<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
----- -----
Commission File Number 0-22645
LAMALIE ASSOCIATES, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
Florida 59-2776441
------- ----------
<S> <C>
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
200 Park Avenue
New York, New York
10166-0136
-------------------
(Address of Principal Executive Offices)
(212) 953-7900
-------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
At September 30, 1998, the Registrant had outstanding 8,011,557 shares of
$.01 par value common stock.
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LAMALIE ASSOCIATES, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
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<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Income
for the three and six-month periods
ended August 31, 1998 and 1997 3
Condensed Consolidated Balance Sheets at
August 31, 1998 and February 28, 1998 4
Condensed Consolidated Statements of Cash Flows
for the six-month periods ended
August 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
PART II. OTHER INFORMATION 13
SIGNATURES 15
</TABLE>
2
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LAMALIE ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
-------------------------- -------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fee revenue, net $ 24,179 $ 16,773 $ 47,673 $ 30,498
Operating expenses:
Compensation and benefits 16,389 12,957 33,747 23,501
General and administrative 5,298 2,071 8,975 3,875
Goodwill amortization 194 -- 400 --
-------- -------- -------- --------
Total operating expenses 21,881 15,028 43,122 27,376
-------- -------- -------- --------
Operating income 2,298 1,745 4,551 3,122
Interest income (expense), net 306 37 188 (108)
-------- -------- -------- --------
Income before provision for income taxes 2,604 1,782 4,739 3,014
Provision for income taxes 1,432 766 2,370 1,296
-------- -------- -------- --------
Net income $ 1,172 $ 1,016 $ 2,369 $ 1,718
======== ======== ======== ========
Basic net income per common share $ .15 $ .22 $ .36 $ .45
======== ======== ======== ========
Weighted average common shares 7,716 4,552 6,671 3,797
======== ======== ======== ========
Diluted net income per common and
common equivalent share $ .15 $ .22 $ .35 $ .45
======== ======== ======== ========
Weighted average common and common
equivalent shares 7,889 4,657 6,906 3,850
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 4
LAMALIE ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
(unaudited)
ASSETS August 31, February 28,
1998 1998
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,148 $ 23,780
Short-term investments 38,402 --
Accounts receivable, less allowance of $1,850 and $2,120, respectively 26,778 22,219
Prepaid expenses 2,355 1,420
Refundable income taxes -- 1,822
Deferred tax assets 1,043 486
--------- --------
Total current assets 73,726 49,727
--------- --------
Property and equipment, net of accumulated depreciation and amortization of $3,220
and $2,608, respectively 7,892 5,612
Non-current deferred tax assets 5,184 3,698
Goodwill, net of accumulated amortization of $417 and $17, respectively 22,902 24,790
Other assets 7,672 5,089
--------- --------
Total assets $ 117,376 $ 88,916
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 5,006 $ 6,807
Accrued compensation 11,001 20,573
Income taxes payable 1,794 --
Current maturities of long-term debt 3,994 3,070
Other current liabilities 681 8,976
--------- --------
Total current liabilities 22,476 39,426
--------- --------
Accrued rent 1,015 1,013
Deferred compensation 8,427 6,951
Long-term debt, less current maturities 5,861 6,055
--------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.01 par value; 3,000,000 shares authorized; no
shares issued and outstanding -- --
Common stock; $0.01 par value; 35,000,000 shares authorized;
8,011,557 and 5,576,446 shares issued and outstanding, respectively 80 56
Additional paid-in capital 74,631 32,873
Cumulative translation adjustment (25) --
Retained earnings 4,911 2,542
--------- --------
Total stockholders' equity 79,597 35,471
--------- --------
Total liabilities and stockholders' equity $ 117,376 $ 88,916
========= ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 5
LAMALIE ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months
Ended August 31,
-----------------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,369 $ 1,718
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 612 404
Goodwill amortization 400 --
Amortization of deferred compensation 283 --
Changes in operating assets and liabilities (14,308) (2,601)
-------- --------
Net cash used in operating activities (10,644) (479)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments available for sale (38,271) --
Capital expenditures (2,892) (679)
Investment in life insurance (875) (1,366)
Acquisition of Ward Howell International, Inc. (8,384) --
-------- --------
Net cash used in investing activities (50,422) (2,045)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 1,000 4,576
Repayments (40) (6,270)
Proceeds from public offering of common stock 41,411 24,980
Other issuances of common stock 88 --
-------- --------
Net cash provided by financing activities 42,459 23,286
-------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (18,607) 20,762
CASH AND CASH EQUIVALENTS, at beginning of period 23,780 1,662
Foreign currency translation adjustment (25) --
-------- --------
CASH AND CASH EQUIVALENTS, at end of period $ 5,148 $ 22,424
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE> 6
LAMALIE ASSOCIATES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Condensed Consolidated Financial Statements
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of August 31, 1998 and February 28, 1998, and the results of
operations for the three- and six-month periods ended August 31, 1998 and 1997
and cash flows for the six-month periods ended August 31, 1998 and 1997.
The condensed consolidated financial statements include the financial position
and results of operations of the Company and its wholly-owned subsidiaries. All
material intercompany profits, transactions and balances have been eliminated.
These condensed consolidated financial statements, including the condensed
consolidated balance sheet as of February 28, 1998, which has been derived from
audited financial statements, are presented in accordance with the requirements
of Form 10-Q and consequently may not include all disclosures normally required
by generally accepted accounting principles or those normally made in the
Company's Annual Report on Form 10-K. The accompanying condensed consolidated
financial statements and related notes should be read in conjunction with the
Company's Annual Report on Form 10-K/A as filed with the Securities and Exchange
Commission on June 12, 1998.
Note 2. Short-term Investments
As of August 31, 1998, short-term investments consists of investments in
commercial paper and investments in Federal Home Loan Bank discount notes. These
securities are classified as available-for-sale, and accounted for in accordance
with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." All securities mature within
fiscal 1999 with the latest maturity date being February 1, 1999. There have
been no sales or transfers of securities during the current year.
Note 3. Net Income Per Common and Common Equivalent Share
Basic net earnings per common share ("basic EPS") was determined by dividing the
net income by the weighted average number of shares of common stock outstanding
during the period. Diluted net earnings per common and common equivalent share
("diluted EPS") was determined by dividing the net income by the weighted
average number of shares of common stock outstanding and dilutive common
equivalent shares from stock options using the treasury stock method and from
convertible debt assuming conversion upon issuance. The following reconciles the
numerator and denominator of basic EPS to diluted EPS:
6
<PAGE> 7
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
August 31, 1998 August 31, 1997
--------------------------------------------- --------------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Income available to common
stockholders $1,172 7,716 $ .15 $1,016 4,552 $ .22
EFFECT OF DILUTIVE
SECURITIES
Options -- 117 -- 105
Convertible promissory note 12 56 -- --
------ ----- ------ -----
DILUTED EPS
Income available to common
stockholders + assumed
conversions $1,184 7,889 $ .15 $1,016 4,657 $ .22
====== ===== ====== ====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
August 31, 1998 August 31, 1997
--------------------------------------------- --------------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
<S> <C> <C> <C> <C> <C> <C>
BASIC EPS
Income available to common
stockholders $2,369 6,671 $ .36 $1,718 3,797 $ .45
EFFECT OF DILUTIVE
SECURITIES
Options -- 178 -- 53
Convertible promissory note 23 57 -- --
------ ----- ------ -----
DILUTED EPS
Income available to common
stockholders + assumed
conversions $2,392 6,906 $ .35 $1,718 3,850 $ .45
====== ===== ====== ====== ===== =====
</TABLE>
All share and per share information in these condensed consolidated financial
statements has been adjusted to give effect to the 1,000 to one common stock
split and par value restatement which became effective June 3, 1997, in
connection with the reincorporation of the Company in Florida.
Note 4. Newly Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS
130). SFAS 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in the financial statements and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in-capital in the stockholders' equity section of
the consolidated balance sheets for annual financial statements. The Company
adopted SFAS 130 in fiscal 1999 and accordingly, comprehensive income is as
follows:
7
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31,
-------------------------- --------------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 1,172 $ 1,016 $ 2,369 $ 1,718
Other comprehensive income (loss), net
of tax:
Translation adjustment (29) -- (25) --
------- ------- ------- -------
Comprehensive income $ 1,143 $ 1,016 $ 2,344 $ 1,718
======= ======= ======= =======
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FISCAL 1999 COMPARED TO FISCAL 1998
Fee revenue. The Company's fee revenue increased 44.2% and 56.3% respectively,
to $24.2 million and $47.7 million for the three- and six-month periods ended
August 31, 1998, compared to $16.8 million and $30.5 million for the same
periods in fiscal 1998. As of August 31, 1998, the total number of consultants
employed was 125, an increase of 62 since August 31, 1997, including 35
consultants hired in connection with two acquisitions during the fourth quarter
of fiscal 1998, and 13 consultants hired in the London, England office which
opened in May 1998. The average fee revenue per consultant employed for a full
year decreased 14.1%, to $438,000 for the six-month period ended August 31,
1998, compared to $510,000 for the same period in fiscal 1998. Approximately
$38,000 per consultant was related to two multiple placement assignments during
the three-month period ended August 31, 1997, that generated much higher fees
than typical assignments and were non-recurring. This decrease also resulted
from consultants added through acquisitions of companies which had historically
lower consultant productivity. The average first-year cash compensation of
positions for which the Company conducted searches decreased 17.9% to $193,000
for the six-month period ended August 31, 1998, compared to $235,000 for the
same period in fiscal 1998, also attributable primarily to acquisitions.
Compensation and benefits. Compensation and benefits increased 26.5% and 43.6%,
respectively, to $16.4 million and $33.7 million for the three- and six-month
periods ended August 31, 1998, compared to $13.0 million and $23.5 million for
the same periods in fiscal 1998. As a percentage of fee revenue, compensation
and benefits decreased to 67.8% and 70.9%, respectively, for the three- and
six-month periods ended August 31, 1998, compared to 77.2% and 77.1%,
respectively, for the same periods in fiscal 1998. This decrease was due to
lower discretionary compensation accruals in the three-month period ended August
31, 1998, as well as
8
<PAGE> 9
a reversal during the current period of approximately $1.4 million of
discretionary compensation which was accrued in prior periods. Reversals of
discretionary compensation are not expected to recur in future quarters. In
addition, the Company revised its compensation plan for consultants which
reduced the accrual for the formula-based component of their compensation by
approximately $300,000. The Company also recorded a charge of approximately
$200,000 related to severance payments accrued in connection with certain
employee terminations.
General and administrative expenses. General and administrative expenses
increased approximately $3.2 million and $5.1 million, respectively, to $5.3
million and $9.0 million for the three- and six-month periods ended August 31,
1998, compared to $2.1 million and $3.9 million for the same periods in fiscal
1998. As a percentage of fee revenue, general and administrative expenses
increased to 21.9% and 18.8% for the three- and six-month periods ended August
31, 1998, compared to 12.4% and 12.7% for the same period in fiscal 1998. These
increases were primarily due to start-up costs associated with the London
office. The Company also incurred travel and meeting expenses related to
conferences designed to focus marketing efforts within practice group areas,
provide post-acquisition cultural integration, and train new consultants. These
expenses were higher than the Company has typically experienced due to the
significant number of new employees as a result of recent acquisitions and the
opening of the London office.
Goodwill amortization. Goodwill amortization was $194,000 and $400,000,
respectively, for the three- and six-month periods ended August 31, 1998,
compared to no amortization for the same periods in fiscal 1998. This change was
a result of goodwill acquired in connection with two acquisitions during the
fourth quarter of fiscal 1998.
Operating income. Operating income increased 31.7% and 45.8%, respectively, to
$2.3 million and $4.6 million for the three- and six-month periods ended August
31, 1998, compared to $1.7 million and $3.1 million for the same periods in
fiscal 1998. This change was primarily the result of an increase in fee revenue
and a decrease in compensation and benefits as a percentage of fee revenue which
were partially offset by an increase in general and administrative expenses as a
percentage of fee revenue.
Net interest income (expense). Net interest income increased $269,000 to
$306,000 for the three-month period ended August 31, 1998, compared to $37,000
for the same period in fiscal 1998. The Company received $188,000 of interest
income for the six-month period ended August 31, 1998, as compared to net
interest expense incurred of $108,000 for the same period in fiscal 1998. These
changes were a result of earnings associated with investment of the net proceeds
from the secondary public offering in June 1998.
Provision for income taxes. The effective income tax rate for the six-month
period ended August 31, 1998, of 50.0% varied from the statutory rates of 34%
and 31% for domestic and international operations, respectively. A significant
portion of the difference between the statutory rate and the effective rate is
due to the foreign subsidiary operating in a loss position since it began
operations in May 1998. The remainder of the difference is a result of state and
local income tax effects and the non-deductibility of certain expenses,
including goodwill amortization, premiums on key person life insurance policies,
and a portion of meals and entertainment.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
On June 9, 1998, the Company completed a public offering covering 3.2 million
shares (including an over-allotment exercised) of its common stock,
approximately 2.3 million of which were offered by the Company, with the balance
being offered by certain stockholders of the Company. Net proceeds to the
Company from the offering were approximately $41.4 million. The Company expects
to use the net proceeds of the offering to pursue strategic domestic and
international acquisitions, to support continued enhancements to the Company's
technology-based infrastructure and for general corporate purposes.
The Company relies primarily upon cash flows from operations and available
borrowings under its credit facilities to finance its operations. During the
six-month period ended August 31, 1998, cash used in operations was
approximately $10.6 million. A significant portion of the Company's compensation
expense for fiscal 1998 was accrued and paid shortly after the end of the
Company's fiscal year. This resulted in significant cash outflows during the
Company's first quarter. In addition, the Company experienced significant cash
outflows during the second quarter of fiscal 1999 to provide the working capital
for the start-up of the London office. To provide additional liquidity, the
Company has obtained a line of credit from a bank to provide credit facilities
of approximately $25 million. Borrowings under these facilities will accrue
interest at various rates based on either a LIBOR index or the bank's prime
lending rate, as determined at the Company's option. Outstanding borrowings
under the Company's credit facilities at August 31, 1998 were $1,000,000.
Nothing was outstanding at August 31, 1997.
Capital expenditures totaled approximately $2.9 million for the six-month period
ended August 31, 1998. These expenditures consisted primarily of upgrades to
information systems, purchases of office furniture and equipment and leasehold
improvements with a significant portion related to the London office.
Additionally, investments in life insurance policies intended to fund the
Company's deferred compensation liabilities were approximately $875,000.
The Company believes that funds from operations, its expanded credit facilities,
and the net proceeds from the secondary offering will be sufficient to meet its
anticipated working capital, capital expenditure, and general corporate
requirements for the foreseeable future.
YEAR 2000 COMPLIANCE
The Company has completed its assessment of its internal systems and believes
that all internal systems are Year 2000 compliant. The Company is currently
assessing Year 2000 issues related to its third-party vendors' states of Year
2000 readiness and the potential impact, if any, of any lack of readiness on the
Company's operations. This analysis is expected to be complete by the end of
fiscal 1999. Based on its preliminary assessment, the Company does not expect to
be materially affected by any non-compliant third-party vendors. Nevertheless,
the Company intends to identify alternate vendors during its assessment. The
Company believes that costs associated with Year 2000 compliance will not have a
material impact on the Company's financial statements.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Quarterly Report on Form 10-Q contain
forward-looking statements that are based on the current beliefs and
expectations of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. Such statements
include those regarding general economic and executive search industry trends
and the Company's ability to successfully execute its international acquisition
and growth strategies.
Because such statements involve risks and uncertainties, actual actions and
strategies and the timing and expected results thereof may differ materially
from those expressed or implied by such forward-looking statements, and the
Company's future results, performance, or achievements could differ materially
from those expressed in, or implied by, any such forward-looking statements.
Future events and actual results could differ materially from those set forth in
or underlying the forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. These potential risks and uncertainties
include dependence on attracting and retaining qualified executive search
consultants, portability of client relationships, restrictions imposed by
blocking arrangements, competition, implementation of acquisition strategy,
reliance on information processing systems, and employment liability risk. In
addition to the factors noted above, other risks, uncertainties, assumptions,
and factors that could affect the Company's financial results are described in
the Company's Annual Report on Form 10-K/A filed with the Securities and
Exchange Commission on June 12, 1998.
10
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its 1998 Annual Meeting of Stockholders on September 29, 1998.
The record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting was August 5, 1998. At the close of business on such
date, there were 8,009,706 shares of Common Stock outstanding, of which
5,864,047 shares were represented at the meeting in person or by proxy. Proxies
for the meeting were solicited by the Company's Board of Directors in accordance
with applicable securities laws and regulations, and there was no solicitation
in opposition to the Board's nominees for directors or the Board's
recommendation on any proposal as listed in the proxy statement.
At the Annual Meeting, the stockholders elected three directors, each to serve
for a three year term. The three nominees for such positions, all of whom were
elected as directors at the meeting, the number of votes cast for the election
of each such nominee and the number of shares as to which authority to vote for
such nominee was withheld, were: (1) Joe D. Goodwin - 4,976,757 votes for,
authority withheld for 887,290 shares; (2) John C. Pope - 5,725,721 votes for,
authority withheld for 138,326 shares and (3) Neal L. Maslan - 5,368,436 votes
for, authority withheld for 495,611 shares. There were no votes abstaining and
no broker non-votes in the election of directors, and there was no provision for
voting "against" any nominee. Robert L. Pearson, Roderick C. Gow, John S.
Rothschild, John F. Johnson, Ray J. Groves and Richard W. Pogue also continue to
serve as directors.
At the Annual Meeting, the stockholders also adopted a proposal to approve the
Company's 1998 Omnibus Stock and Incentive Plan (the "1998 Employee Stock
Plan"). Of the shares present at the Annual Meeting, 2,910,494 shares voted for
such proposal, 2,093,369 shares voted against such proposal, 13,857 shares
abstained from voting on such proposal and there were 846,327 broker non-votes
as to such proposal.
At the Annual Meeting, the stockholders also adopted a proposal to approve an
increase in the number of shares covered by the 1998 Employee Stock Plan from
1,000,000 shares to 1,500,000 shares. Of the shares present at the Annual
Meeting, 3,030,404 shares voted for such proposal, 1,973,259 shares voted
against such proposal, 14,057 shares abstained from voting on such proposal and
there were 846,327 broker non-votes as to such proposal.
