares
issuable upon the exercise of Director Options.
(6) Includes 9,000 Common Shares issuable upon the exercise of Director
Options.
____________________________
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and executive officers and persons who own more than
10% of a registered class of our equity securities, to file reports of
holdings and transactions in our securities with the SEC. Executive officers,
directors and greater than 10% beneficial owners are required by applicable
regulations to furnish us with copies of all Section 16(a) forms they file
with the SEC.
Based solely upon a review of the reports furnished to us with respect
to fiscal year 1998, we believe that all SEC filing requirements applicable to
our directors and executive officers were satisfied.
PROPOSAL 1
ELECTION OF DIRECTORS
At the annual meeting, five (5) directors will be elected by the
stockholders to serve until his successor has been duly elected and qualified,
or until the earliest of his death, resignation or retirement.
The persons named in the enclosed proxy will vote your shares as you
specify on the enclosed proxy form. If you return your properly executed proxy
but fail to specify how you want your shares voted, the shares will be voted
in favor of the nominees listed below. Our board of directors has proposed
the following nominees for election as directors at the annual meeting. Two
of the nominees are currently members of our board. The other three are being
nominated for the first time.
Nominees
George S. Hastings, Jr., age 52, received his Bachelor of Science Degree
in Finance with a minor in Accounting from the University of Tennessee in 1973
and a Doctor of Jurisprudence Degree from the University of Tennessee College
of Law in 1975. He has been a member of the State Bar of Tennessee and the
United States Tax Court since 1976. Mr. Hastings has been involved in the
catfish aquacultural industry since 1986 and has substantial experience in all
levels of catfish farm management. Mr. Hastings is also on the board of
directors at Delta Pride, and is actively involved with an alliance of
companies seeking to bring the process of recovering high quality minced
catfish protein to the industry. In the spring of 1999, he arranged the
purchase of a ninth farm by the Company.
Joseph Duncan, Sr., age 72, has been elected and has served as a
Director since December 30, 1995. Mr. Duncan previously served as Chairman of
the Board of Security Alarms & Services Inc. ("SAS") until it was acquired by
National Guardian Services Corporation. Prior to that time, SAS was the
largest independently-owned, full-line security company in the Central South
United States, specializing in burglar and fire alarm systems, access control
and security guard services. Mr. Duncan is past president of the National
Burglar & Fire Alarm Association, and served as a member of the board of
directors of that trade association for fourteen years. In addition, Mr.
Duncan served as a board member or advisor to a number of national and
regional trade associations including the National Council of Investigation &
Security Services, the Central Station Alarm Association, and the Tennessee
Burglar & First Alarm Association.
Jimmy Grice, age 61, currently serves as Chairman of the Board and Chief
Executive Officer of Grice Seining, Inc., a position he has held for more
than 10 years. Grice Seining is one of the United State's largest custom
Seining companies handling between 20 and 30 million pounds per year, which is
approximately one out every twenty catfish seined in the United States. He
has served on the Boards of The Catfish Farmers of Mississippi and Arkansas,
as well as the Catfish Farmers of America. Mr. Grice's experience in the
catfish farming industry spans its birth to the present. In 1968, he
constructed one of the industry's first commercial farms of over 100 acres
selling 150,000 pounds of fish per year.
Charles Don Moore, age 57, has been in the retail and wholesale pharmacy
industry to the present. From 1975 through 1985, Mr. Moore was President and
Chairman of the Board of four corporations operating drug stores in the East
Tennessee region. Mr. Moore also has experience in housing construction,
automobile retail and freight reclamation. Mr. Moore received a Pharmacy BS
Degree from Auburn University in 1965.
Charles E. Porter, age 56, served as president of Captain D's and
Shoney's, Inc., until his retirement in May 1996. Shoney's Inc. operates a
chain of family style restaurants based in the South Eastern region of the
United States with approximately 600 and 1,000 units, respectively, and
approximate sales volume of $450 million and $1.2 billion, respectively,
peaking during his tenure. Mr. Porter started his career in the restaurant
industry in 1973 as a Shoney's manager trainee while attending night classes
at the University of Tennessee at Nashville. After stints as unit manager of
Shoney's and Captain D's, Mr. Porter was promoted to the purchasing department
where he became Director and later Vice-President of purchasing, manufacturing
and distribution. He next became Chairman and President of manufacturing and
distributions for Mike Rose Foods, a subsidiary of Shoney's, Inc. Mr. Porter
held this position until his promotion to President of Captain D's and later
Shoney's in 1994.
Our Board unanimously recommends that you vote FOR the election of
directors as set forth in Proposal One. Proxies solicited by our Board will
be so voted unless you specify otherwise in your proxy.
PROPOSAL 2
AMENDMENT TO CHARTER INCREASING NUMBER OF DIRECTORS
General. Our Board has adopted, subject to stockholder approval, an
amendment to Article 9(a) of our Charter ("Articles of Incorporation") whereby
the number of our directors is increased to not less than four nor more than
seven, with the exact number being set from time to time by resolution of our
Board. Currently, our Board has set the number of directors at five. Our
current Charter provides that our number of directors will not be less than
three nor more than 5.
Form of Amendment. The Amendment amends Article 9(a) of the Charter by
changing the number "three" to "four", and the number "five" to "seven"
therein. If approved, the amendment will be effective upon filing of the
amendment to the Charter with the Tennessee Secretary of State. If the
amendment is approved, we will promptly file the amendment with the Secretary
of State following the annual meeting.
Reasons for Amendment. Our Board has determined that an increase in the
number of our authorized directors will allow us to have additional directors.
Our Board feels additional independent directors could be beneficial to the
Company by bringing a wider background of expertise and possibly relationships
within the catfish aquaculture industry. Also, our management believes it
could benefit from the consultation with directors having a wide range of
experience and expertise.
The appointment of additional directors to our Board would not radically
increase the amount of compensation we currently pay our directors. The Board
has no agreement or understanding to increase the compensation of current or
newly appointed directors.
The Board of Directors unanimously recommends that you vote FOR this
proposal. Proxy solicited by the Board will be so voted unless you specify
otherwise in your Proxy.
PROPOSAL 3
APPROVAL OF THE AQUAPRO CORPORATION
1999 FLEXIBLE INCENTIVE PLAN
General. In order to provide flexibility in attracting and compensating
key employees and outside directors, our Board has adopted, subject to
stockholder approval, the AquaPro Corporation 1999 Flexible Incentive Plan,
which provides for the grant of various types of stock-based compensation to
our directors, officers, employees, consultants, advisors and those of our
subsidiaries. Subject to stockholder approval, certain awards have been made
under the plan, as described below. The plan is designed to comply with the
requirements for
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code and the conditions for exemption from the short-swing profit recovery
rules under Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
Our Board believes our ability to award one or more of the non-cash
forms of compensation under the plan is necessary to attract and keep our key
employees and outside directors (directors who are not affiliated with our
management). The board believes the plan will allow us to be competitive with
comparable employers and allow us to provide directors, employees and key
consultants with incentives tied to our success while conserving our cash
resources. If the plan is approved and implemented, we may in the future
award any of the benefits provided under the plan in the board's discretion.
The principal features of the plan are summarized below. All statements
made in this summary of the plan are qualified by reference to the full text
of the plan which is attached to this proxy statement as Exhibit A. You are
encouraged to read the plan in its entirety.
The Plan. The purpose of the plan is to reinforce the long-term
commitment to our success, the success of our subsidiaries, directors,
officers, employees, consultants and advisors who are or will be responsible
for such success; to facilitate the ownership of our common stock by such
individuals, thereby reinforcing the identity of their interests with those of
our stockholders; and to assist us in attracting and retaining directors,
officers and other employees with experience and ability.
The plan provides for the granting of incentive stock options,
non-qualified stock options or both. The plan also provides for the granting
of restricted stock, dividend equivalent rights, phantom stock awards, stock
appreciation rights and performance awards. In addition, the plan permits the
compensation committee to authorize loans to plan participants in connection
with the grant of awards, on terms and conditions determined solely by the
compensation committee. All awards will be evidenced by an agreement setting
forth the terms and conditions applicable thereto.
Eligibility. Options, dividend equivalent rights, restricted stock,
phantom stock awards, stock appreciation rights and performance awards may be
granted to any of our or our subsidiaries' directors, officers, other
employees, consultants or advisors who the compensation committee determines
may contribute to our long-term success, provided that incentive stock options
may only be granted to our employees.
The plan is administered by the compensation committee of our Board of
Directors, the composition of which will at all times comply with the
requirements of Rule 16b-3 under the Exchange Act.
Securities Subject to the Plan. The plan covers 6% of the shares of our
common stock outstanding as of the date of determination. The shares issued
under the plan may come from our authorized but unissued shares or shares we
previously reacquired. The plan provides for adjustments to the aggregate
number of shares subject to the plan and any award thereunder, and to the
purchase price to be paid and/or the number of shares issuable upon the
exercise of any option or pursuant to restricted awards. The compensation
committee has the authority, in the event of any such adjustment, to provide
for the cancellation of any outstanding award in exchange for payment in cash
or other property.
Terms and Conditions of Options. The compensation committee will
determine the option exercise price per share of common stock purchasable
pursuant to an option; provided, however, that incentive stock options cannot
be granted for less than 100% of the fair market value of the common stock on
the date of grant. Additionally, any plan participant who owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Internal Revenue Code) more than 10% of the combined voting power of all
classes of our stock and an incentive stock option is granted to such
employee, the option exercise price of such incentive stock option (to the
extent required by the Code at the time of the grant) will not be less than
110% of the fair market value of the common stock on the date of grant. The
term of each option shall be fixed by the compensation committee, provided
that if any plan participant owns or is deemed to own (by reason of the
attribution rule of Section 424(d) of the Internal Revenue Code) more than 10%
of the combined voting power of all classes of our stock and an incentive
stock option is granted to such employee, the term of an incentive stock
option (to the extent required by the Internal Revenue Code at the time of
grant) shall be no more than five years from the date of grant. We may make
loans available to option holders in connection with the exercise of
outstanding options granted under the plan.
Reload Options. This award permits us to allow an optionee, upon
exercise of an option or vesting of an award, to satisfy any applicable
federal income tax requirements in the form of either cash or common stock,
including common stock issuable upon exercise of the option. An option grant
may include a "reload option." A reload option is issued to the optionee upon
the exercise of his outstanding option. The reload option has the same term
and expiration date as the exercised option, but has an exercise price equal
to the fair market value of the stock on the date of the outstanding option is
exercised. The number of shares covered by the reload option equals either
(i) the number of shares tendered by the optionee to pay the exercise price
of the outstanding option (if the optionee elects to pay the option price with
stock he already owns), or (ii) the number of shares issued to the optionee
upon exercise of the outstanding option.
Restricted Awards. A restricted stock award is an award of common stock
that may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of for a period of ten years, or any shorter period as the
compensation committee shall determine, from the date on which the award is
granted. The compensation committee may also impose such other restrictions
and conditions on an award as it deems appropriate. The compensation
committee may provide that the foregoing restrictions will lapse with respect
to specified percentages of the awarded shares on successive anniversaries of
the date of the award. In addition, the compensation committee has the
authority to cancel all or any portion of any restrictions prior to the
expiration of the granted period. Performance awards are shares of common
stock subject to restrictions based upon the attainment of performance
measures of our performance. In addition, performance goals may be based upon
a participant's attainment of specific objectives we set for the participant's
performance. Phantom stock awards are rights awarded to participants that
entitle the participant to receive shares of common stock or cash equivalent
to the fair market value of the common stock without any payment by the
participant.
Upon the award of any restricted stock or performance award, the holder
will have the rights of a stockholder with respect to the shares, including
dividend rights, subject to the conditions and restrictions generally
applicable to restricted stock or specifically set forth in the participant's
award agreement.
Dividend Equivalent Rights. Dividend equivalent rights may be granted
separately or in conjunction with options. The value of a dividend equivalent
right is equal to the product of (1) the number of shares of common stock as
to which the dividend equivalent right relates and (2) the cash dividend
payable per share of common stock. Dividend equivalent rights may be payable
either in cash or in shares of common stock, and payment may occur either as
the dividend equivalent right accrues or at such later time as the related
option is exercised. Dividend equivalent rights expire at the time specified
in the award agreement, and no dividends are payable or credited with respect
to the dividend equivalent rights.
Stock Appreciation Rights. The compensation committee has the
discretion to grant a stock appreciation right in tandem with any option or
may grant the SAR independently. A stock appreciation right entitles a
participant to surrender the stock appreciation right to us and to receive in
exchange the number of shares of common stock having an aggregate value equal
to the excess of the fair market value of one share on the date of exercise
over the purchase price per share specified in the stock appreciation right,
times the number of shares called for by the stock appreciation right (or
portion thereof) surrendered. The compensation committee may elect to settle
any stock appreciation right obligation in cash. Any stock appreciation right
granted in tandem with an option is only exercisable to the extent that the
related option is exercisable. Further, a stock appreciation right is only
exercisable upon consent of the compensation committee. Limited stock
appreciation rights payable upon the occurrence of a change in control may be
granted under the plan.
Death; Termination of Employment; Restrictions on Transfer. The
compensation committee will provide in the award agreements whether and to
what extent awards will be exercisable upon termination of employment or
service for any reason, including death or disability, of any participant in
the plan. In no event may any option be exercisable more than ten years from
the date it is granted. Except as otherwise determined by the compensation
committee in accordance with Federal securities laws, options are not
transferable and are exercisable during the recipient's lifetime only by the
recipient.
Amendment: Termination. Our board of directors may terminate or amend
the plan at any time, except that stockholder approval is required for any
amendment to the plan which would be required to fulfill the conditions of
Federal securities laws, Section 162(m) of the Internal Revenue Code and such
other applicable statutory rules and regulations and only if we intend to
fulfill such conditions. Termination or amendment of the plan will not affect
previously granted awards, which will continue in effect in accordance with
their terms.
Certain Federal Income Tax Consequences. Under current Federal income
tax laws, awards under the plan will generally have the following tax
consequences:
Non-Qualified Stock Options. A participant will generally not be taxed
upon the grant of a non-qualified stock option. Rather, at the time of
exercise of such non-qualified stock option, the participant will recognize
ordinary income for Federal income tax purposes in an amount equal to the
excess, if any, of the fair market value of the shares purchased over the
option exercise price and will have a tax basis in such shares equal to the
amount paid by the participant upon exercise plus the amount taxable as
ordinary income to the participant. We will generally be entitled to a
deduction against taxable income at such time and in the same amount that the
participant recognizes ordinary income.
If shares acquired upon exercise of a non-qualified stock option are
later sold or exchanged, then the difference between the sales price and the
tax basis of such stock as determined on the date that ordinary income was
recognized with respect thereto will generally be taxable as long-term or
short-term capital gain or loss (if the stock is a capital asset of the
participant) depending upon the length of time the stock has been held.
Incentive Stock Options. A participant will not be in receipt of taxable
income upon the grant of an incentive stock option or upon its timely
exercise. Exercise of an incentive stock option will be timely if made during
its term and if the participant remains our employee at all times during the
period beginning on the date of grant of the incentive stock option and ending
on the date three months before the date of exercise (or one year before the
date of exercise in the case of a disabled employee). Exercise of an incentive
stock option will also be timely if made by the legal representative of a
participant who dies (1) while employed by us or (2) within three months after
termination of employment. The tax consequences of an untimely exercise of an
incentive stock option will be determined in accordance with the rules
applicable to non-qualified stock options, above.
If stock acquired pursuant to a timely exercised incentive stock option
is later disposed of, the participant will, except as noted below with respect
to a "disqualifying disposition," recognize long-term capital gain or loss at
the time of the disposition (if the stock is a capital asset of the employee)
equal to the difference between the amount realized upon such sale and the
option exercise price. Under these circumstances, we will not be entitled to
any Federal income tax deduction in connection with either the exercise of the
incentive stock option or the sale of such stock by the participant.
If, however, a participant disposes of stock acquired pursuant to the
exercise of an incentive stock option prior to the expiration of two years
from the date of grant of the incentive stock option or within one year from
the date such stock is transferred to him upon exercise (a "disqualifying
disposition") generally (1) the participant will realize ordinary income at
the time of the disposition in an amount equal to the excess, if any, of the
fair market value of the stock at the time of exercise (or, if less, the
amount realized on such disqualifying disposition) over the option exercise
price, and (2) if the stock is a capital asset of the participant, any
additional gain recognized by the participant will be taxed as short-term or
long-term capital gain. Any capital gain recognized by the participant who has
held the underlying common stock for more than one year will be taxed at the
20% long-term capital gain rate. Capital gain on stock held twelve months or
less will be short-term. At the time of such disqualifying disposition, we may
claim a deduction for Federal income tax purposes only for the amount taxable
to the participant as ordinary income.
The amount by which the fair market value of the capital gain on the
exercise date of an incentive stock option exceeds the option exercise price
will be an item of adjustment for purposes of the "alternative minimum tax"
imposed by Section 55 of the Internal Revenue Code.
Our Board unanimously recommends that you vote FOR this proposal.
Proxies solicited by our Board will be so voted unless you specify otherwise
in your proxy.
PROPOSAL 4
RATIFICATION OF INDEPENDENT AUDITORS
Based upon the recommendation of the audit committee, the stockholders
are urged to ratify the appointment by our board of directors of Ernst & Young
LLP as independent auditors for the fiscal year ending December 31, 1999.
Ernst & Young has served as our independent auditor since 1996 and is familiar
with our affairs and financial procedures. Representatives of Ernst & Young
are not expected to be present at the annual meeting.
Our Board unanimously recommends that you vote FOR this proposal.
Proxies solicited by our Board will be so voted unless you specify otherwise
in your proxy.
EXECUTIVE OFFICERS AND DIRECTORS
An Officer of the Company
(or a Predecessor of the
Name and Age Position Company) Since
George S. Hastings, Jr. Chairman of the Board 1983
Age 52 Chief Executive Officer,
President, Chief Financial
Officer, Secretary
Randle Willoughby Vice-President of Production 1988
Age 35
Roger Daley* Director --
Age 76
Joseph Duncan, Sr.* Director --
Age 72
Kenneth Ostebo* Director --
Age 42
______________________
Business Experience
For a description of the business experience of Mr. Hastings and Mr.
Duncan, see "Election of Directors" above.
Randle Willoughby, age 35, has been involved in the management of
catfish farming since 1983. Until 1992, Mr. Willoughby was with a 4,000 acre
operation where he began as an oxygen checker and worked his way up to overall
general manager. In this position, Mr. Willoughby worked directly with the
Production Credit Association in obtaining a satisfiable inventory analysis.