At the Annual Meeting, the stockholders also adopted a proposal to ratify the
appointment of Arthur Andersen LLP as the Company's firm of independent
certified public accountants for the fiscal year ending February 28, 1999. Of
the shares present at the Annual Meeting, 5,833,819 shares voted for such
proposal, 26,871 shares voted against such proposal, 3,357 shares abstained from
voting on such proposal and there were no broker non-votes as to such proposal.
11
<PAGE> 12
ITEM 5. OTHER INFORMATION
On October 9, 1998, the Company announced that the Compensation and Management
Development Committee of the Board of Directors (the "Compensation Committee")
had approved a stock option repricing program. Under the program, employees will
have the opportunity to exchange some of their outstanding options for a smaller
number of newly issued options with an initial exercise price of $8.00-$10.00
per share. The program was effective as of October 8, 1998. The Company's stock
closed at $6.75 on October 8, 1998.
In the announcement, it was noted that the then recent downturn in the stock
market and decline in the Company's stock price had adversely impacted stock
options as effective employee incentives. After carefully studying the issue,
the Compensation Committee concluded that a repricing program was necessary to
provide appropriate equity-based incentives to retain and motivate search
consultants and other key employees, and to improve the overall performance of
the Company. For these reasons, the Compensation Committee found the repricing
program to be in the best interests of all stockholders. The Compensation
Committee received information regarding the economic value of options and other
advice from a nationally prominent consulting firm.
The program generally provides that for employees, other than executive
officers, outstanding options with an exercise price of $12.00 per share may be
exchanged for new options with an exercise price of $8.00 per share, on the
basis of 100 outstanding options surrendered for 80 new options; and outstanding
options with an exercise price higher than $12.00 per share may be exchanged for
new options with an exercise price of $8.00 per share, on the basis of 100
outstanding options surrendered for 60 new options. The new options will
generally vest over four years, at the rate of 25% per year.
The program provides less favorable terms for options granted to executive
officers. Outstanding options held by executive officers with an exercise price
of $12.00 per share or higher may be exchanged for new options with an exercise
price of $10.00 per share, on the basis of 100 outstanding options surrendered
for 70 new options. Most of these new options will vest 100% only after a
three-year waiting period. Most of the Company's executive officers are also
search consultants for the Firm.
The program, which is voluntary, potentially covers up to approximately 1.5
million options, or approximately 84% of all options currently outstanding, and
covers options with initial exercise prices ranging between $12.00 and $21.50
per share. Options granted with exercise prices lower than $12.00 per share are
not eligible to participate in the program. The Company's Compensation Committee
consists of three independent directors. Options issued to members of the
Compensation Committee are not affected by the program.
12
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
2.1 (4) --Agreement and Plan of Merger dated February 27, 1998, by and among Lamalie
Associates, Inc., LAI Mergersub, Inc. and Ward Howell International, Inc.
2.2 (4) --Asset Purchase Agreement dated December 29, 1997, by and among Lamalie
Associates, Inc., Chartwell Partners International, Inc. and David DeWilde
3.1 (1) --Articles of Incorporation of the Registrant as now in effect
3.2 --Bylaws of the Registrant as now in effect
4 (1) --Form of Common Stock Certificate
10.1 (3) --Definitive 1997 Omnibus Stock and Incentive Plan
10.2 --Non-Employee Directors' Stock Option Plan
10.3 --Profit Sharing and Savings Plan
10.4 (1) --1997 Employee Stock Purchase Plan
10.5 (1) --Form of Agreement for Deferred Compensation Plan
10.6 (1) --Managing Partners' Compensation Plan
10.7 (1) --Partners' Compensation Plan
10.8 (1) --Employment Agreement for Mr. Gow
10.9 --1998 Omnibus Stock and Incentive Plan
10.10 (1) --Employment Agreement for Mr. Rothschild +
</TABLE>
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<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.11 (2) --Form of Indemnification Agreement entered into with Messrs. Philip R.
Albright, Michael Brenner, Arthur J. Davidson, Mark P. Elliott, David W.
Gallagher, Joe D. Goodwin, Roderick C. Gow, Ray J. Groves, Harold E. Johnson,
John F. Johnson, Robert L. Pearson, Richard W. Pogue, John C. Pope, John S.
Rothschild, Thomas M. Watkins III, Jack P. Wissman
10.12 (1) --Directors' Deferral Plan
10.13 (3) --Employment Agreement with Robert L. Pearson dated October 8, 1997
10.14 (4) --Form of Employment Agreement for Former Ward Howell International, Inc. Shareholders
10.15 --Employment Agreement with Patrick J. McDonnell dated September 15, 1998
27 --Financial Data Schedule (for SEC use only)
</TABLE>
(1) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (File No. 333-26027),
originally filed April 29, 1997, as amended and as effective July 1, 1997.
(2) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended May 31,
1997, filed on August 8, 1997.
(3) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended November
30, 1997, filed on January 13, 1998.
(4) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's current Report on Form 8-K filed March 13, 1998.
(5) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Annual Report on Form 10-K/A for the year ended February 28,
1998, filed on June 12, 1998.
+ Confidential treatment has been granted with
respect to portions of this Exhibit.
14
<PAGE> 15
LAMALIE ASSOCIATES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, Registrant's principal financial officer, thereunto duly
authorized.
October 14, 1998 LAMALIE ASSOCIATES, INC.
- ----------------- (Registrant)
By: /s/ Philip R. Albright
---------------------------------
Philip R. Albright
Chief Financial Officer
(Authorized officer of
Registrant and principal
financial officer)
15
<PAGE> 1
EXHIBIT 3.2
* * * * * * *
BYLAWS
OF
LAMALIE ASSOCIATES, INC.
* * * * * * *
<PAGE> 2
BYLAWS
OF
LAMALIE ASSOCIATES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
- ----- ----
<S> <C> <C>
ARTICLE I
OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Notice of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Notice of Adjourned Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Waiver of Call and Notice of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. Adjournment: Quorum for Adjourned Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 9. Voting on Matters Other Than Election of Directors . . . . . . . . . . . . . . . . . . . . . 3
Section 10. Voting for Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 11. Voting Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 12. Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 13. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 14. Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Number, Tenure and Qualifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 8. Adjournment: Quorum for Adjourned Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 9. Manner of Acting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 10. Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 11. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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<TABLE>
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Section 12. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 13. Presumption of Assent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 14. Informal Action by Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 15. Meeting by Telephone, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1. Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. Appointment and Term of Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4. Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6. Duties of Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Disaster Emergency Powers of Acting Officers. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Creation of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Other Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Removal or Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Vacancies on Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. Meetings of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Absence of Committee Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8. Quorum of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Manner of Acting of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Minutes of Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12. Informal Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2. Actions by or in the Right of this Corporation . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Obligation to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Determination that Indemnification is Proper . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Evaluation and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6. Prepayment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7. Nonexclusivity and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8. Continuation of Indemnification Right . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII
INTERESTED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. Determination of Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Approval by Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII
CERTIFICATES OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1. Certificates for Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2. Signatures of Past Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3. Transfer Agents and Registrars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5. Lost Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX
RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1. Record Date for Stockholder Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2. Record Date for Dividend and Other Distributions . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE X
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XI
FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XII
SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XIII
STOCK IN OTHER CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XIV
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XV
EMERGENCY BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 1. Scope of Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2. Call and Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3. Quorum and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4. Appointment of Temporary Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5. Modification of Lines of Succession . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6. Change of Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 7. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8. Amendment or Repeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XVI
PRECEDENCE OF LAW AND ARTICLES OF INCORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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BYLAWS
OF
LAMALIE ASSOCIATES, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of LAMALIE
ASSOCIATES, INC. (this "Corporation") shall be at such place within or without
the State of Florida as the Board of Directors of this Corporation (the "Board
of Directors" or the "Board") or the officers of this Corporation acting within
their authority shall from time to time determine.
Section 2. Other Offices. This Corporation may also have
offices at such other places both within and without the State of Florida as
the Board of Directors or the officers of this Corporation acting within their
authority may from time to time determine or the business of this Corporation
may require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the
stockholders shall be held between January 1 and December 31, inclusive, in
each year for the purpose of electing directors and for the transaction of such
other proper business as may come before the meeting, the exact date to be
established by the Board of Directors from time to time.
Section 2. Special Meetings. Special meetings of the
stockholders may be called, for any purpose or purposes, by the Board of
Directors, the Chairman of the Board (if one is so appointed) or the President
and shall be called by the President or the Secretary if the holders of not
less than 33-1/3% percent of all the votes entitled to be cast on any issue
proposed to be considered at such special meeting sign, date and deliver to
this Corporation's Secretary one or more written demands for a special meeting,
describing the purpose(s) for which it is to be held. Special meetings of the
stockholders of this Corporation may not be called by any other person or
persons. Notice and call of any such special meeting shall state the purpose
or purposes of the proposed meeting, and business transacted at any special
meeting of the stockholders shall be limited to the purposes stated in the
notice thereof.
Section 3. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Florida, as the
place of meeting for any annual or special meeting of
1
<PAGE> 6
the stockholders. If no designation is made, the place of meeting shall be the
principal executive office of this Corporation.
Section 4. Notice of Meeting. Written notice stating the place,
day and hour of an annual or special meeting and the purpose or purposes for
which it is called shall be given no fewer than ten (10) nor more than sixty
(60) days before the date of the meeting to each stockholder entitled to vote
at such meeting, except that no notice of a meeting need be given to any
stockholder for which notice is not required to be given under law. Notice may
be delivered personally, via United States mail, telegraph, teletype, facsimile
or other electronic transmission, or by private mail carriers handling
nationwide mail services, by or at the direction of the President, the
Secretary, the Board of Directors, or the person(s) calling the meeting. If
mailed via United States mail, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at the
stockholder's address as it appears on the stock transfer books of this
Corporation, with postage thereon prepaid. If the notice is mailed at least 30
days before the date of the meeting, the mailing may be done by a class of
United States mail other than first class.
Section 5. Notice of Adjourned Meeting. If an annual or special
stockholders' meeting is adjourned to a different date, time, or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before an adjournment is taken, and any business
may be transacted at the adjourned meeting that might have been transacted on
the original date of the meeting. If, however, a new record date for the
adjourned meeting is or must be fixed under law, notice of the adjourned
meeting must be given to persons who are stockholders as of the new record date
and who are otherwise entitled to notice of such meeting.
Section 6. Waiver of Call and Notice of Meeting. Call and
notice of any stockholders' meeting may be waived by any stockholder before or
after the date and time stated in the notice. Such waiver must be in writing
signed by the stockholder and delivered to this Corporation. Neither the
business to be transacted at nor the purpose of any special or annual meeting
need be specified in such waiver. A stockholder's attendance at a meeting (a)
waives such stockholder's ability to object to lack of notice or defective
notice of the meeting, unless the stockholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting; and (b)
waives such stockholder's ability to object to consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the matter
when it is presented.
Section 7. Quorum. Except as otherwise provided in these Bylaws
or in the Articles of Incorporation of this Corporation, as amended from time
to time (the "Articles of Incorporation"), a majority of the outstanding shares
of this Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of the stockholders. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting, unless a new record date is or must be set for that adjourned meeting,
and the withdrawal of stockholders after a quorum has been established at a
meeting shall not effect the validity of any action taken at the meeting or any
adjournment thereof.
Section 8. Adjournment: Quorum for Adjourned Meeting. If less
than a majority of the outstanding shares are represented at a meeting, a
majority of the shares so represented may adjourn
2
<PAGE> 7
the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented or deemed to be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 9. Voting on Matters Other Than Election of Directors.
At any meeting at which a quorum is present, action on any matter other than
the election of directors shall be approved if the votes cast by the holders of
shares represented at the meeting and entitled to vote on the subject matter
favoring the action exceed the votes cast opposing the action, unless a greater
number of affirmative votes or voting by classes is required by law, the
Articles of Incorporation or these Bylaws.
Section 10. Voting for Directors. Directors shall be elected by
a plurality of the votes cast by the shares entitled to vote at a meeting at
which a quorum is present.
Section 11. Voting Lists. At least ten (10) days prior to each
meeting of stockholders, the officer or agent having charge of the stock
transfer books for shares of this Corporation shall make a complete list of the
stockholders entitled to vote at such meeting, or any adjournment thereof, with
the address and the number, class and series (if any) of shares held by each,
which list shall be subject to inspection by any stockholder during normal
business hours for at least ten (10) days prior to the meeting. The list also
shall be available at the meeting and shall be subject to inspection by any
stockholder at any time during the meeting or its adjournment. The
stockholders list shall be prima facie evidence as to who are the stockholders
entitled to examine such list or the transfer books and to vote at any meeting
of the stockholders.
Section 12. Voting of Shares. Except as otherwise provided by
law or in the Articles of Incorporation, each stockholder entitled to vote
shall be entitled at every meeting of the stockholders to one vote in person or
by proxy on each matter for each share of voting stock held by such
stockholder. Such right to vote shall be subject to the right of the Board of
Directors to close the transfer books or to fix a record date for voting
stockholders as hereinafter provided. Treasury shares, and shares of stock of
this Corporation owned directly or indirectly by another corporation the
majority of the voting stock of which is owned or controlled by this
Corporation, shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares.
Section 13. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy, executed in writing and delivered to this
Corporation in the original or transmitted via telegram, or as a photographic,
photostatic or equivalent reproduction of a written proxy by the stockholder or
by the stockholder's duly authorized attorney-in-fact; but, no proxy shall be
valid after eleven (11) months from its date, unless the proxy provides for a
longer period. Each proxy shall be filed with the Secretary of this
Corporation before or at the time of the meeting. In the event that a proxy
shall designate two or more persons to act as proxies, a majority of such
persons present at the meeting, or, if only one is present, that one, shall
have all of the powers conferred by the proxy upon all the persons so
designated, unless the instrument shall provide otherwise.
Section 14. Inspectors. For each meeting of the stockholders,
the Board of Directors or the President may appoint one or more inspectors to
supervise the voting; and, if one or more inspectors are so appointed, all
questions respecting the qualification of any vote, the validity of any
3
<PAGE> 8
proxy, and the acceptance or rejection of any vote shall be decided by such
inspector(s). Before acting at any meeting, the inspector(s) shall take an
oath to execute their duties with strict impartiality and according to the best
of their ability. If any inspector shall fail to be present or shall decline
to act, the President shall appoint another inspector to act in his or her
place. In case of a tie vote by the inspectors on any question, the presiding
officer shall decide the issue.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of this
Corporation shall be managed by its Board of Directors, which may exercise all
such powers of this Corporation and do all such lawful acts and things as are
not by law, the Articles of Incorporation or these Bylaws directed or required
to be exercised or done only by the stockholders.
Section 2. Number, Tenure and Qualifications. The number of
directors of the Corporation shall be not less than three (3) nor more than
twelve (12), the number of the same to be fixed by resolution adopted by a vote
of a majority of the then authorized number of directors; provided that no
decrease in the number of directors shall have the effect of shortening the term
of any then incumbent director. Each director shall hold office until his or
her term of office expires and until such director's successor is duly elected
and qualifies, unless such director sooner dies, resigns or is removed by the
stockholders at any annual or special meeting. It shall not be necessary for
directors to be stockholders. All directors shall be natural persons who are 18
years of age or older.
Section 3. Annual Meeting. The Board of Directors shall hold an
annual meeting for the purpose of the election of officers and the transaction
of such other business as may come before the meeting. If no other date, place
and/or time is set by the Board for such meeting, the same shall be held at the
same place as and immediately following the annual meeting of stockholders;
and, if a majority of the directors are present at such place and time, no
prior notice of such meeting shall be required to be given to the directors.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice from time to time on such date(s), at such
time(s) and at such place(s) as shall have been determined in advance in
accordance with a schedule, resolution or other action duly adopted or taken by
the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, if there be one, or the
President. The person or persons authorized to call special meetings of the
Board of Directors may fix the place for holding any special meetings of the
Board of Directors called by such person or persons, as the case may be. If no
such designation is made, the place of meeting shall be the principal executive
office of this Corporation. Notice of any special meeting of the Board shall
be given, unless waived, in accordance with Section 6 of this Article.
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Section 6. Notice. Whenever notice of a meeting is required,
written notice stating the place, day and hour of the meeting shall be
delivered at least two (2) days prior thereto to each director, either
personally, or by United States mail, telegraph, teletype, facsimile or other
form of electronic communication, or by private mail carriers handling
nationwide mail services, to the director's business address. If notice is
given by United States mail, such notice shall be deemed to be delivered five
(5) days after deposited in the United States mail so addressed with postage
thereon prepaid or when received, if such date is earlier. If notice is given
by telegraph, teletype, facsimile transmission or other form of electronic
communication or by private mail carriers handling nationwide mail services,
such notice shall be deemed to be delivered when received by the director. Any
director may waive notice of any meeting, either before, at or after such
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened and so states at the beginning of
the meeting or promptly upon arrival at the meeting.
Section 7. Quorum. A majority of the total number of directors
as determined from time to time to comprise the Board of Directors shall
constitute a quorum.
Section 8. Adjournment: Quorum for Adjourned Meeting. If less
than a majority of the total number of directors are present at a meeting, a
majority of the directors so present may adjourn the meeting from time to time
without further notice. At any adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally noticed.
Section 9. Manner of Acting. If a quorum is present when a vote
is taken, the act of a majority of the directors present at the meeting shall
be the act of the Board of Directors unless otherwise provided in the Articles
of Incorporation.
Section 10. Removal. Subject to the rights, if any, of the
holders of shares of Preferred Stock then outstanding, any or all of the
directors of this Corporation may be removed from office at any annual or
special meeting of stockholders by the affirmative vote of at least a majority
of the then outstanding shares of Common Stock of this Corporation. Notice of
any such annual or special meeting of stockholders shall state that the removal
of a director or directors is among the purposes of the meeting and shall state
the grounds therefor. Directors may not be removed by the stockholders without
cause.
Section 11. Vacancies. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors. Any
director elected in accordance with the preceding sentence shall hold office
until the next stockholders' meeting at which directors are elected (or, if
permitted under applicable law, until the expiration of the remainder of the
full term of the class of directors in which the new directorship was created
or the vacancy occurred)and until such director's successor is duly elected and
qualifies, unless such director sooner dies, resigns or is removed by the
stockholders at any annual or special meeting. A director elected by
stockholders to fill a vacancy shall be elected for the unexpired term of such
director's predecessor in office.
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Section 12. Compensation. By resolution of the Board of
Directors, the directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors, and may be paid compensation for
attendance at each meeting of the Board of Directors or for serving as
directors. No payment shall preclude any director from serving this
Corporation in any other capacity and receiving compensation therefor.
Section 13. Presumption of Assent. A director of this
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless such director objects at the beginning of the meeting
(or promptly upon his or her arrival) to the holding of the meeting or the
transacting of specified business at the meeting or such director votes against
such action or abstains from voting in respect of such matter.
Section 14. Informal Action by Board. Any action required or
permitted to be taken by any provisions of law, the Articles of Incorporation
or these Bylaws at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if each and every member of the Board or
of such committee, as the case may be, signs a written consent thereto and such
written consent is filed in the minutes of the proceedings of the Board or such
committee, as the case may be. Action taken under this section is effective
when the last director signs the consent, unless the consent specifies a
different effective date, in which case it is effective on the date so
specified.
Section 15. Meeting by Telephone, Etc. Directors or the members
of any committee thereof shall be deemed present at a meeting of the Board of
Directors or of any such committee, as the case may be, if the meeting is
conducted using a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of this Corporation shall
consist of a Chief Executive Officer, a President, a Secretary and a Treasurer,
each of whom shall be appointed by the Board of Directors. The Board of
Directors may also appoint a Chairman of the Board, who may be an officer of
this Corporation if the Board so determines, one or more Vice Presidents, one
or more Assistant Secretaries and Assistant Treasurers and such other officers
as the Board of Directors shall deem appropriate. The same individual may
simultaneously hold more than one office in this Corporation.
Section 2. Appointment and Term of Office. The officers of this
Corporation shall be appointed annually by the Board of Directors at its annual
meeting. If the appointment of officers shall not be made at such meeting,
such appointment shall be made as soon thereafter as is convenient. Each
officer shall hold office until such officer's successor is duly appointed and
qualifies, unless such officer sooner dies, resigns or is removed by the Board.
The appointment of an officer does not itself create contract rights.
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Section 3. Resignation. An officer may resign at any time by
delivering notice to this Corporation. A resignation shall be effective when
the notice is delivered unless the notice specifies a later effective date. An
officer's resignation shall not affect this Corporation's contract rights, if
any, with the officer.
Section 4. Removal. The Board of Directors may remove any
officer at any time with or without cause. An officer's removal shall not
affect the officer's contract rights, if any, with this Corporation.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
Section 6. Duties of Officers. The Chairman of the Board of
this Corporation, or the President if there shall not be a Chairman of the
Board, shall preside at all meetings of the Board of Directors and of the
stockholders. The Chief Executive Officer shall be the chief executive officer
of this Corporation. The Secretary shall be responsible for preparing minutes
of the directors' and stockholders' meetings and for authenticating records of
this Corporation. Subject to the foregoing, the officers of this Corporation
shall have such powers and duties as ordinarily pertain to their respective
offices and such additional powers and duties specifically conferred by law,
the Articles of Incorporation and these Bylaws, or as may be assigned to them
from time to time by the Board of Directors or an officer authorized by the
Board of Directors to prescribe the duties of other officers.
Section 7. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors, by any duly appointed
committee thereof, or otherwise as approved by the Board, and no officer shall
be prevented from receiving a salary or other compensation by reason of the
fact that the officer is also a director of this Corporation.
Section 8. Delegation of Duties. In the absence or disability
of any officer of this Corporation, or for any other reason deemed sufficient
by the Board of Directors, the Board may delegate the powers or duties of such
officer to any other officer or to any other director for the time being.
Section 9. Disaster Emergency Powers of Acting Officers. Unless
otherwise expressly prescribed by action of the Board of Directors taken
pursuant to Article XV of these Bylaws, if, as a result of some catastrophic
event, a quorum of this Corporation's directors cannot readily be assembled and
the Chief Executive Officer is unable to perform the duties of the office of
Chief Executive Officer and/or other officers are unable to perform their
duties, (a) the powers and duties of Chief Executive Officer shall be held and
performed by that officer of this Corporation highest on the list of successors
(adopted by the Board of Directors for such purpose) who shall be available and
capable of holding and performing such powers and duties; and, absent any such
prior designation, by the President; or, if the President is not available and
capable of holding and performing such powers and duties, then by that Vice
President who shall be available and capable of holding and performing such
powers and duties whose surname commences with the earliest letter of the
alphabet among all such Vice Presidents; or, if no Vice President is available
and capable of holding and performing such powers and duties, then by the
Secretary; or, if the Secretary is likewise unavailable,
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by the Treasurer; (b) the officer so selected to hold and perform such powers
and duties shall serve as Acting Chief Executive Officer until the Chief
Executive Officer again becomes capable of holding and performing the powers
and duties of Chief Executive Officer, or until the Board of Directors shall
have elected a new Chief Executive Officer or designated another individual as
Acting Chief Executive Officer; (c) such officer (or the Chief Executive
Officer, if such person is still serving) shall have the power, in addition to
all other powers granted to the Chief Executive Officer by law, the Articles of
Incorporation, these Bylaws and the Board of Directors, to appoint acting
officers to fill vacancies that may have occurred, either permanently or
temporarily, by reason of such disaster or emergency, each of such acting
appointees to serve in such capacity until the officer for whom the acting
appointee is acting is capable of performing the duties of such office, or
until the Board of Directors shall have designated another individual to
perform such duties or shall have elected or appointed another person to fill
such office; (d) each acting officer so appointed shall be entitled to exercise
all powers invested by law, the Articles of Incorporation, these Bylaws and the
Board of Directors in the office in which such person is serving; and (e)
anyone transacting business with this Corporation may rely upon a certificate
signed by any two officers of this Corporation that a specified individual has
succeeded to the powers and duties of the Chief Executive Officer or such other
specified office. Any person, firm, corporation or other entity to which such
certificate has been delivered by such officers may continue to rely upon it
until notified of a change by means of a writing signed by two officers of this
corporation.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
Section 1. Creation of Committees. The Board of Directors may
designate an Executive Committee and one or more other committees, each to
consist of two (2) or more of the directors of this Corporation.
Section 2. Executive Committee. The Executive Committee, if
there shall be one, shall consult with and advise the officers of this
Corporation in the management of its business, and shall have, and may
exercise, except to the extent otherwise provided in the resolution of the
Board of Directors creating such Executive Committee, such powers of the Board
of Directors as can be lawfully delegated by the Board.
Section 3. Other Committees. Such other committees, to the
extent provided in the resolution or resolutions creating them, shall have such
functions and may exercise such powers of the Board of Directors as can be
lawfully delegated.
Section 4. Removal or Dissolution. Any Committee of the Board
of Directors may be dissolved by the Board at any meeting; and any member of
such committee may be removed by the Board of Directors with or without cause.
Such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 5. Vacancies on Committees. Vacancies on any committee
of the Board of Directors shall be filled by the Board of Directors at any
regular or special meeting.
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Section 6. Meetings of Committees. Regular meetings of any
committee of the Board of Directors may be held without notice from time to
time on such date(s), at such time(s) and at such place(s) as shall have been
determined in advance in accordance with a schedule, resolution or other action
duly adopted or taken by such committee and special meetings of any such
committee may be called by any member thereof upon two (2) days notice of the
date, time and place of the meeting given to each of the other members of such
committee, or on such shorter notice as may be agreed to in writing by each of
the other members of such committee, given either personally or in the manner
provided in Section 6 of Article III of these Bylaws (pertaining to notice for
directors' meetings).
Section 7. Absence of Committee Members. The Board of Directors
may designate one or more directors as alternate members of any committee of
the Board of Directors, who may replace at any meeting of such committee, any
member not able to attend.
Section 8. Quorum of Committees. At all meetings of committees
of the Board of Directors, a majority of the total number of members of the
committee as determined from time to time shall constitute a quorum for the
transaction of business.
Section 9. Manner of Acting of Committees. If a quorum is
present when a vote is taken, the act of a majority of the members of any
committee of the Board of Directors present at the meeting shall be the act of
such committee.
Section 10. Minutes of Committees. Each committee of the Board
of Directors shall keep regular minutes of its proceedings and report the same
to the Board of Directors when required.
Section 11. Compensation. Members of any committee of the Board
of Directors may be paid compensation in accordance with the provisions of
Section 12 of Article III of these Bylaws (pertaining to compensation of
directors).
Section 12. Informal Action. Any committee of the Board of
Directors may take such informal action and hold such informal meetings as
allowed by the provisions of Sections 14 and 15 of Article III of these Bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. General. To the fullest extent permitted by law,
this Corporation shall be entitled but, subject to Sections 2 and 3 below, not
obligated to indemnify any person who is or was a party, or is threatened to be
made a party, to any threatened, pending or completed action, suit or other
type of proceeding (other than an action by or in the right of this
Corporation), whether civil, criminal, administrative, investigative or
otherwise, and whether formal or informal, by reason of the fact that such
person is or was a director or officer of this Corporation or is or was serving
at the request of this Corporation as a director, officer, employee, agent,
trustee or fiduciary of another corporation, partnership, joint venture, trust
(including, without limitation, an employee benefit trust)
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or other enterprise, against judgments, amounts paid in settlement, penalties,
fines (including an excise tax assessed with respect to any employee benefit
plan) and expenses (including attorneys' fees, paralegals' fees and court
costs) actually and reasonably incurred in connection with any such action,
suit or other proceeding, including any appeal thereof, if such person acted in
good faith and in a manner such person reasonably believed to be in, or not
opposed to, the best interests of this Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any such action, suit or other
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner that such person
reasonably believed to be in, or not opposed to, the best interests of this
Corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.
Section 2. Actions by or in the Right of this Corporation. To
the fullest extent permitted by law, whenever indemnification is proper as
determined below, this Corporation shall be obligated to indemnify any person
who is or was a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or other type of proceeding (as further
described in Section 1 of this Article VI) by or in the right of this
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of this Corporation or is or was serving
at the request of this Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees, paralegals' fees and court costs)
and amounts paid in settlement not exceeding, in the judgment of the Board of
Directors, the estimated expenses of litigating the action, suit or other
proceeding to conclusion, actually and reasonably incurred in connection with
the defense or settlement of such action, suit or other proceeding, including
any appeal thereof, if such person acted in good faith and in a manner such
person reasonably believed to be in, or not opposed to, the best interests of
this Corporation, except that no indemnification shall be made under this
Section 2 in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable unless, and only to the extent that, the
court in which such action, suit or other proceeding was brought, or any other
court of competent jurisdiction, shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnification for such
expenses that such court shall deem proper.
Section 3. Obligation to Indemnify. To the extent that a
director or officer has been successful on the merits or otherwise in defense
of any action, suit or other proceeding referred to in Section 1 or Section 2
of this Article VI, or in the defense of any claim, issue or matter therein,
such person shall, upon application, be indemnified against expenses (including
attorneys' fees, paralegals' fees and court costs) actually and reasonably
incurred by such person in connection therewith.
Section 4. Determination that Indemnification is Proper.
Indemnification pursuant to Section 1 or Section 2 of this Article VI, unless
made under the provisions of Section 3 of this Article VI or unless otherwise
made pursuant to a determination by a court, shall be made by this Corporation
only as authorized in the specific case upon a determination that the
indemnification is proper in the circumstances because the indemnified person
has met the applicable standard of conduct set forth in Section 1 or Section 2
of this Article VI. Such determination shall be made either
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(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or other proceeding to which
the indemnification relates; (2) if such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by the Board of
Directors (the designation being one in which directors who are parties may
participate) consisting solely of two or more directors not at the time parties
to such action, suit or other proceeding; (3) by independent legal counsel (i)
selected by the Board of Directors in accordance with the requirements of
subsection (1) or by a committee designated under subsection (2) or (ii) if a
quorum of the directors cannot be obtained and a committee cannot be
designated, selected by majority vote of the full Board of Directors (the vote
being one in which directors who are parties may participate); or (4) by the
stockholders by a majority vote of a quorum consisting of stockholders who were
not parties to such action, suit or other proceeding or, if no such quorum is
obtainable, by a majority vote of stockholders who were not parties to such
action, suit or other proceeding.
Section 5. Evaluation and Authorization. Evaluation of the
reasonableness of expenses and authorization of indemnification shall be made
in the same manner as is prescribed in Section 4 of this Article VI for the
determination that indemnification is permissible; provided, however, that if
the determination as to whether indemnification is permissible is made by
independent legal counsel, the persons who selected such independent legal
counsel shall be responsible for evaluating the reasonableness of expenses and
may authorize indemnification.
Section 6. Prepayment of Expenses. Expenses (including
attorneys' fees, paralegals' fees and court costs) incurred by a director or
officer in defending a civil or criminal action, suit or other proceeding
referred to in Section 1 or Section 2 of this Article VI may, in the discretion
of the Board of Directors, be paid by this Corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if such person is ultimately found not
to be entitled to indemnification by this Corporation pursuant to this Article
VI.
Section 7. Nonexclusivity and Limitations. The indemnification
and advancement of expenses provided pursuant to this Article VI shall not be
deemed exclusive of any other rights to which a person may be entitled under
any law, Bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in such person's official capacity and as to
action in any other capacity while holding office with this Corporation, and
shall continue as to any person who has ceased to be a director or officer and
shall inure to the benefit of such person's heirs and personal representatives.
The Board of Directors may, at any time, approve indemnification of or
advancement of expenses to any other person that this Corporation has the power
by law to indemnify, including, without limitation, employees and agents of
this Corporation. In all cases not specifically provided for in this Article
VI, indemnification or advancement of expenses shall not be made to the extent
that such indemnification or advancement of expenses is expressly prohibited by
law.
Section 8. Continuation of Indemnification Right. Unless
expressly otherwise provided when authorized or ratified by this corporation,
indemnification and advancement of expenses as provided for in this Article VI
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person. For purposes of this Article VI, the term
"corporation" includes, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a
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consolidation or merger, so that any person who is or was a director or officer
of a constituent corporation, or is or was serving at the request of a
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, is in the
same position under this Article VI with respect to the resulting or surviving
corporation as such person would have been with respect to such constituent
corporation if its separate existence had continued.
Section 9. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of this Corporation, or who is or was serving at the request of this
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity
or arising out of such person's status as such, whether or not this Corporation
would have the power to indemnify such person against the liability under
Section 1 or Section 2 of this Article VI.
ARTICLE VII
INTERESTED PARTIES
Section 1. General. No contract or other transaction between
this Corporation and any one or more of its directors or any other corporation,
firm, association or entity in which one or more of its directors are directors
or officers or are financially interested shall be either void or voidable
because of such relationship or interest, because such director or directors
were present at the meeting of the Board of Directors or of a committee thereof
that authorizes, approves or ratifies such contract or transaction or because
such director's or directors' votes are counted for such purpose if: (a) the
fact of such relationship or interest is disclosed or known to the Board of
Directors or committee that authorizes, approves or ratifies the contract or
transaction by a vote or consent sufficient for the purpose without counting
the votes or consents of such interested directors; (b) the fact of such
relationship or interest is disclosed or known to the stockholders entitled to
vote on the matter, and they authorize, approve or ratify such contract or
transaction by vote or written consent; or (c) the contract or transaction is
fair and reasonable as to this Corporation at the time it is authorized by the
Board of Directors, a committee thereof or the stockholders.
Section 2. Determination of Quorum. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or a committee thereof that authorizes, approves or
ratifies a contract or transaction referred to in Section 1 of this Article
VII.
Section 3. Approval by Stockholders. For purposes of Section
1(b) of this Article VII, a conflict of interest transaction shall be
authorized, approved or ratified if it receives the vote of a majority of the
shares entitled to be counted under this Section 3. Shares owned by or voted
under the control of a director who has a relationship or interest in the
transaction described in Section 1 of this Article VII may not be counted in a
vote of stockholders to determine whether to authorize, approve or ratify a
conflict of interest transaction under Section 1(b) of this Article VII. The
vote of the shares owned by or voted under the control of a director who has a
relationship or interest in
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the transaction described in Section 1 of this Article VII, shall be counted,
however, in determining whether the transaction is approved under other
sections of this Corporation's Bylaws and law. A majority of those shares that
would be entitled, if present, to be counted in a vote on the transaction under
this Section 3 shall constitute a quorum for the purpose of taking action under
this Section 3.
ARTICLE VIII
CERTIFICATES OF STOCK
Section 1. Certificates for Shares. Shares may but need not be
represented by certificates. The rights and obligations of stockholders shall
be identical whether or not their shares are represented by certificates. If
shares are represented by certificates, each certificate shall be in such form
as the Board of Directors may from time to time prescribe, signed (either
manually or in facsimile) by the President or a Vice President (and may be
signed (either manually or in facsimile) by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and sealed with the seal
of this Corporation or its facsimile), exhibiting the holder's name, certifying
the number of shares owned and stating such other matters as may be required by
law. The certificates shall be numbered and entered on the books of this
Corporation as they are issued. If shares are not represented by certificates,
then, within a reasonable time after issue or transfer of shares without
certificates, this Corporation shall send the stockholder a written statement
in such form as the Board of Directors may from time to time prescribe,
certifying as to the number of shares owned by the stockholder and as to such
other information as would have been required to be on certificates for such
shares.
If and to the extent this Corporation is authorized to issue shares of
more than one class or more than one series of any class, every certificate
representing shares shall set forth or fairly summarize upon the face or back
of the certificate, or shall state that the Corporation will furnish to any
stockholder upon request and without charge a full statement of:
(a) the designations, relative rights, preferences and limitations
of the shares of each class or series authorized to be issued;
(b) the variations in rights, preferences and limitations between
the shares of each such series, if this Corporation is authorized to issue any
preferred or special class in series insofar as the same have been fixed and
determined; and
(c) the authority of the Board of Directors to fix and determine
the variations, relative rights and preferences of future series.
Section 2. Signatures of Past Officers. If the person who
signed (either manually or in facsimile) a share certificate no longer holds
office when the certificate is issued, the certificate shall nevertheless be
valid.
Section 3. Transfer Agents and Registrars. The Board of
Directors may, in its discretion, appoint responsible banks or trust companies
in such city or cities as the Board may deem advisable
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from time to time to act as transfer agents and registrars of the stock of this
Corporation; and, when such appointments shall have been made, no stock
certificate shall be valid until countersigned by one of such transfer agents
and registered by one of such registrars.
Section 4. Transfer of Shares. Transfers of shares of this
Corporation shall be made upon its books by the holder of the shares in person
or by the holder's lawfully constituted representative, upon surrender of the
certificate of stock for cancellation if such shares are represented by a
certificate of stock or by delivery to this Corporation of such evidence of
transfer as may be required by this Corporation if such shares are not
represented by certificates. The person in whose name shares stand on the
books of this Corporation shall be deemed by this Corporation to be the owner
thereof for all purposes and this Corporation shall not be bound to recognize
any equitable or other claim to or interest in such share on the part of any
other person, whether or not it shall have express or other notice thereof,
save as expressly provided by the laws of the State of Florida.