From 1992 until 1996, he was general manager a 500 acre farm where he raised
the farm's average sales from 3,500 to 6,200 pounds of product per acre. This
represented a 75% increase in sales while costs increased only 50%. Mr.
Willoughby joined the Company in 1997, and has assembled management team with
over 68 years of combined experience in aquacultural management. He recently
initiated a performance bonus program giving the farm management team the
incentive to strive towards improved production.
Roger A. Daley, age 76, served as a Director of the Company effective
September 16, 1996. Prior to his retirement in 1986, Mr. Daley served as
General Manager and President of the Knoxville News Sentinel, which he first
joined as an advertising sales representative in 1946. During his service with
the News Sentinel, the newspaper expanded five times and became agent for the
Knoxville Journal. Mr. Daley has also served as a member of the American
Newspaper Publishers Association and of the Southern Newspaper Publishers
Association, for which he served on several committees and served three years
on that Board.
Kenneth Ostebo was appointed a Director of the Company effective May 4,
1998. From 1994 to the present, Mr. Ostebo has been Chief Executive Officer
for Ocean Edge, Inc., a commercial fishing and marketing company. Mr. Ostebo
has 21 years experience in the seafood industry and has developed expertise in
introducing lesser known products into the marketplace. In 1982, he
established new markets for secondary seafood items and brought them to a
national level. Mr. Ostebo then started a company using the same processing
principles and product development and spent two years on research and
development of a new seafood product which ultimately gained national
acceptance. Mr. Ostebo has expertise in taking a new product from its
inception to target markets to consumer awareness and selling these products
on both domestic and international levels.
Compensation of Executive Officers
Mr. Hastings, our Chairman of the Board, Chief Executive Officer and
President, received salaries of $70,558, $59,250 and $118,500 during fiscal
years ended June 30, 1998, the six month fiscal year ended 1997 and the year
ended December 31, 1996, respectively. None of our other executive officers
received salary or bonus in excess of $100,000 during the fiscal years ended
December 31, 1998, 1997 and 1996.
Employment Contracts. The Company has a written employment agreement
with Mr. George Hastings. Pursuant to this agreement, he receives a base
salary of $87,000 per annum. In addition, Mr. Hastings is entitled to awards
of up to 12,000 shares of our restricted stock and stock options to purchase
up to 240,000 shares of our stock at the market price on the date of grant.
Mr. Hastings is also entitled to medical insurance coverage and to such annual
bonus compensation as may be determined by the Board of Directors. The award
of any bonus compensation, however, is dependent on the achievement of certain
performance levels by the Company, including growth in funds from operations
and/or water acres under management. The stock options awarded pursuant to
such employment contract is exercisable for a term of seven years at an
exercise price equal to the fair market value on such date and are exercisable
upon issuance. The employment agreement has an initial three-year term and is
automatically extended for an additional year at the end of each year of the
agreement, subject to the right of the Company to terminate the contract for
cause upon notice or voluntarily by giving at least three months' prior
written notice and the payment of severance payment equal to three years of
compensation.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the annual meeting
in the year 2000, and who wishes to have the proposal included in our proxy
statement for that meeting, must deliver the proposal to our corporate
secretary, George S. Hastings, Jr., AquaPro Corporation, 1100 Highway 3,
Sunflower, Mississippi 38778 by August 1, 2000. All proposals must meet the
requirements set forth in the rules and regulations of the SEC in order to be
eligible for inclusion in the proxy statement for that meeting.
ANNUAL REPORT
We have provided without charge a copy of the annual report to
stockholders for fiscal year 1998 to each person being solicited by this proxy
statement. Upon the written request by any person being solicited by this
proxy statement, we will provide without charge a copy of the Annual Report on
Form 10-K as filed with the SEC (excluding exhibits, for which a reasonable
charge shall be imposed). All requests should be directed to: George S.
Hastings, Jr., AquaPro Corporation, 1100 Highway 3, Sunflower, Mississippi
38778.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ George S. Hastings, Jr.
Chairman of the Board, Chief Executive
Officer, President, Chief Financial
Officer and Secretary
October ___, 1999
Jackson, Mississippi
EXHIBIT A
AQUAPRO CORPORATION
1999 FLEXIBLE INCENTIVE PLAN
TABLE OF CONTENTS
Page
SECTION 1. PURPOSE OF THIS PLAN -1-
SECTION 2. DEFINITIONS -1-
SECTION 3. ADMINISTRATION OF THIS PLAN -5-
SECTION 4. SHARES SUBJECT TO PLAN -6-
SECTION 5. ELIGIBILITY -6-
SECTION 6. STOCK OPTIONS -7-
SECTION 7. RESTRICTED STOCK -10-
SECTION 8. STOCK APPRECIATION RIGHTS -11-
SECTION 9. PHANTOM STOCK AWARDS -12-
SECTION 10. DIVIDEND EQUIVALENTS -12-
SECTION 11. PERFORMANCE AWARDS -13-
SECTION 12. STOCK PURCHASE PLAN -14-
SECTION 13. OTHER AWARDS -15-
SECTION 14. COMPLIANCE WITH SECURITIES AND OTHER LAWS -15-
SECTION 15. ADJUSTMENTS UPON THE OCCURRENCE OF
A REORGANIZATION OR CORPORATE TRANSACTION -16-
SECTION 16. AMENDMENT OR TERMINATION OF THIS PLAN -17-
SECTION 17. AMENDMENTS AND ADJUSTMENTS TO AWARDS -17-
SECTION 18. GENERAL PROVISIONS -18-
SECTION 1. PURPOSE OF THIS PLAN
The purposes of the AquaPro Corporation Flexible Incentive Plan are to (i)
promote the interests of AquaPro Corporation (the "Company") and its
stockholders by enabling the Company and each of its Subsidiaries (as
hereinafter defined) to (A) attract, motivate and retain their respective
employees and Non-Employee Directors (as hereinafter defined) by offering
such employees and Non-Employee Directors performance-based stock incentives
and other equity interests in the Company and other incentive awards and (B)
compensate Consultants (as hereinafter defined) by offering such Consultants
performance-based stock incentives and other equity interests in the Company
and other incentive awards that recognize the creation of value for the
stockholders of the Company and (ii) promote the Company's long-term growth
and success. To achieve these purposes, eligible Persons may receive Stock
Options, Restricted Stock, Performance Awards and any other Awards (as such
terms are hereinafter defined), or any combination thereof.
SECTION 2. DEFINITIONS
As used in this Plan, the following terms shall have the meanings set
forth below unless the context otherwise requires:
2.1 "Award" shall mean the grant of a Stock Option, Restricted Stock, a
Performance Award, a Dividend Equivalent, an SAR, a Phantom Stock Award or any
other grant of incentive compensation pursuant to this Plan.
2.2 "Book Value" shall mean the excess of the value of the assets of an
entity over the liabilities of such entity (determined in accordance with
United States generally accepted accounting principles, consistently applied).
2.3 "Board" shall mean the Board of Directors of the Company, as the
same may be constituted from time to time.
2.4 "Cause" shall mean termination of a Participant's employment with
the Company or a Subsidiary upon the occurrence of one or more of the following
events:
(1) The Participant's failure to substantially perform such
Participant's duties with the Company or any Subsidiary as determined by the
Committee or the Board following receipt by the Participant of written notice
of such failure and the Participant's failure to remedy such failure within
thirty (30) days after receipt of such notice (other than a failure resulting
from the Participant's incapacity during physical or mental illness);
(2) The Participant's willful failure or refusal to perform
specific directives of the Board, which directives are consistent with the
scope and nature of the Participant's duties and responsibilities, and which
are not remedied by the Participant within thirty (30) days after being
notified in writing of such Participant's failure by the Board;
(c) The Participant's conviction of a felony; or
(d) A breach of the Participant's fiduciary duty to the Company or
any Subsidiary or willful violation in the course of performing the
Participant's duties for the Company or any Subsidiary of any law, rule or
regulation (other than traffic violations or other minor offenses). No act
or failure to act on the Participant's part shall be considered willful
unless done or omitted to be done in bad faith and without reasonable belief
that the action or omission was in the best interest of the Company;
provided, however, that for each employee of the Company who has entered
into an employment agreement with the Company, "Cause" shall have the
meaning provided in such employment agreement.
2.5 "Change in Control" shall mean, after the Effective Date, (i) a
Corporate Transaction is consummated, other than a Corporate Transaction that
would result in substantially all of the holders of voting securities of the
Company outstanding immediately prior thereto owning (directly or indirectly
and in substantially the same proportions relative to each other) not less
than fifty percent (50%) of the combined voting power of the voting
securities of the issuing/surviving/resulting entity outstanding immediately
after such Corporate Transaction or (ii) an agreement for the sale or other
disposition of all or substantially all of the Company's assets (evaluated on
a consolidated basis, without regard to whether the sale or disposition is
effected via a sale or disposition of assets of the Company, the sale or
disposition of the securities of one or more Subsidiaries or the sale or
disposition of the assets of one or more Subsidiaries) is consummated.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time (or any successor to such legislation).
2.7 "Committee" shall mean the Compensation Committee of the Board as
such Compensation Committee may be constituted from time to time; provided,
however, the Committee will consist of not less than three (3) Directors. All
members of the Committee will serve at the pleasure of the Board.
2.8 "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
2.9 "Company" shall have the meaning set forth in Section 1 of this
Plan.
2.10 "Consultant" shall mean any Person who or which is engaged by the
Company or any Subsidiary to render consulting services.