Section 5. Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by this Corporation and alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost or destroyed certificate or certificates, or the owner's
legal representative, to pay a reasonable charge for issuing the new
certificate, to advertise the matter in such manner as it shall require and/or
to give this Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against this Corporation with respect to the
certificate alleged to have been lost or destroyed.
ARTICLE IX
RECORD DATE
Section 1. Record Date for Stockholder Actions. The Board of
Directors is authorized from time to time to fix in advance a date, not more
than seventy (70) nor less than ten (10) days before the date of any meeting of
the stockholders, a date in connection with the obtaining of the consent of
stockholders for any purpose, or the date of any other action requiring a
determination of the stockholders, as the record date for the determination of
the stockholders entitled to notice of and to vote at any such meeting and any
adjournment thereof, or of the stockholders entitled to give such consent or
take such action, as the case may be. In no event may a record date so fixed
by the Board of Directors precede the date on which the resolution establishing
such record date is adopted by the Board of Directors. Only those stockholders
listed as stockholders of record as of the close of business on the date so
fixed as the record date shall be entitled to notice of and to vote at such
meeting and any adjournment thereof, or to exercise such rights or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of this Corporation after any such record date fixed as aforesaid. If
the Board of Directors fails to establish a record date as provided herein, the
record date shall be deemed to be the date ten (10) days prior to the date of
the stockholders' meeting.
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Section 2. Record Date for Dividend and Other Distributions.
The Board of Directors is authorized from time to time to fix in advance a date
as the record date for the determination of the stockholders entitled to
receive a dividend or other distribution. Only those stockholders listed as
stockholders of record as of the close of business on the date so fixed as the
record date shall be entitled to receive the dividend or other distribution, as
the case may be, notwithstanding any transfer of any stock on the books of this
Corporation after any such record date fixed as aforesaid. If the Board of
Directors fails to establish a record date as provided herein, the record date
shall be deemed to be the date of authorization of the dividend or other
distribution.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and this
Corporation may pay, dividends on its outstanding shares of capital stock in
the manner and upon the terms and conditions provided by the Articles of
Incorporation and by law. Subject to the provisions of the Articles of
Incorporation and to law, dividends may be paid in cash or property, including
shares of stock or other securities of this Corporation.
ARTICLE XI
FISCAL YEAR
The fiscal year of this Corporation shall be the period selected by
the Board of Directors as the fiscal year.
ARTICLE XII
SEAL
A corporate seal, if adopted by the Board, shall have the name of this
Corporation, the word "SEAL" and the year of incorporation inscribed thereon,
or be in such other form as the Board may determine, and may be a facsimile,
engraved, printed or impression seal.
ARTICLE XIII
STOCK IN OTHER CORPORATIONS
Shares of stock in other corporations held by this Corporation shall
be voted by the President or such other officer or officers or other agent or
agents of this Corporation as the Board of Directors shall from time to time
designate for the purpose or by a proxy thereunto duly authorized by the Board
or the President.
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ARTICLE XIV
AMENDMENTS
Except as may be contrary to law of the Articles of Incorporation of
this Corporation, these Bylaws may be altered, amended or repealed in any
respect and one or more new Bylaws may be adopted by the Board of Directors;
provided that any Bylaw or amendment thereto as adopted by the Board of
Directors may be altered, amended or repealed by vote of the stockholders
entitled to vote thereon, or a new Bylaw in lieu thereof may be adopted by the
stockholders, and the stockholders may prescribe in any Bylaw made by them that
such Bylaw shall not be altered, amended or repealed by the Board of Directors.
ARTICLE XV
EMERGENCY BYLAWS
Section 1. Scope of Emergency Bylaws. The emergency Bylaws
provided in this Article XV shall be operative during any emergency,
notwithstanding any different provision set forth in the preceding Articles
hereof; provided, however, that to the extent not inconsistent with the
provisions of this Article XV and the emergency Bylaws, the Bylaws provided in
the preceding Articles shall remain in effect during such emergency. For
purposes of the emergency Bylaw provisions of this Article XV, an emergency
shall exist if a quorum of this Corporation's directors cannot readily be
assembled because of some catastrophic event. Upon termination of the
emergency, these emergency Bylaws shall cease to be operative.
Section 2. Call and Notice of Meeting. During any emergency, a
meeting of the Board of Directors may be called by any officer or director of
this Corporation. Notice of the date, time and place of the meeting shall be
given by the person calling the meeting to such of the directors as it may be
feasible to reach by any available means of communication. Such notice shall
be given at such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
Section 3. Quorum and Voting. At any such meeting of the Board
of Directors, a quorum shall consist of any one or more directors, and the act
of the majority of the directors present at such meeting shall be the act of
this Corporation.
Section 4. Appointment of Temporary Directors.
(a) The director or directors who are able to be
assembled at a meeting of directors during an emergency may assemble for the
purpose of appointing, if such directors deem it necessary, one or more
temporary directors (the "Temporary Directors") to serve as directors of this
Corporation during the term of any emergency.
(b) If no directors are able to attend a meeting of
directors during an emergency, then such stockholders as may reasonably be
assembled shall have the right, by majority vote of those
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assembled, to appoint Temporary Directors to serve on the Board of Directors
until the termination of the emergency.
(c) If no stockholders can reasonably be assembled in
order to conduct a vote for Temporary Directors, then the President or his or
her successor, as determined pursuant to Section 9 of Article IV herein, shall
be deemed a Temporary Director of this Corporation, and such President or his
or her successor, as the case may be, shall have the right to appoint
additional Temporary Directors to serve with him or her on the Board of
Directors of this Corporation during the term of the emergency.
(d) Temporary Directors shall have all of the rights,
duties and obligations of directors appointed pursuant to Article III hereof,
provided, however, that a Temporary Director may be removed from the Board of
Directors at any time by the person or persons responsible for appointing such
Temporary Director, or by vote of the majority of the stockholders present at
any meeting of the stockholders during an emergency, and, in any event, the
Temporary Director shall automatically be deemed to have resigned from the
Board of Directors upon the termination of the emergency in connection with
which the Temporary Director was appointed.
Section 5. Modification of Lines of Succession. Either before
or during any emergency, the Board of Directors may provide, and from time to
time modify, lines of succession different from that provided in Section 9 of
Article IV in the event that during such an emergency any or all officers or
agents of this Corporation shall for any reason be rendered incapable of
discharging their duties.
Section 6. Change of Principal Office. The Board of Directors
may, either before or during any such emergency, and effective during such
emergency, change the principal office of this Corporation or designate several
alternative head offices or regional offices, or authorize the officers of this
Corporation to do so.
Section 7. Limitation of Liability. No officer, director or
employee acting in accordance with these emergency Bylaws during an emergency
shall be liable except for willful misconduct.
Section 8. Amendment or Repeal. These emergency Bylaws shall be
subject to amendment or repeal by further action of the Board of Directors or
by action of the stockholders, but no such amendment or repeal shall affect the
validity of any action taken prior to the time of such amendment or repeal. Any
amendment of these emergency Bylaws may make any further or different provision
that may be practical or necessary under the circumstances of the emergency.
ARTICLE XVI
PRECEDENCE OF LAW AND ARTICLES OF INCORPORATION
Any provision of the Articles of Incorporation of this Corporation
shall, subject to law, control and take precedence over any provision of these
Bylaws inconsistent therewith.
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EXHIBIT 10.2
LAMALIE ASSOCIATES, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 29, 1998
<PAGE> 2
LAMALIE ASSOCIATES, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED AND RESTATED AS OF SEPTEMBER 29, 1998
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of the Lamalie Associates, Inc. Non-Employee
Directors' Stock Option Plan is to secure for Lamalie Associates, Inc. and its
stockholders the benefits of the incentive inherent in increased common stock
ownership by the members of the Board of Directors of the Company who are not
employees of the Company or any of its Subsidiaries.
1.2 MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common
Stock that may be offered under the Plan is 80,000, subject to adjustment as
provided in Section 3.1 below. The Common Stock to be issued may be either
authorized and unissued shares or issued shares acquired by the Company or its
Subsidiaries. In the event that Options granted under the Plan shall terminate
or expire without being exercised in whole or in part, new Options may be
granted covering the shares not purchased under such lapsed Options.
1.3 DEFINITIONS. The following words and terms as used herein shall have
that meaning set forth therefor in this Section 1.3 unless a different meaning
is clearly required by the context. Whenever appropriate, words used in the
singular shall be deemed to include the plural and vice versa, and the masculine
gender shall be deemed to include the feminine gender.
1.3.1 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company.
1.3.2 "CODE" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time, or any successor statute. Reference to a
specific section of the Code shall include a reference to any successor
provision.
1.3.3 "COMMITTEE" is defined in Section 1.4.
1.3.4 "COMMON STOCK" shall mean the common stock of the Company.
1.3.5 "COMPANY" shall mean Lamalie Associates, Inc. and its
successors.
1.3.6 "EFFECTIVE DATE" is defined in Section 3.9.
<PAGE> 3
1.3.7 "FAIR MARKET VALUE" of the shares of Common Stock shall mean
the closing price, on the date in question (or, if no shares are traded on such
day, on the next preceding day on which shares were traded), of the Common Stock
on the principal securities exchange in the United States on which such stock is
listed, or if such stock is not listed on a securities exchange in the United
States, the closing price on such day in the over-the-counter market as reported
by the National Association of Security Dealers Automated Quotation System
(NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market
value of such stock as determined by the Committee in good faith and based on
all relevant factors.
1.3.8 "NSO" shall mean a nonqualified stock option granted in
accordance with the provisions of Article 2 of this Plan.
1.3.9 "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of
Directors who is not an employee of the Company or any Subsidiary.
1.3.10 "OPTION" shall mean an NSO, as defined in Section 1.3.8
above.
1.3.11 "OPTIONEE" shall mean a Non-Employee Director to whom an
Option is granted under the Plan.
1.3.12 "PLAN" shall mean the Lamalie Associates, Inc. Non-Employee
Directors' Stock Option Plan, as set forth herein and as amended from time to
time.
1.3.13 "SUBSIDIARY" shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code.
1.4 ADMINISTRATION. The Plan shall be administered by a Committee
comprised of members of the Board (the "Committee").
1.4.1 The Committee shall have all the powers vested in it by the
terms of the Plan, such powers to include authority (within the limitations
described herein) to prescribe the form of the agreement embodying awards of
nonqualified stock options made under the Plan. The Committee shall, subject to
the provisions of the Plan, grant Options, and have the power to construe the
Plan, to determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decision of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive. The Committee may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Committee.
1.4.2 To the fullest extent permitted by law, each person who is or
shall have been a member of the Committee shall be indemnified and held harmless
by the Company against and from
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<PAGE> 4
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided
that the person shall give the Company an opportunity, at its own expense, to
handle and defend the same before the person undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation or Bylaws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
1.5 ELIGIBILITY REQUIREMENTS. Each Non-Employee Director shall be
eligible to receive Options in accordance with Article 2 below. The adoption of
this Plan shall not be deemed to give any director any right to or be granted
options to purchase Common Stock, except to the extent and upon such terms and
conditions as set forth in this Plan.
ARTICLE 2
TERMS AND CONDITIONS OF OPTIONS
2.1 GRANT. Options granted under the Plan shall be evidenced by an
agreement in such form as the Board shall prescribe from time to time in
accordance with the Plan and shall comply with the terms and conditions set
forth under this Article 2.
2.2 NUMBER OF SHARES. Each Non-Employee Director shall be granted an
Option for 5,000 shares of Common Stock upon his initial appointment to the
Board. In addition, each year, as of the date of the Annual Meeting of
Stockholders of the Company, each Non-Employee Director who is then reelected or
who is continuing as a member of the Board after the adjournment of the Annual
Meeting shall be granted an Option for 5,000 shares of Common Stock.
2.3 OPTION PRICE. The Option exercise price shall be the Fair Market
Value of the Common Stock on the date of the grant of the Option.
2.4 METHOD OF EXERCISE. An Option may be exercised by a Non-Employee
Director during such time as may be permitted by the Option and the Plan by
providing written notice to the Board and tendering the purchase price in
accordance with the provisions of Section 2.5, and complying with any other
exercise requirements contained in the Option or promulgated from time to time
by the Board.
2.5 METHOD OF PAYMENT. Each Option shall state the method of payment of
the Option price upon the exercise of the Option. The method of payment stated
in the Option shall include payment in full (a) in United States dollars in cash
or by check, bank draft or money order payable
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<PAGE> 5
to the order of the Company, (b) in the discretion of and in the manner
determined by the Board, by the delivery of shares of Common Stock already owned
by the Optionee, (c) by any other legally permissible means acceptable to the
Board at the time of the grant of the Option (including cashless exercise as
permitted under the Federal Reserve Board's Regulation T, subject to applicable
legal restrictions), or (d) in the discretion of the Board, through a
combination of (a), (b) and (c) of this Section 2.5. If the option price is paid
in whole or in part through the delivery of shares of Common Stock, the decision
of the Board with respect to the Fair Market Value of such shares shall be final
and conclusive.
2.6 TERM AND EXERCISE OF OPTIONS.
2.6.1 One hundred percent (100%) of the total number of shares of
Common Stock covered by the Option shall become exercisable beginning with the
first anniversary of the date of the grant of the Option and shall be
exercisable by the Non-Employee Director for a period of ten (10) years from the
date of grant. Not less than one hundred (100) shares may be exercised at any
one time unless the number exercised is the total number at the time exercisable
under the Option.
2.6.2 Notwithstanding the foregoing, no Option or any part of an
Option shall be exercisable (a) before the Non-Employee Director has served one
term-year as a member of the Board since the date such Option was granted (as
used herein, the term "term-year" means that period from one Annual Meeting to
the subsequent Annual Meeting), (b) after the expiration of ten (10) years from
the date the Option was granted, and (c) unless written notice of the exercise
is delivered to the Company specifying the number of shares to be purchased and
payment in full is made for the shares of Common Stock being acquired thereunder
at the time of exercise.
2.7 DEATH OR OTHER TERMINATION OF POSITION AS A DIRECTOR. Subject to the
provisions of Section 2.6:
2.7.1 In the event that a Non-Employee Director (a) is removed as a
director for dishonesty or violation of his or her fiduciary duty to the
Company, (b) voluntarily resigns under or followed by such circumstances as
would constitute a violation of his or her fiduciary duty to the Company, or (c)
commits an act of dishonesty not discovered by the Company prior to the
cessation of his or her services as a Non-Employee Director but that would have
resulted in his or her removal if discovered prior to such date, then forthwith
from the happening of any such event, any Option then held by him or her shall
terminate and become void to the extent that it then remains unexercised.
2.7.2 If a person shall cease to be a Non-Employee Director for any
reason other than one or more of the reasons set forth in section 2.7.1, such
person, or in the case of death, the executors, administrators, legatees or
distributees of such person, as the case may be, may, at any time prior to the
date of the expiration of the Option, exercise the Option with respect to any
shares of Common Stock as to which such person has not exercised the Option on
the date the person ceased to be such a Non-Employee Director.
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<PAGE> 6
2.7.3 In the event any Option is exercised by the executors,
administrators, legatees or distributees of the estate of a deceased Optionee,
the Company shall be under no obligation to issue Common Stock thereunder unless
and until the Company is satisfied that the person or persons exercising the
Option are the duly appointed legal representatives of the deceased Optionee's
estate or the proper legatees or distributees thereof.
2.8 TRANSFERABILITY OF OPTIONS. The Option shall not be transferable by
the Optionee otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him.
2.9 DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable
after the exercise of an Option, the Company shall deliver, or cause to be
delivered, to the Non-Employee Director exercising the Option, a certificate or
certificates representing the shares of Common Stock purchased upon the
exercise. Certificates representing shares of Common Stock to be delivered to a
Non-Employee Director shall be registered in the name of such director.
2.10 RIGHTS AS A STOCKHOLDER. A Non-Employee Director shall have no
rights as a stockholder with respect to any shares of Common Stock covered by
his or her Option until the date on which he or she becomes a record owner of
the shares purchased upon the exercise of the Option (the "record ownership
date"). No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions, or other rights
for which the record date is prior to the record ownership date.
ARTICLE 3
MISCELLANEOUS
3.1 STOCK ADJUSTMENTS.
3.1.1 In the event of any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or other division or
consolidation of shares or the payment of a stock dividend (but only on Common
Stock) or any other increase or decrease in the number of such shares effected
without any receipt of consideration by the Company, then, in any such event,
the number of shares of Common Stock that remain available under the Plan, the
number of shares of Common Stock covered by each outstanding Option, and the
purchase price per share of Common Stock covered by each outstanding Option
shall be proportionately and appropriately adjusted for any such increase or
decrease.
3.1.2 Subject to any required action by the stockholders, if any
change occurs in the Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or of any similar change affecting Common Stock, then, in any such
event, the number and type of shares covered by each outstanding Option, and the
purchase price
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<PAGE> 7
per share of Common Stock covered by each outstanding Option, shall be
proportionately and appropriately adjusted for any such change. A dissolution or
liquidation of the Company shall cause each outstanding Option to terminate.
3.1.3 In the event of a change in the Common Stock as presently
constituted that is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any change shall be deemed to be shares of
Common Stock within the meaning of the Plan.
3.1.4 To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by, and in the
discretion of, the Committee, whose determination in that respect shall be
final, binding and conclusive.
3.1.5 Except as hereinabove expressly provided in this Section 3.1,
a Non-Employee Director shall have no rights by reason of any division or
consolidation of shares 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, merger or consolidation,
or spin-off of assets or stock of another corporation; and any issuance by the
Company of shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option.
3.1.6 The existence of the Plan, and the grant of any Option
pursuant to the Plan, shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate, or to dissolve,
to liquidate, to sell, or to transfer all or any part of its business or assets.
3.2 LISTING AND REGISTRATION OF COMMON STOCK. Each Option shall be
subject to the requirement that if at any time the Board of Directors shall
determine, in its discretion, that the listing, registration or qualification of
the Common Stock covered thereby upon any securities exchange or under any state
or federal laws, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the granting
of such Option or the issuance or purchase of shares thereunder, such Option may
not be exercised unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board. Notwithstanding anything in the Plan to the
contrary, if the provisions of this Section 3.2 become operative, and if, as a
result thereof, the exercise of an Option is delayed, then and in that event,
the term of the Option shall not be affected. Notwithstanding the foregoing or
any other provision in the Plan, the Company shall have no obligation under the
Plan to cause any shares of Common Stock to be registered or qualified under any
federal or state law or listed on any stock exchange or admitted to any national
marketing system.