2.11 "Corporate Transaction" shall mean any recapitalization (other than
a transaction contemplated by Section 15.1 of this Plan) merger, consolidation
or conversion involving the Company or any exchange of securities involving the
Common Stock (other than a transaction contemplated by Section 15.1 of this
Plan), provided that a primary issuance of shares of Common Stock shall not be
deemed to be a "Corporate Transaction."
2.12 "Designated Beneficiary" shall mean the beneficiary designated by a
Participant, in a manner authorized by the Committee or the Board, to exercise
the rights of such Participant in the event of such Participant's death. In the
absence of an effective designation by a Participant, the Designated
Beneficiary shall be such Participant's estate.
2.13 "Director" shall mean any member of the Board.
2.14 "Disability" shall mean permanent and total inability to engage in
any substantial gainful activity, even with reasonable accommodation, by reason
of any medically determinable physical or mental impairment which has lasted or
can reasonably be expected to last without material interruption for a period
of not less than twelve (12) months, as determined in the sole discretion of
the Committee or the Board.
2.15 "Dividend Equivalent" shall mean an award granted pursuant to
Section 10 of this Plan of a right to receive certain payments with respect to
Shares.
2.16 "Effective Date" shall mean December 15, 1999.
2.17 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time (or any successor to such legislation).
2.18 "Fair Market Value" shall mean with respect to the Shares, as of any
date, the value established by the Board. Fair market value shall be determined
without regard to any restriction other than a restriction which, by its terms,
will never lapse.
2.19 "Incentive Stock Option" shall mean any option to purchase Shares
awarded pursuant to this Plan which qualifies as an "Incentive Stock Option"
pursuant to Section 422 of the Code.
2.20 "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 (or any successor to such rule) promulgated under the Exchange Act) who
is also an "outside director," as required pursuant to Section 162(m) of the
Code and such Treasury regulations as may be promulgated thereunder.
2.21 "Non-Qualified Stock Option" shall mean any option to purchase
Shares awarded pursuant to this Plan that does not qualify as an Incentive
Stock Option, including, without limitation, any option to purchase Shares
originally designated as or intended to qualify as an Incentive Stock Option
but which does not (for whatever reason) qualify as an Incentive Stock Option.
2.22 "Non-Share Method" shall have the meaning set forth in Section
6.6(c) of this Plan.
2.23 "Optionee" shall mean any Participant who has been granted and holds
a Stock Option awarded pursuant to this Plan.
2.24 "Participant" shall mean any Person who has been granted and holds
an Award granted pursuant to this Plan.
2.25 "Performance Award" shall mean any Award granted pursuant to this
Plan of Shares, rights based upon, payable in or otherwise related to Shares
(including Restricted Stock) or cash, as the Committee or Board may determine,
at the end of a specified performance period established by the Committee or
Board and may include, without limitation, Performance Shares or Performance
Units.
2.26 "Performance Shares" shall have the meaning set forth in Section
11.1 of this Plan.
2.27 "Performance Units" shall have the meaning set forth in Section 11.1
of this Plan.
2.28 "Permitted Modification" shall be deemed to be any modification of
an Award which is made in connection with a Corporate Transaction and which
provides, in connection with a Stock Option, that subsequent to the
consummation of the Corporate Transaction (i) the exercise price of such
Stock Option will be proportionately adjusted to reflect the exchange ratio
applicable to the particular Corporate Transaction and/or (ii) the nature
and amount of consideration to be received upon exercise of the Stock Option
will be the same (on a per share basis) as was received by Persons who were
holders of shares of Common Stock immediately prior to the consummation of
the Corporate Transaction.
2.29 "Person" shall mean an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization or any other form of business
organization.
2.30 "Phantom Stock Award" means a right awarded to a participant that,
in accordance with the terms of the granting agreement, entitles the holder to
receive Shares or cash in an amount equal to the Fair Market Value thereof, as
determined by the Committee, without payment of any amounts by the holder.
2.31 "Plan" shall mean this AquaPro Corporation 1999 Flexible Incentive
Plan as it may be amended from time to time.
2.32 "Purchase Loan" shall have the meaning set forth in Section 12.1 of
this Plan.
2.33 "Reload Option" shall mean a Stock Option as defined in Section
6.6(b) of this Plan.
2.34 "Reorganization" shall mean any stock split, stock dividend, reverse
stock split, combination of Shares or any other similar increase or decrease in
the number of Shares issued and outstanding.
2.35 "Restricted Stock" shall mean any Shares granted pursuant to this
Plan that are subject to restrictions or substantial risk of forfeiture.
2.36 "Retirement" shall mean termination of employment of an employee of
the Company or any Subsidiary, other than discharge for Cause, after age 65 or
on or before age 65 if pursuant to the terms of any retirement plan maintained
by the Company or any Subsidiary in which such employee participates.
2.37 "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time (or any successor to such legislation).
2.38 "Share Retention Method" shall have the meaning set forth in Section
6.6(c) of this Plan.
2.39 "Shares" shall mean shares of the Common Stock and any shares of
capital stock or other securities hereafter issued or issuable upon, in respect
of or in substitution or exchange for shares of Common Stock.
2.40 "SAR" shall mean a stock appreciation right granted pursuant to an
agreement that entitles the holder to receive, with respect to each Share
encompassed by the exercise of such SAR, an amount determined by the Committee.
In the absence of such determination, the holder shall be entitled to receive,
with respect to such Share encompassed by the exercise of such SAR, the excess
of its Fair Market Value on the date of exercise over the value on the date of
the grant.
2.41 "Stock Option" shall mean any Incentive Stock Option or
Non-Qualified Stock Option.
2.42 "Subsidiary" shall mean a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
2.43 "Transactional Consideration" shall have the meaning set forth in
Section 15.2 of this Plan.
SECTION 3. ADMINISTRATION OF THIS PLAN
3.1 Committee/Board. This Plan shall be administered and interpreted by
the Committee and/or the Board.
3.2 Awards.
(1) Subject to the provisions of this Plan and directions from the
Board, the Committee is authorized to:
(1) determine the Persons to whom Awards are to be granted;
(2) determine the types and combinations of Awards to be
granted; the number of Shares to be covered by an Award;
the exercise price of an Award; the time or times when
an Award shall be granted and may be exercised; the
terms, performance criteria or other conditions, vesting
periods or any restrictions for an Award; any
restrictions on Shares acquired pursuant to the exercise
of an Award; and any other terms and conditions of an
Award;
(3) interpret the provisions of this Plan;
(4) prescribe, amend and rescind rules and regulations
relating to this Plan;
(5) determine whether, to what extent and under what
circumstances to provide loans from the Company to
Participants to exercise Awards granted pursuant to this
Plan, and the terms and conditions of such loans;
(6) rely upon employees of the Company for such clerical and
record keeping duties as may be necessary in connection
with the administration of this Plan;
(7) accelerate or defer (with the consent of the
Participant) the vesting of any rights pursuant to an
Award; and
(8) make all other determinations and take all other actions
necessary or advisable for the administration of this
Plan.
(2) Without limiting the Board's right to amend this Plan pursuant
to Section 17 of the Plan, the Board may take all actions authorized by Section
3.2(a) of this Plan, including, without limitation, granting such Awards
pursuant to this Plan as the Board may deem necessary or appropriate.
3.3 Procedures.
(1) Proceedings by the Board with respect to this Plan will be
conducted in accordance with the articles of incorporation and bylaws of the
Company.
(2) A majority of the Committee members shall constitute a quorum
for action by the Committee. All determinations of the Committee shall be made
by not less than a majority of its members.
(3) All questions of interpretation and application of this Plan
or pertaining to any question of fact or Award granted hereunder will be
decided by the Committee or the Board, whose decision will be final,
conclusive and binding upon the Company and each other affected party.
SECTION 4. SHARES SUBJECT TO PLAN
4.1 Limitations. The maximum number of Shares that may be issued with
respect to Awards granted pursuant to this Plan at any time shall be an amount
equal to 6.0% of the Company's issued and outstanding shares of Common Stock at
such time. The Shares issued pursuant to this Plan may be authorized but
unissued Shares, or may be issued Shares which have been reacquired by the
Company.
4.2 Changes. To the extent that any Award granted pursuant to this Plan
shall be forfeited, shall expire or shall be canceled, in whole or in part,
then the number of Shares covered by the Award so forfeited, expired or
canceled may again be awarded pursuant to the provisions of this Plan. In
the event that Shares are delivered to the Company in full or partial payment
of the exercise price for the exercise of a Stock Option, the number of
Shares available for future Awards granted pursuant to this Plan shall be
reduced only by the net number of Shares issued upon the exercise of the
Stock Option. Awards that may be satisfied either by the issuance of Shares
or by cash or other consideration shall, until the form of consideration to
be paid is finally determined, be counted against the maximum number of
Shares that may be issued pursuant to this Plan.
SECTION 5. ELIGIBILITY
Eligibility for participation in this Plan shall be confined to those
individuals who are employed by the Company or a Subsidiary and such
Consultants and Non-Employee Directors as may be designated by the Committee
or the Board. In making any determination as to Persons to whom Awards shall
be granted, the type of Award and/or the number of Shares to be covered by
the Award, the Committee or the Board shall consider the position and
responsibilities of the Person, the importance of the Person to the Company,
the duties of the Person, the past, present and potential contributions of
the Person to the growth and success of the Company and such other factors
as the Committee or the Board may deem relevant in connection with
accomplishing the purposes of this Plan.