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<PAGE> 8
3.3 TERM OF THE PLAN. The Plan shall terminate upon the earlier of the
following dates or events: (a) upon the adoption of a resolution of the Board
terminating the Plan; or (b) ten years from the Effective Date.
3.4 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as
permitted by law, from time to time, with respect to any shares of Common Stock
at the time not subject to Options, suspend, discontinue or terminate the Plan
or revise or amend it in any respect whatsoever.
3.5 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Options will be used for general
corporate purposes.
3.6 NO OBLIGATION TO EXERCISE. The granting of any Option under the Plan
shall impose no obligation upon any Optionee to exercise such Option.
3.7 NO IMPLIED RIGHTS TO DIRECTORS. Except as expressly provided for in
the Plan, no Non-Employee Director or other person shall have any claim or right
to be granted an Option under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Non-Employee Director any right to be
retained as a Director or in any other capacity.
3.8 WITHHOLDING. Whenever the Company proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Company shall have the
right to require the Optionee to remit to the Company an amount sufficient to
satisfy any federal, state or local withholding tax liability prior to the
delivery of any certificate or certificates for such shares. Whenever under the
Plan payments are to be made in cash, such payments shall be made net of an
amount sufficient to satisfy any federal, state or local withholding tax
liability.
3.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become
effective upon the satisfaction of all the following conditions, with the
Effective Date being the date that the last such condition is satisfied:
3.9.1 the adoption of the Plan by the Board of Directors; and
3.9.2 the closing of the initial public offering of the Common
Stock.
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<PAGE> 1
EXHIBIT 10.3
TWENTY-THIRD AMENDMENT
OF THE
LAI WARD HOWELL, INC.
PROFIT SHARING AND SAVINGS PLAN
AMENDED AND RESTATED
AS OF
AUGUST 1, 1998
This Twenty-Third Amendment of the LAI Ward Howell, Inc. Profit Sharing
and Savings Plan (formerly known as the Lamalie Associates, Inc. Profit Sharing
and Savings Plan) is made and entered into this 30th day of July, 1998, but is
effective for all purposes as of August 1, 1998, except as may be otherwise
noted herein, by Lamalie Associates, Inc. (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has previously adopted the LAI Ward Howell Profit
Sharing and Savings Plan (formerly known as the Lamalie Associates, Inc. Profit
Sharing Plan), which has been amended from time to time (as amended to date, the
"Plan"); and
WHEREAS, the Company is authorized and empowered to amend the Plan
further; and
WHEREAS, the Company deems it advisable and in the best interests of
the Participants to amend the Plan further to add a cash or deferred arrangement
to the Plan and to make other desired changes.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
to read as follows:
ARTICLE I
DEFINITIONS
(a) "ACCOUNT" or "ACCOUNTS" shall mean a Participant's Employer
Contribution Account, Elective Contribution Account, Matching Contribution
Account, Non-Elective Contribution Account, Rollover Contribution Account,
Voluntary Contribution Account and/or such other accounts as may be established
by the Plan Administrator.
(b) "ACTUAL CONTRIBUTION PERCENTAGE" shall mean, with respect to a
group of Participants for the Plan Year, the average of the Actual Contribution
Ratios (calculated separately for each member of the group) of each Participant
who is a member of such group.
<PAGE> 2
(c) "ACTUAL CONTRIBUTION RATIO" shall mean the ratio of the amount of
matching and voluntary contributions (including elective and/or qualified
non-elective contributions, if any, treated as matching contributions in
accordance with Treasury Regulation Section 1.401(m)-1(b)(5)) made on behalf of
a Participant for a Plan Year to the Participant's Compensation for the Plan
Year.
(d) "ACTUAL DEFERRAL PERCENTAGE" shall mean, with respect to a group of
Participants for the Plan Year, the average of the Actual Deferral Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group.
(e) "ACTUAL DEFERRAL RATIO" shall mean the ratio of the amount of
elective contributions (including matching and non-elective contributions, if
any, treated as elective contributions, and including elective contributions by
Highly Compensated Employees in excess of the limitation set forth in paragraph
(a)(1)(A) of Article VI to the extent required by Treasury Regulation Section
1.402(g)-1(e)(1)(ii)) made on behalf of a Participant for a Plan Year to the
Participant's Compensation for the Plan Year.
(f) "ADMINISTRATOR" shall mean the Plan Administrator.
(g) "AFFILIATE" shall mean, with respect to an Employer, any
corporation other than such Employer that is a member of a controlled group of
corporations, within the meaning of Section 414(b) of the Code, of which such
Employer is a member; all other trades or businesses (whether or not
incorporated) under common control, within the meaning of Section 414(c) of the
Code, with such Employer; any service organization other than such Employer that
is a member of an affiliated service group, within the meaning of Section 414(m)
of the Code, of which such Employer is a member; and any other organization that
is required to be aggregated with such Employer under Section 414(o) of the
Code. For purposes of determining the limitations on Annual Additions, the
special rules of Section 415(h) of the Code shall apply.
(h) "AGREEMENT AND DECLARATION OF TRUST" shall mean the agreement
providing for the Trust Fund, as it may be amended from time to time.
(i) "ANNUAL ADDITIONS" shall mean the sum of:
(1) the amount of Employer contributions allocated to the
Participant under any defined contribution plan maintained by an
Employer or an Affiliate;
(2) the amount of the Employee's contributions (other than rollover
contributions, if any) to any contributory defined contribution plan
maintained by an Employer or an Affiliate;
(3) any forfeitures allocated to the Participant under any defined
contribution plan maintained by an Employer or an Affiliate; and
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(4) if the Participant is a Key Employee, to the extent required by
law, any contributions allocated to any individual account on behalf of
such Participant under Section 401(h) or Section 419A(d) of the Code.
(j) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors
of the Company.
(k) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute. Reference to a specific section of the Code shall include
a reference to any successor provision.
(l) "COMPANY" shall mean Lamalie Associates, Inc. and its successors.
(m) "COMPENSATION" shall mean, with respect to a Participant, the
regular salaries and wages, overtime pay, bonuses and commissions paid by an
Employer, but shall not include third party disability payments, stock options,
relocation expense payments, benefits under this Plan, any amount contributed to
any pension, employee welfare, life insurance or health insurance plan or
arrangement, or any other tax-favored fringe benefits. No Compensation in excess
of $150,000 (adjusted under such regulations as may be issued by the Secretary
of the Treasury) shall be taken into account for any Employee; for these
purposes, if any Employee is a Family Member of a Highly Compensated Employee
who is (1) a 5% owner of an Employer or (2) one of the ten Highly Compensated
Employees paid the greatest amount of Compensation during the Plan Year, then
such Family Member shall not be considered as a separate Employee and any
Compensation paid to such Family Member shall be treated as if it were paid to
or on behalf of the related Highly Compensated Employee.
(n) "DIRECT ROLLOVER" shall mean a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(o) "DISTRIBUTEE" shall mean
(1) a Participant, or former Participant, who is entitled to
benefits payable as a result of his retirement, disability or other
severance of employment as provided in Article VIII;
(2) a Participant's, or former Participant's, surviving spouse who
is entitled to death benefits payable pursuant to paragraph (d) of
Article VIII; and
(3) a Participant's, or former Participant's, spouse or former
spouse who is the alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, entitled to benefits
payable as provided by paragraph (b)(2) of Article XVI.
(p) "EFFECTIVE DATE" of this Amendment shall mean August 1, 1998,
except as may otherwise be noted herein.
(q) "ELIGIBLE RETIREMENT PLAN" shall mean an individual retirement
account described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in Section
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<PAGE> 4
401(a) of the Code that will accept a Distributee's Eligible Rollover
Distribution; provided, however, that in the case of an Eligible Rollover
Distribution to a Participant's, or former Participant's, surviving spouse who
is entitled to death benefits payable pursuant to paragraph (d) of Article VIII,
an Eligible Retirement Plan shall mean only an individual retirement account
described in Section 408(a) of the Code or an individual retirement annuity
described in Section 408(b) of the Code.
(r) "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean any distribution of all
or any portion of the balance to the credit of a Distributee, other than:
(1) any distribution made under the provisions of paragraph
(b)(1)(A) of Article IX that is one of a series of substantially equal
periodic payments made for a specified period of ten years or more;
(2) any distribution to the extent that such distribution is
required under Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Notwithstanding the preceding provisions of this subparagraph (D), an
Eligible Rollover Distribution shall not include one or more
distributions during a Plan Year if the aggregate amount distributed
during the Plan Year is less than $200 (adjusted under such regulations
as may be issued from time to time by the Secretary of the Treasury).
(s) "ELECTIVE CONTRIBUTION ACCOUNT" shall mean an account established
pursuant to Article VII(b) with respect to contributions made under salary
reduction arrangements pursuant to paragraph (a) of Article VI.
(t) "EMPLOYEE" shall mean any person employed by an Employer or an
Affiliate. The term "Employee" shall also include any individual required to be
treated as an Employee by reason of Section 414(n) of the Code (but only for the
purposes specified in such Section 414(n)).
(u) "EMPLOYER" shall mean the Company, LAI Ward Howell, Inc. and any
subsidiary, related corporation, or other entity that adopts this Plan with the
consent of the Company.
(v) "EMPLOYER CONTRIBUTION ACCOUNT" shall mean an account established
pursuant to Article VII(b) with respect to Employer contributions made to this
Plan pursuant to paragraph (c) of Article VI.
(w) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor statute. References to a specific section of
ERISA shall include references to any successor provisions.
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<PAGE> 5
(x) "FAMILY MEMBER" of a Highly Compensated Employee shall mean such
Employee's spouse, lineal descendant or ascendant, or the spouse of his lineal
descendant or ascendant; provided, however, that for purposes of determining the
$150,000 limit on a Highly Compensated Employee's Compensation for Plan Years
beginning before January 1, 1997, the term "Family Member" shall include only
the Employee's spouse and his lineal descendants who have not attained age 19
before the close of the Plan Year.
(y) "HIGHLY COMPENSATED EMPLOYEE" shall mean any Employee who:
(1) was a 5% owner of an Employer at any time during the Plan Year
or the preceding Plan Year; or
(2) for the preceding Plan Year,
(A) had Section 415 Compensation in excess of $80,000
(adjusted under such regulations as may be issued by the Secretary
of the Treasury), and
(B) if an Employer elects the application of this section (B)
for such preceding Plan Year, was a member of the "top paid group."
As used herein, "top paid group" shall mean all Employees who are
in the top 20% of the Employer's work force on the basis of Section
415 Compensation paid during the year.
The term "Highly Compensated Employee" shall also mean any former Employee who
separated from service (or was deemed to have separated from service) prior to
the Plan Year, performs no service for an Employer during the Plan Year, and was
an actively employed Highly Compensated Employee in the separation year or any
Plan Year ending on or after the date the Employee attained age 55.
(z) "HOUR OF SERVICE" shall mean
(1) (A) an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for an Employer or an
Affiliate;
(B) an hour for which an Employee is paid, or entitled to
payment, by an Employer or an Affiliate on account of a period of
time during which no duties are performed (irrespective of whether
the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), lay-off, jury
duty, military duty or leave of absence. Notwithstanding the
preceding,
(i) no more than 501 Hours of Service shall be credited
under this section (B) to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year);
(ii) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a
period during which no duties are performed shall not be
credited to the Employee if such payment is made or
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<PAGE> 6
due under a plan maintained solely for the purpose of
complying with applicable workmen's compensation, or
unemployment compensation or disability insurance laws; and
(iii) an hour shall not be credited for a payment which
solely reimburses an Employee for medical or medically related
expenses incurred by the Employee; and
(C) an hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or an
Affiliate; provided, however, that the same Hour of Service shall
not be credited both under section (A) or section (B), as the case
may be, and under this section (C). Crediting of an Hour of Service
for back pay awarded or agreed to with respect to periods described
in section (B) shall be subject to the limitations set forth in
that section.
The definition set forth in this subparagraph (1) is subject to the special
rules contained in Department of Labor Regulations Sections 2530.200b-2(b) and
(c), and any regulations amending or superseding such Sections, which special
rules are hereby incorporated in the definition of "Hour of Service" by this
reference.
(2) An Employee required to be credited with at least one Hour of
Service during any calendar month under subparagraph (1) shall be credited with
190, and only 190, Hours of Service for such month.
(3) (A) Notwithstanding the other provisions of this "Hour of Service"
definition, in the case of an Employee who is absent from work for any
period by reason of her pregnancy, by reason of the birth of a child of
the Employee, by reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee or for
purposes of caring for such child for a reasonable period beginning
immediately following such birth or placement, the Employee shall be
treated as having those Hours of Service described in section (B).
(B) The Hours of Service to be credited to an Employee under the
provisions of section (A) are the Hours of Service that otherwise would
normally have been credited to such Employee but for the absence in
question or, in any case in which the Plan is unable to determine such
hours, eight Hours of Service per day of such absence; provided,
however, that the total number of hours treated as Hours of Service
under this subparagraph (3) by reason of any such pregnancy or
placement shall not exceed 501 hours.
(C) The hours treated as Hours of Service under this subparagraph
(3) shall be credited only in the Plan Year in which the absence from
work begins, if the crediting is necessary to prevent a One Year Break
in Service in such Plan Year or, in any other case, in the immediately
following Plan Year.
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<PAGE> 7
(D) Credit shall be given for Hours of Service under this
subparagraph (3) solely for purposes of determining whether a One Year
Break in Service has occurred for participation or vesting purposes;
credit shall not be given hereunder for any other purposes (including,
without limitation, benefit accrual).
(E) Notwithstanding any other provision of this subparagraph (3),
no credit shall be given under this subparagraph (3) unless the
Employee in question furnishes to the Administrator such timely
information as the Administrator may reasonably require to establish
that the absence from work is for reasons referred to in section (A)
and the number of days for which there was such an absence.
(aa) "KEY EMPLOYEE" shall mean any Employee or former Employee (or any
beneficiary of such Employee) who is at any time during the Plan Year (or was at
any time during the four preceding Plan Years) (1) an officer of an Employer
(within the meaning of Section 416(i)(1)(B) of the Code) having an aggregate
annual compensation from the Employer and its Affiliates in excess of 50% of the
amount in effect under Section 415(b)(1)(A) of the Code for any such Plan Year,
(2) one of the ten Employees owning (or considered as owning) the largest
interests in an Employer, owning more than a 1/2% interest in the Employer, and
having an aggregate annual compensation from the Employer and its Affiliates of
more than the limitation in effect under Section 415(c)(1)(A) of the Code for
the calendar year that includes the last day of the Plan Year (if two Employees
have equal interests in an Employer, the Employee having the greater annual
compensation from the Employer shall be deemed to have a larger interest), (3) a
5% owner of an Employer (within the meaning of Section 416(i)(1)(B) of the Code)
or (4) a 1% owner of an Employer (within the meaning of Section 416(i)(1)(B) of
the Code) having an aggregate annual compensation from the Employer and its
Affiliates of more than $150,000.
(bb) "LEAVE OF ABSENCE" shall mean the time granted to an Employee for
vacation, sick leave, temporary layoff or other purposes, all as authorized in
accordance with uniform rules adopted by his Employer from time to time. Leave
of Absence shall also include the time that an Employee serves in the armed
forces of the United States of America during a period of national emergency or
as a result of the operation of a compulsory military service law of the United
States of America and during any period after his discharge from such armed
forces in which his employment rights are guaranteed by law.
(cc) "LIMITATION YEAR" shall mean the Plan Year.
(dd) "MATCHING CONTRIBUTION ACCOUNT" shall mean an account established
pursuant to Article VII(b) with respect to contributions to this Plan on behalf
of a Participant by an Employer pursuant to paragraph (b) of Article VI.
(ee) "NON-ELECTIVE CONTRIBUTION ACCOUNT" shall mean an account
established pursuant to Article VII(b) with respect to Employer non-elective
contributions pursuant to Article VI.
(ff) "NON-KEY EMPLOYEE" shall mean, with respect to any Plan Year, an
Employee or former Employee who is not a Key Employee (including any such
Employee who formerly was a Key Employee).
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<PAGE> 8
(gg) "NORMAL RETIREMENT DATE" shall mean the date on which a
Participant attains the age of 65 years.
(hh) "ONE YEAR BREAK IN SERVICE" shall mean a Plan Year in which an
Employee has 500 or fewer Hours of Service, and it shall be deemed to occur on
the last day of any such Plan Year.
(ii) "PARTICIPANT" shall mean any eligible Employee of an Employer who
has become a Participant under the Plan and shall include any former employee of
an Employer who became a Participant under the Plan and who still has a balance
in an Account under the Plan.
(jj) "PLAN" shall mean the Profit Sharing and Savings Plan as herein
set forth, as it may be amended from time to time.
(kk) "PLAN ADMINISTRATOR" shall mean the Company.
(ll) "PLAN YEAR" shall mean the 12-month period ending on the last day
of February.
(mm) "ROLLOVER CONTRIBUTION ACCOUNT" shall mean an account established
pursuant to Article VII(b) with respect to rollover contributions to this Plan
made pursuant to paragraph (g) of Article VI.
(nn) "SECTION 415 COMPENSATION" shall mean all compensation received
by or made available to the Participant from all Employers and all Affiliates
for personal services actually rendered, but does not include deferred
compensation, stock options and other distributions that receive special tax
benefit; provided, however, that beginning after December 31, 1997, the term
"Section 415 Compensation" shall also include any amount that is contributed by
an Employer at the election of the Employee and that is not includible in the
gross income of the Employee under Sections 125, 401(k), 402(h), 403(b), or 457
of the Code.
(oo) "TOP HEAVY PLAN" shall mean this Plan if the aggregate account
balances (not including voluntary rollover contributions made by any Participant
from an unrelated plan) of the Key Employees and their beneficiaries for such
Plan Year exceed 60% of the aggregate account balances (not including voluntary
rollover contributions made by any Participant from an unrelated plan) for all
Participants and their beneficiaries. Such values shall be determined for any
Plan Year as of the last day of the immediately preceding Plan Year. The account
balances on any determination date shall include the aggregate distributions
made with respect to Participants during the five-year period ending on the
determination date. For the purposes of this definition, the aggregate account
balances for any Plan Year shall include the account balances and accrued
benefits of all retirement plans qualified under Section 401(a) of the Code with
which this Plan is required to be aggregated to meet the requirements of Section
401(a)(4) or 410 of the Code (including terminated plans that would have been
required to be aggregated with this Plan) and all plans of an Employer or an
Affiliate in which a Key Employee participates; and such term may include (at
the discretion of the Plan Administrator) any other retirement plan qualified
under Section 401(a) of the Code that is maintained by an Employer or an
Affiliate, provided the resulting aggregation group satisfies the requirements
of Sections 401(a) and 410 of the Code. All calculations shall be on the basis
of actuarial assumptions that are specified by
8
<PAGE> 9
the Plan Administrator and applied on a uniform basis to all plans in the
applicable aggregation group. The account balance of any Participant shall not
be taken into account if:
(1) he is a Non-Key Employee for any Plan Year, but was a Key
Employee for any prior Plan Year, or
(2) he has not performed any service for an Employer during the
five-year period ending on the determination date.
(pp) "TRUST" shall mean the trust established by the Agreement and
Declaration of Trust.
(qq) "TRUSTEE" shall mean the individual, individuals or corporation
designated as trustee under the Agreement and Declaration of Trust.
(rr) "TRUST FUND" shall mean the trust fund established under the
Agreement and Declaration of Trust from which the amounts of supplementary
compensation provided for by the Plan are to be paid or are to be funded.
(ss) "VALUATION DATE" shall mean each business day of each year or
such other date as may be selected by the Plan Administrator.
(tt) "VALUATION PERIOD" shall mean the period beginning with the first
day after a Valuation Date and ending with the next Valuation Date.
(uu) "VOLUNTARY CONTRIBUTION ACCOUNT" shall mean an account
established pursuant to Article VII(b) with respect to voluntary after-tax
contributions previously made to this Plan.
(vv) (1) "YEAR OF SERVICE" shall mean a Plan Year during which an
Employee completes 1,000 or more Hours of Service.
(2) For purposes of Article VIII and paragraph (a)(5) of the
Article entitled "Amendment and Termination," an Employee's "Years of
Service" shall not include the following:
(A) any Year of Service during which the Company did not
maintain this Plan or a predecessor plan;
(B) any Year of Service prior to a One Year Break in Service,
but only prior to such time as the Participant has completed a Year
of Service after such One Year Break in Service; and
(C) any Year of Service prior to a One Year Break in Service
if the Participant had no vested interest in the balance of his
Employer Contribution Account at the time of such One Year Break in
Service and if the number of consecutive years in which a One Year
Break in Service occurred equaled or exceeded the greater of five
or the number of Years of Service completed by the Employee prior
thereto (not
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<PAGE> 10
including any Years of Service not required to be taken into
consideration under the Plan as then in effect as a result of any
prior One Year Break in Service); provided, however, that for these
purposes, any One Year Break in Service resulting from a Leave of
Absence shall not be counted but shall be disregarded.
(3) For all purposes of this Plan, an Employee's "Years of
Service" shall include his Years of Service (determined in accordance
with the provisions of this Plan) for Chartwell Partners International,
Inc., provided such Employee was: (A) hired by the Company on January
5, 1998; and (B) an employee of Chartwell Partners International, Inc.
on January 2, 1998.
(4) For all purposes of this Plan, an Employee's "Years of
Service" shall include his Years of Service (determined in accordance
with the provisions of this Plan) for Ward Howell International, Inc.,
provided such Employee was: (A) hired by the Company on February 27,
1998 and (B) an employee of Ward Howell International, Inc. on February
27, 1998.
ARTICLE II
NAME OF THE PLAN
A profit sharing and 401(k) plan is hereby continued in accordance with
the terms hereof and shall be known as the "LAI WARD HOWELL PROFIT SHARING AND
SAVINGS PLAN."
ARTICLE III
PURPOSE OF THE PLAN AND THE TRUST
(a) EXCLUSIVE BENEFIT. This Plan is created for the sole purpose of
providing benefits to the Participants and enabling them to share in the growth
of their Employer. Except as otherwise permitted by law, in no event shall any
part of the principal or income of the Trust be paid to or reinvested in any
Employer or be used for or diverted to any purpose whatsoever other than for the
exclusive benefit of the Participants and their beneficiaries.
(b) RETURN OF CONTRIBUTIONS. Notwithstanding the provisions of
paragraph (a), any contribution made by an Employer to this Plan by a mistake of
fact may be returned to the Employer within one year after the payment of the
contribution; and any contribution made by an Employer that is conditioned upon
the deductibility of the contribution under Section 404 of the Code (each
contribution shall be presumed to be so conditioned unless the Employer
specifies otherwise) may be returned to the Employer if the deduction is
disallowed and the contribution is returned (to the extent disallowed) within
one year after the disallowance of the deduction.
(c) PARTICIPANT'S RIGHTS. The establishment of this Plan shall not be
considered as giving any Employee, or any other person, any legal or equitable
right against any Employer, any Affiliate, the Plan Administrator, the Trustee
or the principal or the income of the Trust, except to the extent
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<PAGE> 11
otherwise provided by law. The establishment of this Plan shall not be
considered as giving any Employee, or any other person, the right to be retained
in the employ of any Employer or any Affiliate.
(D) QUALIFIED PLAN. This Plan and the Trust, are intended to qualify
under the Code as a tax-free employees' plan and trust, and the provisions of
this Plan and the Trust should be interpreted accordingly.
ARTICLE IV
PLAN ADMINISTRATOR
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall control
and manage the operation and administration of the Plan, except with respect to
investments. The Administrator shall have no duty with respect to the
investments to be made of the funds in the Trust except as may be expressly
assigned to it by the terms of the Agreement and Declaration of Trust.
(b) POWERS AND DUTIES. The Administrator shall have complete control
over the administration of the Plan herein embodied, with all powers necessary
to enable it to carry out its duties in that respect. Not in limitation, but in
amplification of the foregoing, the Administrator shall have the power and
discretion to interpret or construe this Agreement and to determine all
questions that may arise as to the status and rights of the Participants and
others hereunder.
(c) DIRECTION OF TRUSTEE. It shall be the duty of the Administrator
to direct the Trustee with regard to the allocation and the distribution of the
benefits to the Participants and others hereunder.
(d) SUMMARY PLAN DESCRIPTION. The Administrator shall prepare or cause
to be prepared a Summary Plan Description (if required by law) and such periodic
and annual reports as are required by law.
(e) DISCLOSURE. At least once each year, the Administrator shall
furnish to each Participant a statement containing the value of his interest in
the Trust Fund and such other information as may be required by law.
(f) CONFLICT IN TERMS. The Administrator shall notify each Employee, in
writing, as to the existence of the Plan and Trust and the basic provisions
thereof. In the event of any conflict between the terms of this Plan and Trust
as set forth in this Agreement and in the Agreement and Declaration of Trust and
as set forth in any explanatory booklet or other description, this Agreement and
the Agreement and Declaration of Trust shall control.
(g) NONDISCRIMINATION. The Administrator shall not take any action or
direct the Trustee to take any action whatsoever that would result in unfairly
benefitting one Participant or group of Participants at the expense of another
or in improperly discriminating between Participants similarly situated or in
the application of different rules to substantially similar sets of facts.
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<PAGE> 12
(h) RECORDS. The Administrator shall keep a complete record of all its
proceedings as such Administrator and all data necessary for the administration
of the Plan. All of the foregoing records and data shall be located at the
principal office of the Administrator.
(i) FINAL AUTHORITY. Except to the extent otherwise required by law,
the decision of the Administrator in matters within its jurisdiction shall be
final, binding and conclusive upon each Employer and each Employee, member and
beneficiary and every other interested or concerned person or party.
(j) CLAIMS.
(1) Claims for benefits under the Plan may be made by a Participant
or a beneficiary of a Participant on forms supplied by the Plan
Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant by the Administrator within ninety (90) days
after the application is filed with the Administrator, unless special
circumstances require an extension of time for processing, in which
event action shall be taken as soon as possible, but not later than one
hundred eighty (180) days after the application is filed with the
Administrator; and in the event that no action has been taken within
such ninety (90) or one hundred eighty (180) day period, the claim
shall be deemed to be denied for the purposes of subparagraph (2). In
the event that the claim is denied, the denial shall be written in a
manner calculated to be understood by the claimant and shall include
the specific reasons for the denial, specific references to pertinent
Plan provisions on which the denial is based, a description of the
material information, if any, necessary for the claimant to perfect the
claim, an explanation of why such material information is necessary and
an explanation of the claim review procedure.
(2) If a claim is denied (either in the form of a written denial or
by the failure of the Plan Administrator, within the required time
period, to notify the claimant of the action taken), a claimant or his
duly authorized representative shall have sixty (60) days after the
receipt of such denial to petition the Plan Administrator in writing
for a full and fair review of the denial, during which time the
claimant or his duly authorized representative shall have the right to
review pertinent documents and to submit issues and comments in
writing. The Plan Administrator shall promptly review the claim and
shall make a decision not later than sixty (60) days after receipt of
the request for review, unless special circumstances require an
extension of time for processing, in which event a decision shall be
rendered as soon as possible, but not later than one hundred twenty
(120) days after the receipt of the request for review. If such an
extension is required because of special circumstances, written notice
of the extension shall be furnished to the claimant prior to the
commencement of the extension. The decision of the review shall be in
writing and shall include specific reasons for the decision, written in
a manner calculated to be understood by the claimant, with specific
references to the Plan provisions on which the decision is based.
(k) APPOINTMENT OF ADVISORS. The Administrator may appoint such
accountants, counsel (who may be counsel for an Employer), specialists and other
persons that it deems necessary and desirable in connection with the
administration of this Plan. The Administrator, by action of its Board
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<PAGE> 13
of Directors, may designate one or more of its employees to perform the duties
required of the Administrator hereunder.
ARTICLE V
ELIGIBILITY AND PARTICIPATION
(a) CURRENT PARTICIPANTS. Any Employee who was a Participant in this
Plan on the Effective Date shall remain as a Participant in the Plan.
(b) ELIGIBILITY AND PARTICIPATION. Effective as of February 1, 1998,
any Employee of an Employer shall be eligible to become a Participant in the
Plan upon becoming an Employee. Any such eligible Employee shall enter the Plan
as a Participant on the day he becomes an Employee.
(c) FORMER EMPLOYEES. An Employee who ceases to be a Participant and
who subsequently reenters the employ of an Employer shall be eligible again to
become a Participant and shall enter the Plan on the date of his reemployment.
(d) RIGHT TO DECLINE PARTICIPATION. An Employee, with the approval of
the Plan Administrator, may decline to participate in the Plan, but any request
by an Employee for such approval shall be in writing.
(e) CARVE OUT. Notwithstanding anything contained in this Plan to the
contrary, the Employees of the Employer's Lake Geneva Office and members of the
insurance practice shall be eligible to participate in this Plan only to the
extent of making elective contributions to the Plan pursuant to paragraph (a) of
Article VI and for no other purposes.
ARTICLE VI
CONTRIBUTIONS TO THE TRUST
(a) PARTICIPANTS' ELECTIVE CONTRIBUTIONS.
(1) AMOUNT CONTRIBUTED. The Employer shall contribute to the
Trust, on behalf of each Participant, an elective contribution as
specified in a written salary reduction agreement (if any) between the
Participant and such Employer; provided, however, that such
contribution for a Participant shall not exceed the lesser of:
(A) (i) $10,000 (adjusted under such regulations as may be
issued from time to time by the Secretary of the Treasury)
with respect to any calendar year;
(ii) reduced, during the calendar year immediately following
the year of a Participant's withdrawal pursuant to paragraph
(a) of Article XI, by
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the amount of such Participant's elective contributions for
the year of the withdrawal; or
(B) 15% of the Participant's Compensation for such Plan Year.
(2) (A) REFUND OF EXCESS ELECTIVE CONTRIBUTIONS. If a
Participant's elective contributions, together with any elective
contributions by the Participant to any other plans of his Employer
or an Affiliate intended to qualify under Sections 401(k) or 403(b)
of the Code, exceed the limitation set forth in paragraph (a)(1)(A)
of this Article VI for any calendar year, the Administrator, upon
notification from the Participant or his Employer, shall refund to
such Participant the portion of such excess that is attributable to
elective contributions to the Plan, increased by the earnings
thereon for such calendar year (and the subsequent period preceding
the date of the refund) (such earnings shall be determined by the
Plan Administrator, as of the last day of the calendar year
preceding the date the refund is made, in a manner consistent with
the provisions of paragraph (d)(1) of Article VII and Treasury
Regulation Section 1.402(g)-1(e)(5)) and reduced by any excess
elective contributions and earnings for the Plan Year beginning
with or within the calendar year that have been previously
distributed to the Participant in accordance with the provisions of
paragraph (a)(7). Any such refund shall be made on or before April
15 immediately following the calendar year in which the excess
elective contribution is made.
(B) If a Participant's elective contributions, together with
any elective contributions by the Participant to any other plans
intended to qualify under Sections 401(k), 403(b), 408(k) or 457 of
the Code, exceed the limitation set forth in paragraph (a)(1)(A) of
this Article VI for any calendar year (after the application of
paragraph (a)(2)(A)), the Administrator may refund to such
Participant, at the Participant's request, the portion of such
excess that is attributable to elective contributions to the Plan,
increased by the earnings thereon for such calendar year (and the
subsequent period preceding the date of the refund) (determined as
provided in paragraph (a)(2)(A)) and reduced by any excess elective
contributions and earnings for the Plan Year beginning with or
within the calendar year that have been previously distributed to
the Participant in accordance with the provisions of paragraph
(a)(7). Any such refund shall be made on or before April 15
immediately following the calendar year in which the excess
elective contribution is made.
(C) Excess elective contributions and earnings shall be
determined for purposes of paragraphs (a)(1)(A), (a)(2)(A) and
(a)(2)(B) after taking into account any previous refunds to the
Participant of excess elective contributions and earnings for the
Plan Year ending with or within the calendar year made in
accordance with the provisions of paragraph (a)(7).
(3) SALARY REDUCTION AGREEMENT. Any salary reduction agreement
shall be executed and in effect prior to the first day of the first pay period
to which it applies. Any such agreement may be revised by the Participant, with
the approval of the Administrator, as of any January 1, April 1, July 1 or
October 1, for pay periods beginning on or after the date such
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<PAGE> 15
revision is executed and made effective. Any salary reduction agreement relating
to a cash bonus shall be executed and in effect prior to the date on which the
bonus is declared.
(4) REFUSAL OF DEFERRAL. The Administrator shall have the right to
require any Participant to reduce his elective contributions under any such
agreement, or to refuse deferral of all or part of the amount set forth in such
agreement, if necessary to comply with the requirements of this Plan and the
Code.
(5) SUSPENSION OF PARTICIPANTS' ELECTIVE CONTRIBUTIONS. A
Participant may suspend further elective contributions to the Plan at any time,
provided the request for such suspension is received by the Plan Administrator
prior to the first day of the first pay period to which such suspension applies.
Any Participant who suspends further contributions relating to periodic pay may
reinstate such contributions by providing written notice to the Plan
Administrator prior to any business day of the Plan Year.
(6) HARDSHIP DISTRIBUTIONS. In the event that a Participant
receives a withdrawal pursuant to paragraph (a) of Article XI, such Participant
is not permitted to make elective contributions to the Plan until the day
following the expiration of 12 months from the date of such distribution.
(7) REFUND OF EXCESS DEFERRALS.
(A) In the event that the elective contributions of Highly
Compensated Employees exceed the limitations set forth in paragraph
(i), such excess (plus the earnings thereon for the Plan Year to
which the excess contributions relate), determined as set forth
below, shall be distributed to the Highly Compensated Employees on
or before the 15th day of the third month after the close of the
Plan Year to which the excess contributions relate. Notwithstanding
the preceding sentence, the Plan Administrator may delay the
distribution of any excess elective contributions (plus the
earnings thereon for the Plan Year to which the excess
contributions relate) attributable to an Employer beyond the 15th
day of the third month of such Plan Year, if the Employer consents
to such delay and the Administrator refunds all such excess amounts
not later than 12 months after the close of the Plan Year to which
the excess contributions relate.
(B) (i) The amount of such excess for a Highly Compensated
Employee for the Plan Year shall be determined by reducing the
elective contribution of the Highly Compensated Employee with
the largest elective contribution to the extent required to
a. enable the arrangement to satisfy the limitations
set forth in paragraph (i), or
b. cause such Highly Compensated Employee's elective
contribution to equal the elective contribution of the
Highly Compensated Employee with the next highest elective
contribution.
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<PAGE> 16
This process shall be repeated until the arrangement satisfies
the limitations set forth in paragraph (i).
(ii) For each Highly Compensated Employee, the amount of
such excess shall be deemed to equal
a. the total elective contributions, plus matching and
non-elective contributions, if any, that are treated as
elective contributions, on behalf of the Participant
(determined prior to the application of this paragraph
(a)(7)), minus
b. the amount determined by multiplying the
Participant's Actual Deferral Ratio (determined after
application of this paragraph (a)(7)) by his Compensation
used in determining such ratio.
(C) Earnings attributable to excess contributions of a Highly
Compensated Employee shall be determined by the Plan Administrator,
as of the last day of the Plan Year to which such excess
contributions relate (and taking into account the subsequent period
preceding the date of the refund), in a manner consistent with the
provisions of paragraph (d)(1) of Article VII and Treasury
Regulation Section 1.401(k)-1(f)(4)(ii).
(D) Excess elective contributions and earnings determined under
paragraph (a)(7)(B) and (C) shall be reduced by any excess elective
contributions and earnings for the calendar year ending with or
within the Plan Year that have been previously refunded to the
Participant in accordance with the provisions of paragraph (a)(2)
(E) In the event that a Highly Compensated Employee's Actual
Deferral Ratio is determined on the basis of both his contributions
and the contributions of his Family Members, any excess elective
contributions and earnings attributable to such Highly Compensated
Employee under this paragraph (a)(7) shall be distributed to the
Highly Compensated Employee and his Family Members in proportion to
the relative elective contributions of the Highly Compensated
Employee and his Family Members for the Plan Year.
(b) MATCHING CONTRIBUTIONS.
(1) Each Employer, at the discretion of its Board of Directors, may
contribute to the Trust a matching contribution on behalf of each
eligible Participant (as determined pursuant to subparagraph (b)(2))
for whom an elective contribution is made during the Plan Year. Such
matching contribution shall be equal to a specified percentage of the
amount of the elective contribution made to the Plan by the
Participant, and may be limited to a specified percentage of the
Participant's Compensation or a specified maximum dollar amount. The
percentage of the matching contribution, and any maximum percentage or
dollar amount, shall be determined by the Board of such Employer. No
matching contribution shall be required for the portion
16
<PAGE> 17
of a Participant's elective contribution subject to the refund
requirements of paragraphs (a)(2) and (a)(7).