SECTION 6. STOCK OPTIONS
6.1 Grants. The Committee or the Board may grant Stock Options alone or
in addition to other Awards granted pursuant to this Plan to any eligible
Person. Each Person so selected shall be offered a Stock Option to purchase
the number of Shares determined by the Committee or the Board. The Committee
or the Board shall specify whether such Stock Option is an Incentive Stock
Option or a Non-Qualified Stock Option and any other terms or conditions
relating to such Award; provided, however only employees of the Company or a
Subsidiary may be granted Incentive Stock Options. To the extent that any
Stock Option designated as an Incentive Stock Option does not qualify as an
Incentive Stock Option (whether because of its provisions, the failure of the
stockholders of the Company to authorize the issuance of Incentive Stock
Options, the time or manner of its exercise or otherwise), such Stock Option
or the portion thereof which does not qualify shall be deemed to constitute a
Non-Qualified Stock Option. Each Person to be granted a Stock Option shall
enter into a written agreement with the Company, in such form as the
Committee or the Board may prescribe, setting forth the terms and conditions
(including, without limitation, the exercise price and vesting schedule) of
the Stock Option. At any time and from time to time, the Optionee and the
Committee or the Board may agree to modify an option agreement in such
respects as they may deem appropriate, including, without limitation, the
conversion of an Incentive Stock Option into a Non-Qualified Stock Option. The
Committee or the Board may require that an Optionee meet certain conditions
before the Stock Option or a portion thereof may vest or be exercised, as, for
example, that the Optionee remain in the employ of the Company or a Subsidiary
for a stated period or periods of time.
6.2 Incentive Stock Options Limitations.
(1) In no event shall any individual be granted Incentive Stock
Options to the extent that the Shares covered by any Incentive Stock Options
(and any incentive stock options granted pursuant to any other plans of the
Company or its Subsidiaries) that may be exercised for the first time by such
individual in any calendar year have an aggregate Fair Market Value in excess
of $100,000. For this purpose, the Fair Market Value of the Shares shall be
determined as of the date(s) on which the Incentive Stock Options are granted.
It is intended that the limitation on Incentive Stock Options provided in this
Section 6.2(a) be the maximum limitation on Stock Options which may be
considered Incentive Stock Options pursuant to the Code.
(2) The option exercise price of an Incentive Stock Option shall
not be less than one hundred percent (100%) of the Fair Market Value of the
Shares subject to such Incentive Stock Option on the date of the grant of such
Incentive Stock Option.
(3) Notwithstanding anything herein to the contrary, in no event
shall any employee owning more than ten percent (10%) of the total combined
voting power of the Company or any Subsidiary be granted an Incentive Stock
Option unless the option exercise price of such Incentive Stock Option shall be
at least one hundred ten percent (110%) of the Fair Market Value of the Shares
subject to such Incentive Stock Option on the date of the grant of such
Incentive Stock Option.
(4) In no event shall any individual be granted an Incentive Stock
Option after the expiration of ten (10) years from the date this Plan is
adopted or is approved by the stockholders of the Company (if stockholder
approval is required by Section 422 of the Code).
(5) To the extent stockholder approval of this Plan is required by
Section 422 of the Code, no individual shall be granted an Incentive Stock
Option unless this Plan is approved by the stockholders of the Company within
twelve (12) months before or after the date this Plan is initially adopted. In
the event this Plan is amended to increase the number of Shares subject to
issuance upon the exercise of Incentive Stock Options or to change the class of
employees eligible to receive Incentive Stock Options, no individual shall be
granted an Incentive Stock Option unless such amendment is approved by the
stockholders of the Company within twelve (12) months before or after such
amendment.
(6) No Incentive Stock Option shall be granted to any employee
owning more than ten percent (10%) of the total combined voting power of the
Company or any Subsidiary unless the term of such Incentive Stock Option is
equal to or less than five (5) years measured from the date on which such
Incentive Stock Option is granted.
6.3 Option Term. The term of a Stock Option shall be for such period of
time from the date of its grant as may be determined by the Committee or
the Board; provided, however, that no Incentive Stock Option shall be
exercisable later than ten (10) years from the date of its grant.
6.4 Time of Exercise. No Stock Option may be exercised unless it is
exercised prior to the expiration of its stated term and, in connection
with options granted to employees of the Company or its Subsidiaries, at
the time of such exercise, the Optionee is, and has been continuously since
the date of grant of such Stock Option, employed by the Company or a
Subsidiary, except that:
(1) A Stock Option may, to the extent vested as of the date the
Optionee ceases to be an employee of the Company or a Subsidiary, be
exercised during the three month period immediately following the date the
Optionee ceases (for any reason other than death, Disability or termination
for Cause) to be an employee of the Company or a Subsidiary (or within such
other period as may be specified in the applicable option agreement),
provided that, if the Stock Option has been designated as an Incentive Stock
Option and the option agreement provides for a longer exercise period, the
exercise of such Stock Option after such three-month period shall be treated
as the exercise of a Non-Qualified Stock Option;
(2) If the Optionee dies while in the employ of the Company or a
Subsidiary, or within three months after the Optionee ceases (for any reason
other than termination for Cause) to be such an employee (or within such other
period as may be specified in the applicable option agreement), a Stock Option
may, to the extent vested as of the date of the Optionee's death, be exercised
by the Optionee's Designated Beneficiary during the one year period immediately
following the date of the Optionee's death (or within such other period as may
be specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option
agreement provides for a longer exercise period, the exercise of such Stock
Option after such one-year period shall be treated as the exercise of a
Non-Qualified Stock Option;
(3) If the Optionee ceases to be an employee of the Company or a
Subsidiary by reason of the Optionee's Disability, a Stock Option, to the
extent vested as of the date the Optionee ceases to be an employee of the
Company or a Subsidiary, may be exercised during the one year period
immediately following the date on which the Disability is determined to
exist (or within such other period as may be specified in the applicable
option agreement); provided that, if the Stock Option has been designated as
an Incentive Stock Option and the option agreement provides for a longer
exercise period, the exercise of such Stock Option after such one-year
period shall be treated as the exercise of a Non-Qualified Stock Option; and
(4) If the Optionee's employment is terminated for Cause, all
Stock Options held by such Optionee shall simultaneously terminate and will no
longer be exercisable. Nothing contained in this Section 6.4 will be deemed to
extend the term of a Stock Option or to revive any Stock Option which has
previously lapsed or been canceled, terminated or surrendered. Stock Options
granted under this Plan to Consultants or Non-Employee Directors will contain
such terms and conditions with respect to the death or disability of a
Consultant or Non-Employee Director or termination of a Consultant's or
Non-Employee Director's relationship with the Company as the Committee or
the Board deems necessary or appropriate. Such terms and conditions will be
set forth in the option agreements evidencing the grant of such Stock Options.
6.5 Vesting of Stock Options.
(1) Each Stock Option granted pursuant to this Plan may only be
exercised to the extent that the Optionee is vested in such Stock Option. Each
Stock Option shall vest separately in accordance with the option vesting
schedule determined by the Committee or the Board, which will be
incorporated in the option agreement entered into between the Company
and such Optionee. The option vesting schedule may be accelerated if,
in the sole discretion of the Committee or the Board, the acceleration
of the option vesting schedule would be in the best interests the Company.
(2) In the event of the dissolution or liquidation of the Company,
each Stock Option granted pursuant to this Plan shall terminate as of a
date to be fixed by the Committee or Board; provided, however, that not
less than thirty (30) days' prior written notice of the date so fixed shall
be given to each Optionee. During such period all Stock Options which have
not previously been terminated, exercised or surrendered will (subject to
the provisions of Sections 6.3 and 6.4 of the Plan) fully vest and become
exercisable, notwithstanding the vesting schedule set forth in the option
agreement evidencing the grant of such Stock Option. Upon the date fixed
by the Committee or the Board, any unexercised Stock Options shall terminate
and be of no further effect.
(3) Upon the occurrence of a Change in Control, all Stock Options
and any associated Stock Appreciation Rights shall become fully vested and
immediately exercisable.
6.6 Manner of Exercise of Stock Options.
(1) Except as otherwise provided in this Plan, Stock Options may
be exercised as to Shares only in amounts and at intervals of time specified
in the written option agreement between the Company and the Optionee. Each
exercise of a Stock Option, or any part thereof, shall be evidenced by a
written notice delivered by the Optionee to the Company. Except as set forth
in Section 6.6(c) of this Plan, the purchase price of the Shares as to which
a Stock Option shall be exercised shall be paid in full at the time of
exercise, and may be paid to the Company either:
(1) in cash (including check, bank draft or money order); or
(2) by other consideration deemed acceptable by the
Committee or the Board in its sole discretion.
(2) If an Optionee delivers Shares (including Shares of Restricted
Stock) already owned by the Optionee in full or partial payment of the
exercise price for any Stock Option, or if the Optionee elects to have the
Company retain that number of Shares out of the Shares being acquired through
the exercise of the Stock Option having a Fair Market Value equal to the
exercise price of the Stock Option being exercised, the Committee or the
Board may, in its sole discretion, authorize the grant of a new Stock Option
(a "Reload Option") for that number of Shares equal to the number of already
owned Shares surrendered (including Shares of Restricted Stock) or newly
acquired Shares being retained by the Company in payment of the option
exercise price of the underlying Stock Option being exercised. The grant of
a Reload Option will become effective upon the exercise of the underlying
Stock Option. The option exercise price of the Reload Option shall be the
Fair Market Value of a Share on the effective date of the grant of the
Reload Option. Each Reload Option shall be exercisable no later than the
time when the underlying stock option being exercised could be last
exercised. The Committee or the Board may also specify additional terms,
conditions and restrictions for the Reload Option and the Shares to be acquired
upon the exercise thereof.
(3) Either the (i) purchase price of the Shares as to which a
Stock Option shall be exercised or (ii) amount, as determined by the Committee
or the Board, of any federal, state or local tax required to be withheld by the
Company due to the exercise of a Stock Option may, subject to the authorization
of the Committee or the Board, be satisfied, at the election of the Optionee,
either (A) by payment by the Optionee to the Company of the amount of such
withholding obligation in cash or other consideration acceptable to the
Committee or the Board in its sole discretion (the "Non-Share Method") or (B)
through either the retention by the Company of a number of Shares out of the
Shares being acquired through the exercise of the Stock Option or the
delivery of already owned Shares having a Fair Market Value equal to the
amount of the withholding obligation (the "Share Retention Method"). If an
Optionee elects to use the Share Retention Method in full or partial
satisfaction of any tax liability resulting from the exercise of a Stock
Option, the Committee or the Board may authorize the grant of a Reload
Option for that number of Shares as shall equal the number of Shares used
to satisfy the tax liabilities of the Optionee arising out of the exercise
of such Stock Option. Such Reload Option will be granted at the price and
on the terms set forth in Section 6.6(b) of this Plan. The cash payment or
an amount equal to the Fair Market Value of the Shares so withheld, as the
case may be, shall be remitted by the Company to the appropriate taxing
authorities.
(4) An Optionee shall not have any of the rights of a stockholder
of the Company with respect to the Shares subject to a Stock Option except
to the extent that such Stock Option is exercised and one or more certificates
representing such Shares shall have been delivered to the Optionee.
SECTION 7. RESTRICTED STOCK
7.1 Grants. The Committee or the Board may grant Awards of Restricted
Stock to any Consultant, Non-Employee Director or employee of the Company
or a Subsidiary for such minimum consideration, if any, as may be required
by applicable law or such greater consideration as may be determined by the
Committee or the Board, in its sole discretion. The terms and conditions of
the Restricted Stock shall be specified by the grant agreement. The Committee
or the Board, in its sole discretion, may specify any particular rights which
the Participant to whom a grant of Restricted Stock is made shall have in the
Restricted Stock during the restriction period and the restrictions applicable
to the particular Award, the vesting schedule (which may be based on service,
performance or other factors) and rights to acceleration of vesting (including,
without limitation, whether non-vested Shares are forfeited or vested upon
termination of employment). Further, the Committee or the Board may grant
performance-based Awards consisting of Restricted Stock by conditioning the
grant, or vesting or such other factors, such as the release, expiration or
lapse of restrictions upon any such Award (including the acceleration of any
such conditions or terms) of such Restricted Stock upon the attainment of
specified performance goals or such other factors as the Committee or the
Board may determine. The Committee or the Board shall also determine when the
restrictions shall lapse or expire and the conditions, if any, pursuant to
which the Restricted Stock will be forfeited or sold back to the Company.
Each Award of Restricted Stock may have different restrictions and
conditions. Unless otherwise set forth in the grant agreement, Restricted
Stock may not be sold, pledged, encumbered or otherwise disposed of by the
recipient until the restrictions specified in the Award expire. Awards of
Restricted Stock are subject to acceleration of vesting, termination of
restrictions and termination in the same manner as Stock Options pursuant
to Sections 6.4 and 6.5 of this Plan.
7.2 Awards and Certificates. Any Restricted Stock issued hereunder may
be evidenced in such manner as the Committee or the Board, in its sole
discretion, shall deem appropriate including, without limitation, book-entry
registration or issuance of a stock certificate or certificates. In the event
any stock certificate is issued in respect of Shares of Restricted Stock, such
certificate shall bear an appropriate legend with respect to the restrictions
applicable to such Award. The Company may retain, at its option, the physical
custody of any stock certificate representing any awards of Restricted Stock
during the restriction period or require that the certificates evidencing
Restricted Stock be placed in escrow or trust, along with a stock power
endorsed in blank, until all restrictions are removed or expire.
SECTION 8. STOCK APPRECIATION RIGHTS
8.1 Grants. The Committee or the Board may grant SARS to any employee,
Non-Employee Director, consultant or advisor of the Company in its sole
discretion.
8.2 Maximum SAR Period. The maximum period in which an SAR may be
exercised shall be determined by the Committee or the Board on the date of
grant, except that no corresponding SAR that is related to an Incentive
Stock Option shall be exercisable after the expiration of ten years from the
date such related stock Option was granted. In the case of a corresponding
SAR that is related to an Incentive Stock Option granted to a Participant
who is or is deemed to be a ten percent (10%) stockholder, such corresponding
SAR shall not be exercisable after the expiration of five years from the
date such related Stock Option was granted. The terms of any corresponding
SAR that is related to an Incentive Stock Option may provide that it is
exercisable for a period less than such maximum period.
8.3 Exercise. Subject to the provisions of this Plan and the applicable
granting agreement, an SAR may be exercised in whole at any time or in part
from time to time at such times and in compliance with such requirements as the
Committee or the Board shall determine; provided however, that a corresponding
SAR that is related to an Incentive Stock Option may be exercised only to the
extent that the related Stock Option is exercisable and only when the Fair
Market Value exceeds the option price of the related Stock Option. An SAR
granted under this Plan may be exercised with respect to any number of whole
shares less than the full number for which the SAR could be exercised. A
partial exercise of an SAR shall not affect the right to exercise the SAR
from time to time in accordance with this Plan and the applicable granting
agreement with respect to the remaining Shares subject to the SAR. The
exercise of a corresponding SAR shall result in the termination of the
related Stock Option to the extent of the number of Shares with respect to
which the SAR is exercised.
8.4 Settlement. At the Committee's or the Board's discretion, the amount
payable as a result of the exercise of an SAR may be settled in cash, Common
Stock, or a combination of cash and Common Stock. No fractional shares will be
deliverable upon the exercise of an SAR but a cash payment will be made in lieu
thereof.
SECTION 9. PHANTOM STOCK AWARDS
9.1 Grants. The Committee or the Board shall designate each individual
to whom Phantom Stock Awards are to be granted and shall specify the number of
Shares included in such awards.
9.2 Vesting. The Committee or the Board, on the date of the Award, may
prescribe that a Participant's rights in the Phantom Stock Award shall be
forfeitable or otherwise restricted for a period of time or subject to such
conditions as may be set forth in the granting agreement.
9.3 Performance Objectives. The Committee or the Board may prescribe
that Phantom Stock Awards will become nonforfeitable based on objectives such
as, but not limited to, the Company's, a Subsidiary's or an operating unit's
return on equity, earnings per share, total earnings, earnings growth,
return on capital, return on assets, or Fair Market Value.
9.4 Settlement. A Phantom Stock Award shall be settled, to the extent
that it is nonforfeitable, at the time set forth in the applicable granting
agreement. At the Committee's or the Board's discretion, the Phantom Stock
Award may be settled in cash, Common Stock, or a combination of cash and
Common Stock. Any payment to be made in cash shall be made in a lump sum or
in installments as prescribed by the Committee or the Board in its
discretion. Any payment to be made in Common Stock shall be based on the
Fair Market Value of the Common Stock on the payment date. Cash Dividend
Equivalents may be paid during or after the vesting period with respect to a
Phantom Stock Award, as determined by the Committee or the Board. If a
payment of cash is to be made on a deferred basis, the Committee or the
Board shall establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto.
SECTION 10. DIVIDEND EQUIVALENTS
10.1 Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants, which will entitle such Participant to
receive, on a current or deferred basis and subject to such conditions as may
be imposed by the Committee, cash payments from the Company in the same
amounts (or such lesser fraction of such amounts as may be specifically set
forth in the Dividend Equivalent agreement evidencing such award) that the
holder of record of such number of Shares would be entitled to receive as
cash dividends on such Shares (unless otherwise limited in such agreement).
Dividend Equivalent agreements will specify the expiration date of such
Dividend Equivalents, the number of Shares to which they relate, and such
other conditions as the Committee may impose.
10.2 Payments. The right to a cash payment in respect of a Dividend
Equivalent will apply to all dividends the record date for which occurs at any
time during the period commencing on the date the Dividend Equivalent is
granted and ending on the date such Dividend Equivalent expires or is
terminated, whichever occurs first.
10.3 Related Dividend Equivalents. If a Dividend Equivalent is granted in
conjunction with the grant of a Stock Option, the applicable Dividend
Equivalent agreement will provide that the grantee is entitled to receive
from the Company cash payments, on a current or deferred basis, in the same
amounts (or such lesser fraction of such amounts as may be specifically set
forth in the Dividend Equivalent agreement) that the holder of record of a
number of Shares equal to the number of Shares covered by such Stock Option
would be entitled to receive as dividends on such Shares unless otherwise
limited in the Dividend Equivalent agreement. Such right to a cash payment
will apply to, and such Dividend Equivalent will remain outstanding in
respect of, all cash dividends the record date for which occurs at any time
during the period commencing on the date the related Stock Option is granted
and ending on the date that such Stock Option is exercised, expires or
terminates, whichever occurs first.