(2) Except as otherwise provided in this subparagraph (2), a
Participant shall be eligible to share in the matching contribution
described in subparagraph (1) for a Plan Year if he is employed by his
Employer on the last day of such Plan Year (or if his employment is
terminated by his retirement, disability (as defined in paragraph
(b)(2) of Article IX) or death). In the event that the requirement set
forth in the preceding sentence would cause this Plan to fail to meet
the requirements of Section 410(b)(1) of the Code (and any regulations
thereunder issued by the Secretary of the Treasury, a Participant shall
be entitled to share in the matching contribution if:
(A) he is a Non-Highly Compensated Employee; and
(B) the allocation of a matching contribution to the
Participant is required by this section (B). The number of
Participants entitled to an allocation required by this section (B)
(the "Required Number of Participants"), when added to the
Non-Highly Compensated Employees who are eligible to receive an
allocation pursuant to the provisions of subparagraph (2) above,
shall be equal to the minimum number of Non-Highly Compensated
Employees who are required to benefit from the Plan during the Plan
Year in order to meet the minimum requirements of Section
410(b)(1)(B) of the Code (and any regulations thereunder issued by
the Secretary of the Treasury). An allocation is required by this
section (B) if a Participant is among the Required Number of
Participants paid the lowest Compensation by their Employers for
the Plan Year (determined without regard to those Participants who
are entitled to an allocation pursuant to subparagraph (2) above).
(3) Except as noted in subparagraph (4), any matching contribution
made by an Employer on account of an elective contribution that has
been refunded pursuant to paragraph (a)(2) or paragraph (a)(7), above,
shall be forfeited, and used to reduce matching contributions for the
Plan Year in which the forfeiture occurs. In the event that forfeitures
arising pursuant to this subparagraph (3) exceed the amount that may be
used to reduce matching contributions for the Plan Year, any additional
forfeitures shall be allocated in accordance with paragraph (d)(4) of
Article VII, to the Matching Contribution Accounts of Participants
other than those whose matching contributions have been reduced
hereunder.
(4) In the event that the matching contributions for Highly
Compensated Employees exceed the limitations of paragraph (i):
(A) The nonvested portion of such excess (including earnings
thereon for the Plan Year to which the excess contributions
relate), if any, shall be forfeited and allocated pursuant to
paragraph (d)(2) of Article VII, to the Matching Contribution
Account of Participants other than those whose matching
contributions have been reduced hereunder.
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<PAGE> 18
(B) The vested portion of such excess (including earnings
thereon for the Plan Year to which the excess contributions
relate), if any, shall be distributed to the Highly Compensated
Employees on or before the 15th day of the third month after the
close of the Plan Year to which the matching contributions relate.
Notwithstanding the preceding sentence, the Plan Administrator may
delay the distribution of any excess matching contributions (plus
the earnings thereon for the Plan Year to which the excess
contributions relate) attributable to an Employer beyond the 15th
day of the third month of such Plan Year, if the Employer consents
to such delay and the Administrator refunds all such excess amounts
not later than 12 months after the close of the Plan Year to which
the excess contributions relate.
(C) (1) The amount of such excess for a Highly Compensated
Employee for the Plan Year shall be determined by the
following leveling method, under which the matching
contribution of the Highly Compensated Employee with the
largest matching contribution amount is reduced to the
extent required to
(a) enable the Plan to satisfy the limitations set
forth in paragraph (i), or
(b) cause such Highly Compensated Employee's matching
contribution to equal the matching contribution of the
Highly Compensated Employee with the next highest matching
contribution.
This process shall be repeated until the Plan satisfies the
limitations set forth in paragraph (i).
(2) For each Highly Compensated Employee, the amount of
such excess is deemed to equal
(a) the total matching contributions, plus elective
contributions, if any, treated as matching contributions,
on behalf of the Employee (determined prior to the
application of this paragraph (b)(4)(C)), minus
(b) the amount determined by multiplying the Employee's
Actual Contribution Ratio (determined after application of
this paragraph (b)(4)(C)) by his Compensation used in
determining such ratio.
(D) In determining the amount of such excess, Actual
Contribution Ratios shall be rounded to the nearest one-hundredth
of one percent of the Employee's Compensation.
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<PAGE> 19
(E) In no case shall the amount of such excess with respect to
any Highly Compensated Employee exceed the amount of matching
contributions on behalf of such Highly Compensated Employee for
such Plan Year.
(F) Earnings attributable to excess contributions shall be
determined by the Plan Administrator, as of the last day of the
Plan Year to which such excess contributions relate in a manner
consistent with the provisions of paragraph (d)(1) of Article VII
and Treasury Regulation Section 1.401(m)-1(e)(3)(ii).
(c) EMPLOYER CONTRIBUTIONS. The amount, if any, to be contributed to
the Trust by an Employer for each Plan Year shall be determined by its Board of
Directors.
(d) NON-ELECTIVE CONTRIBUTIONS. An Employer, at the discretion of its
Board of Directors, may make non-elective contributions to the Non-Elective
Contribution Accounts of Participants.
(e) FORM AND TIMING OF CONTRIBUTIONS. Payments on account of the
contributions due from an Employer for any Plan Year shall be made in cash to
the Trustee. Such payments may be made by a contributing Employer at any time,
but payment of the matching or Employer contributions for any Plan Year shall be
completed on or before the time prescribed by law, including extensions thereof,
for filing such Employer's federal income tax return for its taxable year with
which or within which such Plan Year ends. Payments of any elective contribution
shall be made as of the earliest date on which such contribution can reasonably
be segregated from the employer's general assets; provided, however, that such
payment shall be made no later than the fifteenth business day of the month
following the month in which the contribution is withheld from a Participant's
pay.
(f) PARTICIPANTS' VOLUNTARY CONTRIBUTIONS. This Plan will not accept
voluntary employee contributions for Plan Years beginning after December 31,
1988.
(g) ROLLOVER CONTRIBUTIONS. Each Participant at any time during a Plan
Year, with the consent of the Plan Administrator and in such manner as
prescribed by the Plan Administrator, may pay or cause to be paid to the Trustee
a rollover contribution (as defined in the applicable sections of the Code,
except that for this purpose "rollover contribution" shall be deemed to include
both a direct payment from a Participant and a direct transfer from a trustee of
another qualified plan in which the Participant is or was a participant). Any
Rollover Contribution Account that would cause this Plan to be a transferee plan
within the meaning of Section 401(a)(11)(B)(iii)(III) of the Code shall be
accounted for separately, and shall be subject to the requirements of Sections
401(a)(11) and 417 of the Code.
(h) NO DUTY TO INQUIRE. The Trustee shall have no right or duty to
inquire into the amount of any contribution made by an Employer or any
Participant or the method used in determining the amount of any such
contribution, or to collect the same, but the Trustee shall be accountable only
for funds actually received by it.
(i) LIMITATIONS ON ELECTIVE, MATCHING AND VOLUNTARY CONTRIBUTIONS. The
amounts contributed as elective and matching contributions shall be limited as
follows:
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<PAGE> 20
(1) Actual Deferral Percentage:
(A) The Actual Deferral Percentage for the group of Highly
Compensated Employees for a Plan Year shall not exceed the Actual
Deferral Percentage for the group of all other eligible Employees
for the preceding Plan Year multiplied by 1.25, or
(B) The excess of the Actual Deferral Percentage for the group
of Highly Compensated Employees for a Plan Year over the Actual
Deferral Percentage for the group of all other eligible Employees
for the preceding Plan Year shall not exceed two (2) percentage
points (or such lesser amount as may be required by subparagraph
(3)); and the Actual Deferral Percentage for the group of Highly
Compensated Employees shall not exceed the Actual Deferral
Percentage for the group of all other eligible Employees,
multiplied by 2.0 (or such lesser amount as may be required by
subparagraph (3)); and
Notwithstanding the foregoing, if the Company so elects for a given
Plan Year, the Plan may apply this subparagraph (i)(1) using the Actual
Deferral Percentage for all eligible Non-Highly Compensated Employees
for the current Plan Year rather than their Actual Deferral Percentage
for the preceding Plan Year; provided, however, that if such an
election is made, it may not be changed except as provided by the
Secretary of the Treasury.
(2) Actual Contribution Percentage:
(A) The Actual Contribution Percentage for the group of Highly
Compensated Employees for a Plan Year shall not exceed the Actual
Contribution Percentage for the group of all other eligible
Employees for the preceding Plan Year multiplied by 1.25, or
(B) The excess of the Actual Contribution Percentage for the
group of Highly Compensated Employees for a Plan Year over the
Actual Contribution Percentage for the group of all other eligible
Employees for the preceding Plan Year shall not exceed two (2)
percentage points (or such lesser amount as may be required by
subparagraph (3)); and the Actual Contribution Percentage for the
group of Highly Compensated Employees shall not exceed the Actual
Contribution Percentage for the group of all other eligible
Employees, multiplied by 2.0 (or such lesser amount as may be
required by subparagraph (3)).
Notwithstanding the foregoing, if the Company so elects for a given
Plan Year, the Plan may apply this subparagraph (i)(2) using the Actual
Contribution Percentage for all eligible Non-Highly Compensated
Employees for the current Plan Year rather than their Actual
Contribution Percentage for the preceding Plan Year; provided, however,
that if such an election is made, it may not be changed except as
provided by the Secretary of the Treasury.
(3) Multiple Use Restriction:
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<PAGE> 21
(A) The provisions of this subparagraph (3) shall apply if:
(i) one or more Highly Compensated Employees are
subject to both the Actual Deferral Percentage test
described in subparagraph (1) and the Actual Contribution
Percentage test described in subparagraph (2);
(ii) the sum of the Actual Deferral Percentage and the
Actual Contribution Percentage of those Highly Compensated
Employees subject to either or both tests exceeds the
Aggregate Limit defined in subparagraph (3)(C) below;
(iii) the Actual Deferral Percentage for the group of
Highly Compensated Employees eligible to make elective
contributions for a Plan Year exceeds the limitation set
forth in subparagraph (1)(A); and
(iv) the Actual Contribution Percentage for the group
of Highly Compensated Employees eligible to receive
matching contributions and/or electing to make voluntary
contributions for a Plan Year exceeds the limitation set
forth in subparagraph (2)(A).
(B) The Actual Deferral Percentage and the Actual Contribution
Percentage for the Highly Compensated Employees described in
subparagraph (3)(A) above shall be determined after any corrections
required by paragraphs (a), (b) and (d) of this Article VI to meet
the requirements of paragraph (f)(1) and paragraph (f)(2).
(C) "Aggregate Limit" shall mean the greater of:
(i) the sum of:
a. 125 percent of the greater of the Actual Deferral
Percentage of the Non-Highly Compensated Employees for the
Plan Year or the Actual Contribution Percentage of
Non-Highly Compensated Employees for the preceding Plan
Year, and
b. the lesser of 200% of, or two percentage points
plus, the lesser of such Actual Deferral Percentage and
such Actual Contribution Percentage; or
(ii) the sum of:
a. 125 percent of the lesser of the Actual Deferral
Percentage of the Non-Highly Compensated Employees for the
Plan Year or the Actual Contribution Percentage of
Non-Highly Compensated Employees for the preceding Plan
Year, and
21
<PAGE> 22
b. the lesser of 200% of, or two percentage points
plus, the greater of such Actual Deferral Percentage and
such Actual Contribution Percentage.
(D) If each of the provisions of subparagraph (3)(A) are met,
then the Actual Contribution Percentage of those Highly Compensated
Employees eligible to receive matching contributions for a Plan
Year will be reduced (beginning with such Highly Compensated
Employee whose Actual Contribution Ratio is the highest) so that
the Aggregate Limit is not exceeded. The amount by which each
Highly Compensated Employee's Actual Contribution Ratio is reduced
shall be treated as excess amounts subject to paragraph (b)(3).
Notwithstanding the foregoing, if the Company elects for a given Plan
Year to apply subparagraphs (i)(1) or (i)(2) using the Actual Deferral
Percentage or the Actual Contribution Percentage for all eligible
Non-Highly Compensated Employees for the current Plan Year rather than
their Actual Deferral Percentage or Actual Contribution Percentage for
the preceding Plan Year, then the current Plan Year must also be used
for purposes of applying the Multiple Use Restriction.
(4) For purposes of this paragraph (i), if two or more plans of an
Employer to which elective salary reduction contributions, voluntary
contributions or matching contributions are made are elected by the
Employer to be treated as one Plan for purposes of Section 410(b)(6) of
the Code, such plans shall be treated as a single plan for purposes of
determining the Actual Deferral Percentage and the Actual Contribution
Percentage. For purposes of determining the Actual Deferral Percentages
and the Actual Contribution Percentages for the group of Highly
Compensated Employees and the group of all other eligible Employees,
all Employees of the respective group who are directly or indirectly
eligible to receive allocations of elective contributions, non-elective
contributions and/or matching contributions under the Plan for any
portion of the Plan Year or the preceding Plan Year, as the case may
be, and all Employees of the respective group who elect not to enter
into salary reduction agreements pursuant to paragraph (a) of Article
VI or whose eligibility to enter into salary reduction agreements has
been suspended or otherwise limited because of an election not to
participate, a withdrawal, a loan, or a restriction on Annual Additions
as set forth in paragraph (e) of Article VII, shall be included. For
purposes of determining the Actual Deferral Ratio and the Actual
Contribution Ratio for a Highly Compensated Employee, all cash or
deferred arrangements in which the Employee is eligible to receive
allocations of elective contributions and/or matching contributions
shall be taken into account, unless otherwise required by Treasury
Regulation Sections 1.401(k)-1(g)(1)(ii)(B) and
1.401(m)-1(f)(1)(ii)(B).
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<PAGE> 23
ARTICLE VII
PARTICIPANTS' ACCOUNTS AND ALLOCATION OF CONTRIBUTIONS
(a) COMMON FUND. The assets of the Trust shall constitute a common fund
in which each Participant shall have an undivided interest.
(b) ESTABLISHMENT OF ACCOUNTS. The Plan Administrator shall establish
and maintain with respect to each Participant an account, designated as an
Employer Contribution Account, Elective Contribution Account, Matching
Contribution Account and Non-Elective Contribution Account that shall reflect
the Participant's interest in the Trust Fund with respect to contributions made
by his Employer. In addition, for each Participant who has made a voluntary
contribution pursuant to Article VI, the Plan Administrator shall establish and
maintain a Voluntary Contribution Account; and for each Participant who has made
a rollover contribution pursuant to Article VI, the Plan Administrator shall
establish and maintain a Rollover Contribution Account. The Plan Administrator
may establish such additional Accounts as are necessary to reflect a
Participant's interest in the Trust Fund.
(c) INTERESTS OF PARTICIPANTS. The interest of a Participant in the
Trust Fund shall be the vested balance remaining from time to time in his
Accounts after making the adjustments required pursuant to paragraph (d) of this
Article VII.
(d) ADJUSTMENTS TO ACCOUNTS. Subject to the provisions of paragraph (e)
of this Article VII, the Accounts of a Participant shall be adjusted from time
to time as follows:
(1) As of each Valuation Date, each of a Participant's Accounts
shall be credited or charged, as the case may be, with a share of the
"earnings factor" of the Trust Fund for the Valuation Period ending
with such current Valuation Date. The earnings factor of the Trust Fund
and the share attributable to a Participant's Accounts are to be
determined as follows:
(A) The earnings factor attributable to the Trust Fund for
any Valuation Period shall consist of the aggregate of the
unrealized appreciation or depreciation occurring in the value of
the Trust Fund during such period that is attributable to
contributions theretofore made to the Participants' Accounts and
earnings thereon, and that portion of the income earned or the loss
sustained by the Trust Fund during such period (whether from
investments or from the sale or exchange of assets) that is
attributable to contributions theretofore made to the Participants'
Accounts and earnings thereon.
(B) The share of the earnings factor attributable to each
Account of a Participant for any Valuation Period shall be that
amount that shall bear the same ratio to such earnings factor as
the balance in such Account as of the end of the immediately
preceding Valuation Period (less any amounts distributed from such
Account to the Participant during the Valuation Period ending with
the current Valuation Date) bears to the aggregate of the balances
in the Accounts of like kind as of the end of the immediately
preceding Valuation Period of all Participants who are entitled to
share
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<PAGE> 24
in the earnings factor (less the aggregate amounts distributed from
such Accounts to such Participants during the Valuation Period
ending with the current Valuation Date).
(2) Each of a Participant's Accounts shall be credited with
contributions made during the Plan Year as follows:
(A) As of each Valuation Date, the Elective Contribution
Account of a Participant shall be credited with any elective
contributions made by his Employer on his behalf with respect to a
date occurring during the Valuation Period ending with such
Valuation Date.
(B) As of each Valuation Date that is the last day of a Plan
Year, the Matching Contribution Account of a Participant shall be
credited with any matching contributions made by his Employer on
his behalf with respect to such Plan Year. A Participant will not
be entitled to share in the matching contributions unless he is
employed by his Employer on the last day of the Plan Year.
(C) As of each Valuation Date that is the last day of a Plan
Year, the Employer Contribution Account of a Participant shall be
credited with his share of the contribution, if any, made by his
Employer with respect to the Plan Year ending with such Valuation
Date. The Participants entitled to share in any contribution and
their respective shares thereof shall be determined as follows:
(i) Subject to the provisions of subsections (ii), (iii)
and (iv), a Participant's share of the amount of the
contribution for the Plan Year shall be the amount that shall
bear the same ratio to the total of such contribution as the
Participant's Compensation for such Plan Year bears to the
aggregate of the Compensation of all Participants employed by
such Employer for such Plan Year who are entitled to share in
the contribution for such Plan Year.
(ii) A Participant shall be entitled to share in the
contribution if he is employed by his Employer on the last day
of the Plan Year, effective March 1, 1989.
(iii) In the event that the requirement set forth in
subsection (ii) immediately above would cause this Plan to fail
to meet the requirements of Section 410(b)(1) of the Code (and
any regulations thereunder issued by the Secretary of the
Treasury), a Participant shall be entitled to share in the
contribution regardless of whether he is employed by his
Employer on the last day of the Plan Year.