SECTION 11. PERFORMANCE AWARDS
11.1 Grants. A Performance Award may consist of either or both, as the
Committee or the Board may determine, of (a) the right to receive Shares or
Restricted Stock, or any combination thereof as the Committee or the Board may
determine ("Performance Shares"), or (b) the right to receive a fixed dollar
amount payable in Shares, Restricted Stock, cash or any combination thereof, as
the Committee or the Board may determine ("Performance Units"). The Committee
or the Board may grant Performance Awards to any eligible Consultant,
Non-Employee Director or employee of the Company or a Subsidiary, for such
minimum consideration, if any, as may be required by applicable law or such
greater consideration as may be determined by the Committee or the Board, in
its sole discretion. The terms and conditions of Performance Awards shall be
specified at the time of the grant and may include provisions establishing
the performance period, the performance criteria to be achieved during a
performance period, the criteria used to determine vesting (including the
acceleration thereof), whether Performance Awards are forfeited or vest upon
termination of employment during a performance period and the maximum or
minimum settlement values. Each Performance Award shall have its own terms
and conditions, which shall be determined in the sole discretion of the
Committee or the Board. If the Committee or the Board determines, in its
sole discretion, that the established performance measures or objectives are
no longer suitable because of a change in the Company's business, operations,
corporate structure or for other reasons that the Committee or the Board
deems satisfactory, the Committee or the Board may modify the performance
measures or objectives and/or the performance period. Awards of Performance
Shares and/or Performance Units are subject to acceleration of vesting,
termination of restrictions and termination in the same manner as Stock
Options pursuant to Sections 6.4 and 6.5 of this Plan.
11.2 Terms and Conditions. Performance Awards may be valued by reference
to the Fair Market Value of a Share or according to any other formula or method
deemed appropriate by the Committee or the Board, in its sole discretion,
including, but not limited to, achievement of specific financial, production,
sales, cost or earnings performance objectives that the Committee or the Board
believes to be relevant or the Company's performance or the performance of the
Common Stock measured against the performance of the market, the Company's
industry segment or its direct competitors. Performance Awards may also be
conditioned upon the applicable Participant remaining in the employ of the
Company or one of its Subsidiaries for a specified period. Performance Awards
may be paid in cash, Shares (including Restricted Stock) or other
consideration, or any combination thereof. Performance Awards may be payable
in a single payment or in installments and may be payable at a specified date
or dates or upon attaining the performance objective or objectives, all at
the sole discretion of the Committee or the Board. The extent to which any
applicable performance objective has been achieved shall be conclusively
determined by the Committee or the Board in its sole discretion.
SECTION 12. STOCK PURCHASE PLAN
12.1 Grant of Stock Purchase Rights. The term "Stock Purchase Right"
means the right to purchase shares of Common Stock and to pay for all or a
portion of the purchase price for such shares through a loan made by the
Company to a Participant (a "Purchase Loan") as set forth in this Section 12.
12.2 Terms of Purchase Loans
(1) Each Purchase Loan shall be evidenced by a promissory note.
The term of the Purchase Loan shall be a period not to exceed ten years, as
determined by the Committee, and the proceeds of the Purchase Loan shall be
used exclusively by the Participant for purchase of shares of Common Stock at a
purchase price equal to the Fair Market Value on the date of the Stock Purchase
Right.
(2) A Purchase Loan shall bear interest at whatever rate the
Committee shall determine (not less than the then existing prime rate as
announced by the Company's lender under the Company's credit facility but
not in excess of the maximum rate permissible under applicable law), payable
in a manner and at such times as the Committee shall determine. Those terms
and provisions as the Committee shall determine shall be incorporated into
the promissory note evidencing the Purchase Loan.
12.3 Security for Loans.
(1) Purchase Loans granted to Participants shall be secured by a
pledge of the shares of Common Stock acquired pursuant to the Stock Purchase
Right. Such pledge shall be evidenced by a pledge agreement (the "Pledge
Agreement") containing such terms and conditions as the Committee shall
determine. The certificates for the shares of Common Stock purchased by a
Participant pursuant to a Stock Purchase Right shall be issued in the
Participant's name, but shall be held by the Company as security for repayment
of the Participant's Purchase Loan together with a stock power executed in
blank by the Participant (the execution and delivery of which by the
Participant shall be a condition to the issuance of the Stock Purchase
Right). The Participant shall be entitled to exercise all rights applicable
to such shares of Common Stock, including, but not limited to, the right to
vote such shares of Common Stock and the right to receive dividends and
other distributions made with respect to such shares of Common Stock.
(2) The Company shall release and deliver to each Participant
certificates for the shares of Common Stock purchased by the Participant under
the Stock Purchase Right and then held by the Company, provided the Participant
has paid or otherwise satisfied in full the balance of the Purchase Loan and
any accrued but unpaid interest thereon. In the event the balance of the
Purchase Loan is not repaid, forgiven or otherwise satisfied within ninety
(90) days after (i) the date repayment of the Purchase Loan is due (whether
in accordance with its term, by reason of acceleration or otherwise), or (ii)
such longer time as the Committee, in its discretion, shall provide for
repayment or satisfaction, the Company shall retain those shares of Common
Stock then held by the Company in accordance with the Pledge Agreement.
12.4 Restrictions on Transfer. No Stock Purchase Right or shares of
Common Stock purchased through a Stock Purchase Right and pledged to the
Company as collateral security for the Participant's Purchase Loan and
accrued but unpaid interest thereon may be otherwise pledged, sold, assigned
or transferred (other than by will or by the laws of descent and distribution).
SECTION 13. OTHER AWARDS
The Committee or the Board may grant to any eligible Consultant,
Non-Employee Director or employee of the Company or a Subsidiary other forms of
Awards based upon, payable in or otherwise related to, in whole or in part,
Shares, if the Committee or the Board, in its sole discretion, determines that
such other form of Award is consistent with the purposes of this Plan. The
terms and conditions of such other form of Award shall be specified in a
written agreement which sets forth the terms and conditions of such Award,
including, but not limited to, the price, if any, and the vesting schedule,
if any, of such Award. Such Awards may be granted for such minimum
consideration, if any, as may be required by applicable law or for such
other greater consideration as may be determined by the Committee or the
Board, in its sole discretion.
SECTION 14. COMPLIANCE WITH SECURITIES AND OTHER LAWS
As a condition to the issuance or transfer of any Award or any security
issuable in connection with such Award, the Company may require an opinion of
counsel, satisfactory to the Company, to the effect that (a) such issuance
and/or transfer will not be in violation of the Securities Act or any other
applicable securities laws and (b) such issuance and/or transfer will not be
in violation of the rules and regulations of any securities exchange or
automated quotation system on which the Common Stock is listed or admitted
to trading. Further, the Company may refrain from issuing, delivering or
transferring any Award or any security issuable in connection with such
Award until the Committee or the Board has determined that such issuance,
delivery or transfer will not violate such securities laws or rules and
regulations and that the recipient has tendered to the Company any federal,
state or local tax owed as a result of such issuance, delivery or transfer,
when the Company has a legal liability to satisfy such tax. The Company
shall not be liable for damages due to delay in the issuance, delivery or
transfer of any Award or any security issuable in connection with such Award
or any agreement, instrument or certificate evidencing such Award or
security for any reason whatsoever, including, but not limited to, a delay
caused by the listing requirements of any securities exchange or automated
quotation system or any registration requirements under the Securities Act,
the Exchange Act, or under any other state or federal law, rule or
regulation. The Company is under no obligation to take any action or incur
any expense to register or qualify the issuance, delivery or transfer of any
Award or any security issuable in connection with such Award under applicable
securities laws or to perfect any exemption from such registration or
qualification or to list any security on any securities exchange or
automated quotation system. Furthermore, the Company will have no liability
to any person for refusing to issue, deliver or transfer any Award or any
security issuable in connection with such Award if such refusal is based
upon the foregoing provisions of this Section 14. As a condition to any
issuance, delivery or transfer of any Award or any security issuable in
connection with such Award, the Company may place legends on any agreement,
instrument or certificate evidencing such Award or security, issue stop
transfer orders with respect thereto and require such agreements or
undertakings as the Company may deem necessary or advisable to assure
compliance with applicable laws or regulations, including, if the Company
or its counsel deems it appropriate, representations from the recipient of
such Award or security to the effect that such recipient is acquiring such
Award or security solely for investment and not with a view to distribution
and that no distribution of the Award or the security will be made unless
registered pursuant to applicable federal and state securities laws, or in
the opinion of counsel to the Company, such registration is unnecessary.
SECTION 15. ADJUSTMENTS UPON THE OCCURRENCE OF
A REORGANIZATION OR CORPORATE TRANSACTION
15.1 Reorganization. In the event of a Reorganization, the number of
Shares subject to this Plan and to each outstanding Award, and the exercise
price of each Award which is based upon Shares, shall (to the extent deemed
appropriate by the Committee or the Board) be proportionately adjusted (as
determined by the Committee or the Board in its sole discretion) to account
for any increase or decrease in the number of issued and outstanding Shares
of the Company resulting from such Reorganization.
15.2 Corporate Transaction with the Company as Survivor. If a Corporate
Transaction is consummated and immediately following the consummation of such
Corporate Transaction the Persons who were holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction do not
receive any securities or other property (hereinafter collectively referred to
as "Transactional Consideration") as a result of such Corporate Transaction and
substantially all of such Persons continue to hold the shares of Common Stock
held by them immediately prior to the consummation of such Corporate
Transaction (in substantially the same proportions relative to each other),
the Awards will remain outstanding and will (subject to the provisions of
Sections 6.1, 6.5(c), 7.1 and 9.1 of this Plan) continue in full force and
effect in accordance with its terms (without any modification) following the
consummation of the Corporate Transaction.
15.3 Corporate Transaction with Company Being Acquired. If a Corporate
Transaction is consummated and immediately following the consummation of such
Corporate Transaction the Persons who were holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction do receive
Transactional Consideration as a result of such Corporate Transaction or
substantially all of such Persons do not continue to hold the shares of Common
Stock held by them immediately prior to the consummation of such Corporate
Transaction (in substantially the same proportions relative to each other), the
terms and conditions of the Awards will be modified as follows:
(1) If the documentation pursuant to which a Corporate Transaction
will be consummated provides for the assumption (by the entity issuing
Transactional Consideration to the Persons who were the holders of shares of
Common Stock immediately prior to the consummation of such Corporate
Transaction) of the Awards granted pursuant to this Plan without any
modification or amendment (other than Permitted Modifications and the
modifications contemplated by Sections 6.1, 6.5(c), 7.1 and 11.1 of this
Plan), such Awards will remain outstanding and will continue in full force
and effect in accordance with its terms following the consummation of such
Corporate Transaction (subject to such Permitted Modifications and the
provisions of Sections 6.1, 6.5(c), 7.1 and 11.1 of the Plan).
(2) If the documentation pursuant to which a Corporate Transaction
will be consummated does not provide for the assumption (by the entity issuing
Transactional Consideration to the Persons who were the holders of shares of
Common Stock immediately prior to the consummation of such Corporate
Transaction) of the Awards granted pursuant to this Plan without any
modification or amendment (other than Permitted Modifications), all vesting
restrictions (performance based or otherwise) applicable to Awards which
will not be so assumed will accelerate and the holders of such Awards may
(subject to the expiration of the term of such Awards) exercise/receive the
benefits of such Awards without regard to such vesting restrictions during
the ten (10) day period immediately preceding the consummation of such
Corporate Transaction. For purposes of the immediately preceding sentence,
all performance based goals will be deemed to have been satisfied in full.
The Company will provide each Participant holding Awards which will not be
so assumed with reasonable notice of the termination of such vesting
restrictions and the impending termination of such Awards. Upon the
consummation of such a Corporate Transaction, all unexercised Awards which
are not to be so assumed will automatically terminate and cease to be
outstanding. Nothing contained in this Section 15 will be deemed to extend
the term of an Award or to revive any Award which has previously lapsed or
been canceled, terminated or surrendered.
SECTION 16. AMENDMENT OR TERMINATION OF THIS PLAN
16.1 Amendment of This Plan. Notwithstanding anything contained in this
Plan to the contrary, all provisions of this Plan (including, without
limitation, the maximum number of Shares that may be issued with respect to
Awards to be granted pursuant to this Plan) may at any time or from time to
time be modified or amended by the Board; provided, however, that no Award
at any time outstanding pursuant to this Plan may be modified, impaired or
canceled adversely to the holder of the Award without the consent of such
holder.
16.2 Termination of This Plan. The Board may suspend or terminate this
Plan at any time, and such suspension or termination may be retroactive or
prospective. Termination of this Plan shall not impair or affect any Award
previously granted hereunder and the rights of the holder of the Award shall
remain in effect until the Award has been exercised in its entirety or has
expired or otherwise has been terminated by the terms of such Award.
SECTION 17. AMENDMENTS AND ADJUSTMENTS TO AWARDS
The Committee or the Board may amend, modify or terminate any outstanding
Award with the Participant's consent at any time prior to payment or exercise
in any manner not inconsistent with the terms of this Plan, including, without
limitation, (a) to change the date or dates as of which and/or the terms and
conditions pursuant to which (i) a Stock Option becomes exercisable or (ii) a
Performance Award is deemed earned, (b) to amend the terms of any outstanding
Award to provide an exercise price per share which is higher or lower than the
then current exercise price per share of such outstanding Award or (c) to
cancel an Award and grant a new Award in substitution therefor under such
different terms and conditions as the Committee or the Board determines in
its sole discretion to be appropriate, including, but not limited to, having
an exercise price per share which may be higher or lower than the exercise
price per share of the canceled Award. The Committee or the Board may also
make adjustments in the terms and conditions of, and the criteria included
in agreements evidencing Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 15 of
this Plan) affecting the Company, or the financial statements of the Company
or any Subsidiary, or of changes in applicable laws, regulations or
accounting principles, whenever the Committee or the Board determines that
such adjustments are appropriate to prevent reduction or enlargement of
the benefits or potential benefits intended to be made available pursuant
to this Plan. Any provision of this Plan or any agreement regarding an Award
to the contrary notwithstanding, the Committee or the Board may cause any
Award granted to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in
value to the Fair Market Value of such canceled Award. The determinations of
value pursuant to this Section 17 shall be made by the Committee or the
Board in its sole discretion.
SECTION 18. GENERAL PROVISIONS
18.1 No Limit on Other Compensation Arrangements. Nothing contained in
this Plan shall prevent the Company from adopting or continuing in effect other
compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.
18.2 No Right to Employment or Continuation of Relationship. Nothing in
this Plan or in any Award, nor the grant of any Award, shall confer upon or be
construed as giving any Participant any right to remain in the employ of the
Company or a Subsidiary or to continue as a Consultant or Non-Employee
Director. Further, the Company or a Subsidiary may at any time dismiss a
Participant from employment or terminate the relationship of any Consultant
or Non-Employee Director with the Company or any Subsidiary, free from any
liability or any claim pursuant to this Plan, unless otherwise expressly
provided in this Plan or in any agreement evidencing an Award made under
this Plan. No Consultant, Non-Employee Director or employee of the Company
or any Subsidiary shall have any claim to be granted any Award, and there
is no obligation for uniformity of treatment of any Consultant, Non-Employee
Director or employee of the Company or any Subsidiary or of any Participants.
18.3 GOVERNING LAW. THE VALIDITY, CONSTRUCTION AND EFFECT OF THIS PLAN
AND ANY RULES AND REGULATIONS RELATING TO THIS PLAN SHALL BE DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MISSISSIPPI, WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF.
18.4 Severability. If any provision of this Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or as to any individual or Award, or would disqualify this
Plan or any Award under any law deemed applicable by the Committee or the
Board, such provision shall be construed or deemed amended to conform to
applicable law, or if it cannot be construed or deemed amended without, in
the sole determination of the Committee or the Board, materially altering
the intent of this Plan or the Award, such provision shall be stricken as
to such jurisdiction, individual or Award and the remainder of this Plan
and any such Award shall remain in full force and effect.
18.5 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award, and the Committee or the Board
shall determine, in its sole discretion, whether cash, other securities or
other property shall be paid or transferred in lieu of any fractional Shares
or whether such fractional Shares or any rights thereto shall be canceled,
terminated or otherwise eliminated.
18.6 Headings. Headings are given to the Sections and Subsections of this
Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
18.7 Effective Date. The provisions of this Plan that relate to the grant
of Incentive Stock Options shall be effective as of the date of the approval of
this Plan by the stockholders of the Company.
18.8 Transferability of Awards. Awards shall not be transferable
otherwise than by will or the laws of descent and distribution without the
written consent of the Committee or the Board (which may be granted or withheld
at the sole discretion of the Committee or the Board). Awards may be exercised,
during the lifetime of the holder, only by the holder. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of an Award
contrary to the provisions hereof, or the levy of any execution, attachment
or similar process upon an Award shall be null and void and without effect.
Phantom Stock Awards may be transferred to a Participant's children,
grandchildren, spouse, one or more trusts for the benefit of family members
or a partnership in which such family members are the only partners;
provided; however, that the participant may not receive any consideration
for the transfer.
18.9 Rights of Participants. Except as expressly provided in this Plan,
any Person to whom an Award is granted shall have no rights by reason of any
subdivision or consolidation of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, reorganization, merger
or consolidation or spinoff of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class or securities convertible
into shares of stock of any class shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or exercise price of Shares
subject to an Award.
18.10 No Limitation Upon the Rights of the Company. The grant of an Award
pursuant to this Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, or changes of its capital or
business structure; to merge, convert or consolidate; to dissolve or liquidate;
or sell or transfer all or any part of its business or assets.
18.11 Date of Grant of an Award. Except as noted in this Section 18.11,
the granting of an Award shall take place only upon the execution and delivery
by the Company and the Participant of a written agreement and neither any other
action taken by the Committee or the Board nor anything contained in this Plan
or in any resolution adopted or to be adopted by the Committee, the Board or
the stockholders of the Company shall constitute the granting of an Award
pursuant to this Plan. Solely, for purposes of determining the Fair Market
Value of the Shares subject to an Award, such Award will be deemed to have
been granted as of the date specified by the Committee or the Board
notwithstanding any delay which may elapse in executing and delivering the
applicable agreement.
18.12 Tax Withholding. Whenever the Company proposes or is required to
distribute Common stock under the Plan, the Company may require the recipient
to remit to the Company an amount sufficient to satisfy any federal, state
and local tax withholding requirements prior to the delivery of any
certificate for such shares or, in the discretion of the Committee, the
Company may withhold from the Common Stock to be delivered shares sufficient
to satisfy all or a portion of such tax withholding requirements. Whenever
under the Plan payments are to be made in cash, such payments may be net of
an amount sufficient to satisfy any federal, state and local tax withholding
requirements.