(iv) For each Plan Year in which this Plan is a Top Heavy
Plan, a Participant who is employed by an Employer on the last
day of such Plan Year, who is a Non-Key Employee and who earns
Compensation from an Employer for such Plan Year shall be
entitled to share in the contribution (as described in this
section (A)) to the extent such allocation does not exceed at
least three
24
<PAGE> 25
percent (3%) of his Section 415 Compensation (or, if less, the
highest percentage of such Section 415 Compensation allocated
to the Employer Contribution Account of a Key Employee
hereunder, as well as his employer contribution accounts under
any other defined contribution plan maintained by such Employer
or an Affiliate, including any elective contribution to any
plan subject to Code Section 401(k)), regardless of whether
such Plan Year constitutes a Year of Service for such
Participant, except to the extent such a contribution is made
by an Employer or any Affiliate thereof on behalf of the
Employee for the Plan Year to any other defined contribution
plan maintained by such Employer or Affiliate.
(D) As of each Valuation Date that is the last day of a Plan
Year, the Non-Elective Contribution Account of a Participant shall
be credited with his share of the non-elective contributions, if
any, made by his Employer with respect to the Plan Year ending with
such Valuation Date, such share being the amount that shall bear
the same ratio to the total of such non-elective contribution as
the Participant's Compensation for such Plan Year ending with such
Valuation Date bears to the aggregate of the Compensation from such
Employer for that period of all Participants who are entitled to
share in the non-elective contribution for such Plan Year. A
Participant who is a Highly Compensated Employee shall not be
entitled to share in the non-elective contribution; provided,
further, that a Participant shall not be entitled to share in the
non-elective contribution unless such Plan Year constitutes a Year
of Service for such Participant and he is employed by his Employer
on the last day of the Plan Year
(E) As of each Valuation Date, the Rollover Contribution
Account of a Participant shall be credited with the rollover
contributions, if any, made by the Participant pursuant to Article
VI with respect to the Valuation Period ending with such Valuation
Date.
(3) As of each Valuation Date that is the last day of a Plan Year,
the Employer Contribution Account of a Participant shall be credited
with his share of the value of interests forfeited pursuant to Article
VIII (except to the extent applied pursuant to Article VIII(c)(4)(C))
by Participants employed by his Employer during such Plan Year. A
Participant's share of the forfeitures attributable to Employees of his
Employer shall be the amount that shall bear the same ratio to the
total of the forfeited interests for such Plan Year as the Compensation
of the Participant with respect to such Plan Year bears to the
aggregate of all Compensation of all Participants of such Employer for
that period who are entitled to share in forfeitures for such Plan
Year; provided, however, that a Participant shall not be entitled to
share in forfeitures for a Plan Year unless such Participant shall be
entitled to share in the Employer's contribution for such Plan Year as
provided in subparagraph (2)(C), and unless such Participant was also a
Participant as of the end of the immediately preceding Plan Year.
(4) As of each Valuation Date, each Account of a Participant shall
be charged with the amount of any distribution made to the Participant
or his beneficiary from such Account during the Valuation Period ending
with such Valuation Date.
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<PAGE> 26
(5) For purposes of all computations required by this Article VII,
the accrual method of accounting shall be used, and the Trust Fund and
the assets thereof shall be valued at their fair market value as of
each Valuation Date.
(6) In making the adjustments for any Valuation Date as provided in
this paragraph (d), any life insurance contract or contracts purchased
and held by the Trustee shall be disregarded, and the value of such
contracts shall not be included in the value of a Participant's Account
or in the appreciation, depreciation, income or loss of the Trust for
any such purposes. For all other purposes, the value of such contracts
shall be included in the value of a Participant's Account.
(7) The Plan Administrator may adopt such additional accounting
procedures as are necessary to accurately reflect each Participant's
interest in the Trust Fund, which procedures shall be effective upon
approval by the Employer. All such procedures shall be applied in a
consistent and nondiscriminatory manner.
(e) LIMITATION ON ALLOCATION OF CONTRIBUTIONS.
(1) Notwithstanding anything contained in this Plan to the
contrary, the aggregate Annual Additions to a Participant's Accounts
under this Plan and under any other defined contribution plans
maintained by an Employer or an Affiliate for any Limitation Year shall
not exceed the lesser of:
(A) $30,000 (adjusted under such regulations as may be issued
by the Secretary of the Treasury); or
(B) 25% of the Participant's Section 415 Compensation for such
Plan Year.
(2) In the event that the Annual Additions, under the normal
administration of the Plan, would otherwise exceed the limits set forth
above for any Participant, or in the event that any Participant
participates in both a defined benefit plan and a defined contribution
plan maintained by any Employer or any Affiliate and the aggregate
annual additions to and projected benefits under all of such plans,
under the normal administration of such plans, would otherwise exceed
the limits provided by law, then the Plan Administrator shall take such
actions, applied in a uniform and nondiscriminatory manner, as will
keep the annual additions and projected benefits for such Participant
from exceeding the applicable limits provided by law. Excess Annual
Additions shall be disposed of as provided in subparagraph (3).
Adjustments shall be made to this Plan, if necessary to comply with
such limits, before any adjustments shall be made to any other plan;
provided, however, that any excess Annual Additions attributable to
voluntary contributions to other plans shall first be returned to the
Participant from such other plans.
(3) If as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Section 415 Compensation or other
circumstances permitted under Section 415 of the Code, the Annual
Additions attributable to Employer contributions for a particular
Participant would cause the limitations set forth in this paragraph (e)
to be exceeded, the
26
<PAGE> 27
excess amount shall be held unallocated in a suspense account for the
Plan Year and reallocated among the Participants as of the end of the
next Plan Year to all of the Participants in the Plan in the same
manner as an Employer contribution under the terms of paragraph (d)(2)
of this Article VII before any further Employer contributions are
allocated to the Accounts of the Participants, and such allocations
shall be treated as Annual Additions to the Accounts of the
Participants. In the event that the limits on Annual Additions for any
Participant would be exceeded before all of the amounts in the suspense
account are allocated among the Participants, then such excess amounts
shall be retained in the suspense account to be reallocated as of the
end of the next Plan Year and any succeeding Plan Years until all
amounts in the suspense account are exhausted. The suspense account
shall be credited or charged, as the case may be, with a share of the
"earnings factor" for each Valuation Period during which it is in
existence as if it were an Account of a Participant.
(4) In the event that any Participant participates in both a
defined benefit plan and a defined contribution plan maintained by his
Employer or an Affiliate thereof, then the sum of the Defined Benefit
Plan Fraction and the Defined Contribution Plan Fraction for any
Limitation Year shall not exceed 1.0. For these purposes,
(A) The Defined Benefit Plan Fraction is a fraction, the
numerator of which is the projected annual benefit of the
Participant under the defined benefit plan determined as of the
close of the Limitation Year and the denominator of which is the
lesser of (1) the product of 1.25 times the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for such Limitation
Year or (2) the product of 1.4 times the amount that may be taken
into account under Section 415(b)(1)(B) of the Code with respect to
such Participant for such Limitation Year.
(B) The Defined Contribution Plan Fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Accounts as of the close of the Limitation Year (less
any amount that may be subtracted from the numerator in accordance
with any applicable statutes, notices or rulings) and the
denominator of which is the sum of the lesser of the following
amounts determined for such year and for each prior Year of Service
with the Employer: (1) the product of 1.25 times the dollar
limitation in effect under Section 415(c)(1)(A) of the Code for
such Limitation Year (determined without regard to Section
415(c)(6) of the Code) or (2) the product of 1.4 times the amount
that may be taken into account under Section 415(c)(1)(B) of the
Code with respect to such Participant for such Limitation Year.
(C) The figure "1.0" shall be substituted for the figure "1.25"
set forth in sections (A) and (B) for each year in which this Plan
is a Top Heavy Plan unless (1) the defined benefit plan provides a
minimum benefit equal to 3% of each Participant's Compensation
times the number of years (not exceeding 10) the Plan is a Top
Heavy Plan or the defined contribution plan provides a minimum
contribution equal to 4% (7-1/2% if the Participant participates in
both the defined benefit plan and the defined contribution plan) of
each Participant's Section 415 Compensation, and (2) the present
value of the cumulative accrued benefits (not including rollover
contributions made
27
<PAGE> 28
after December 31, 1983) of the Key Employees for such year does
not exceed 90% of the present value of the accrued benefits (not
including rollover contributions made after December 31, 1983)
under all plans. Such values shall be determined in the same manner
as described in the "Top Heavy" definition in Article I.
(D) At the election of the Administrator, the denominator under
section (B) may be determined with respect to all Limitation Years
ending before January 1, 1983, by multiplying (1) the denominator,
as calculated under section (B) (as in effect for the Plan Year
ending in 1982), for the Limitation Year ending in 1982 by (2) the
transition fraction. For these purposes, the term "transition
fraction" means a fraction with a numerator equal to the lesser of
(1) $51,875 or (2) 1.4 multiplied by 25% of the Compensation of the
Participant for the Limitation Year ending in 1981 and with a
denominator equal to the lesser of (1) $41,500 or (2) 25% of the
Compensation of the Participant for the Plan Year ending in 1981.
The transition fraction shall be applied by substituting the figure
$41,500 for the figure $51,875 if this Plan is a Top Heavy Plan.
(5) For purposes of applying the limitations of this paragraph (e)
for a particular Limitation Year,
(A) all qualified defined benefit plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined benefit plan, and
(B) all qualified defined contribution plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined contribution plan.
ARTICLE VIII
BENEFITS UNDER THE PLAN
(a) RETIREMENT BENEFIT.
(1) A Participant shall be entitled to retire from the employ of
his Employer upon such Participant's Normal Retirement Date. Until a
Participant actually retires from the employ of his Employer, no
retirement benefits shall be payable to him, and he shall continue to
be treated in all respects as a Participant; provided, however, that a
Participant shall begin receiving payment of his retirement benefit no
later than the April 1 after the end of the calendar year in which he
attains age 70 1/2 or actually retires from the employ of his Employer,
whichever is later; provided, however, that an Employee who is a 5%
owner (as defined in Section 416 of the Code) shall begin receiving
payment of his retirement benefit no later than the April 1 after the
end of the calendar year in which he attains age 70 1/2, even if he has
not actually retired from the employ of his Employer at that time.
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<PAGE> 29
Notwithstanding the preceding provisions of this paragraph (a)(1),
nothing contained herein shall affect a Participant's right to begin
receiving his benefit in accordance with the minimum distribution
requirements under Section 401(a)(9) of the Code.
(2) Upon the retirement of a Participant as provided in
subparagraph (1), and subject to adjustment as provided in paragraph
(d) of Article IX, such Participant shall be entitled to a retirement
benefit in an amount equal to 100% of the balances in his Accounts as
of the Valuation Date immediately preceding or concurring with the date
of his retirement, plus the amount of any contributions to his Rollover
Contribution Account made subsequent to such Valuation Date and not
used to purchase insurance.
(b) DISABILITY BENEFIT.
(1) In the event a Participant's employment with his Employer is
terminated by reason of his total and permanent disability, and subject
to adjustment as provided in paragraph (d) of Article IX, such
Participant shall be entitled to a disability benefit in an amount
equal to 100% of the balances in his Accounts as of the Valuation Date
immediately preceding or concurring with the date of the termination of
his employment, plus the amount of any contributions to his Rollover
Contribution Account made subsequent to such Valuation Date and not
used to purchase insurance.
(2) Total and permanent disability shall mean the total incapacity
of a Participant to perform the usual duties of his employment with his
Employer and will be deemed to have occurred only when certified by a
physician who is acceptable to the Plan Administrator and only if such
proof is received by the Administrator within sixty (60) days after the
date of the termination of such Participant's employment.
(c) SEVERANCE OF EMPLOYMENT BENEFIT.
(1) In the event a Participant's employment with his Employer is
terminated for reasons other than retirement, total and permanent
disability or death, and subject to adjustment as provided in paragraph
(d) of Article IX, such Participant shall be entitled to a severance of
employment benefit in an amount equal to his vested interest in the
balances in his Accounts as of the Valuation Date immediately preceding
or concurring with the date of the termination of his employment, plus
the amount of any contributions to his Rollover Contribution Account
made subsequent to such Valuation Date and not used to purchase
insurance.
(2) A Participant's vested interest in his Matching Contribution
Account and his Employer Contribution Account shall be a percentage of
the balance of such Account as of the applicable Valuation Date, based
upon such Participant's Years of Service as of the date of the
termination of his employment, as follows:
29
<PAGE> 30
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED YEARS
YEARS OF SERVICE INTEREST
---------------- ------------
<S> <C>
Less than 1 Year of Service 0%
1 year, but less than 2 years 25%
2 years, but less than 3 years 50%
3 years, but less than 4 years 75%
4 years or more 100%
</TABLE>
Notwithstanding the foregoing, a Participant shall be 100% vested in
his Employer Contribution Account and Matching Contribution Account
upon attaining his Normal Retirement Date, and he shall be 100% vested
in his Elective Contribution Account, Non-Elective Contribution
Account, Rollover Contribution Account and his Voluntary Contribution
Account at all times, regardless of his age or the number of his Years
of Service.
(3) (A) If the termination of employment results in five
consecutive One Year Breaks in Service, then upon the occurrence of
such five consecutive One Year Breaks in Service, the nonvested
interest of the Participant in his Matching Contribution Account
and his Employer Contribution Account as of the Valuation Date
immediately preceding or concurring with the date of his
termination of employment shall be deemed to be forfeited and such
forfeited amount shall be reallocated, pursuant to the provisions
of paragraph (d) of Article VII, at the end of the Plan Year
concurring with the date the fifth such consecutive One Year Break
in Service occurs. If the Participant is later reemployed by an
Employer or an Affiliate, the unforfeited balance, if any, in his
Employer Contribution Account that has not been distributed to such
Participant shall be set aside in a separate account, and such
Participant's Years of Service after any five consecutive One Year
Breaks in Service resulting from such termination of employment
shall not be taken into account for the purpose of determining the
vested interest of such Participant in the balance of his Matching
Contribution Account and his Employer Contribution Account that
accrued before such five consecutive One Year Breaks in Service.
(B) Notwithstanding any other provision of this paragraph (c),
if a Participant is reemployed by an Employer or an Affiliate and,
as a result, no five consecutive One Year Breaks in Service occur,
the Participant shall not be entitled to any severance of
employment benefit as a result of such termination of employment;
provided, however, that nothing contained herein shall require or
permit the Participant to return or otherwise have restored to his
Matching Contribution Account and his Employer Contribution Account
any funds distributed to him prior to his reemployment and the
determination that no five consecutive One Year Breaks in Service
would occur.
(4) (A) Notwithstanding any other provision of this paragraph (c),
if at any time a Participant is less than 100% vested in his
Matching Contribution Account and his Employer Contribution Account
and, as a result of his severance of employment, he receives his
entire vested severance of employment benefit pursuant to the
provisions
30
<PAGE> 31
of Article IX, and the distribution of such benefit is made not
later than the close of the fifth Plan Year following the Plan Year
in which such termination occurs (or such longer period as may be
permitted by the Secretary of the Treasury, through regulations or
otherwise), then upon the occurrence of such distribution, the
non-vested interest of the Participant in his Matching Contribution
Account and his Employer Contribution Account shall be deemed to be
forfeited and such forfeited amount shall be reallocated, pursuant
to the provisions of paragraph (d) of Article VII, at the end of
the Plan Year immediately following or concurring with the date
such distribution occurs.
(B) If a Participant is not vested as to any portion of his
Matching Contribution Account and his Employer Contribution
Account, he will be deemed to have received a distribution
immediately following his severance of employment. Upon the
occurrence of such deemed distribution, the non-vested interest of
the Participant in his Matching Contribution Account and his
Employer Contribution Account shall be deemed to be forfeited and
such forfeited amount shall be reallocated, pursuant to the
provisions of paragraph (d) of Article VII, at the end of the Plan
Year immediately following or concurring with the date such deemed
distribution occurs.
(C) If a Participant whose interest is forfeited under this
subparagraph (4) is reemployed by an Employer or an Affiliate, then
such Participant shall have the right to repay to the Trust, before
the date that is the earlier of (1) five years after the
Participant's resumption of employment or (2) the close of a period
of five consecutive One Year Breaks in Service commencing after his
distribution, the full amount of the severance of employment
benefit previously distributed to him. If the Participant elects to
repay such amount to the Trust within the time periods prescribed
herein, or if a non-vested Participant whose interest was forfeited
under this subparagraph (4) is reemployed by an Employer or an
Affiliate prior to the occurrence of five consecutive One Year
Breaks in Service, the non-vested interest of the Participant
previously forfeited pursuant to the provisions of this
subparagraph (4) shall be restored to the Matching Contribution
Account and the Employer Contribution Account of the Participant,
such restoration to be made from forfeitures of non-vested
interests and, if necessary, by contributions of his Employer, so
that the aggregate of the amounts repaid by the Participant and
restored by the Employer shall not be less than the Matching
Contribution Account and Employer Contribution Account balance of
the Participant at the time of forfeiture unadjusted by any
subsequent gains or losses.
(d) DEATH BENEFIT.
(1) In the event of the death of a Participant, and subject to
adjustment as provided in paragraph (d) of Article IX, his beneficiary
shall be entitled to a death benefit in an amount equal to 100% of the
balances in his Accounts as of the Valuation Date immediately preceding
or concurring with the date of his death, plus the death benefits
provided by any insurance contract or contracts purchased and held by
the Trustee in excess of the cash value, if any, thereof included in
such balances as of such Valuation Date, and plus the amount of any
31
<PAGE> 32
contributions to his Rollover Contribution Account made subsequent to
such Valuation Date and not used to purchase insurance.
(2) Subject to the provisions of subparagraph (3), at any time and
from time to time, each Participant shall have the unrestricted right
to designate a beneficiary to receive his death benefit and to revoke
any such designation. Each designation or revocation shall be evidenced
by written instrument filed with the Plan Administrator, signed by the
Participant and bearing the signatures of at least two persons as
witnesses to his signature. In the event that a Participant has not
designated a beneficiary or beneficiaries, or if for any reason such
designation shall be legally ineffective, or if such beneficiary or
beneficiaries shall predecease the Participant, then the estate of such
Participant shall be deemed to be the beneficiary designated to receive
such death benefit, or if no personal representative is appointed for
the estate of such Participant, then his next of kin under the statute
of descent and distribution of the state of such Participant's domicile
at the date of his death shall be deemed to be the beneficiary or
beneficiaries to receive such death benefit.
(3) Notwithstanding the foregoing, if the Participant is married as
of the date of his death, the Participant's surviving spouse shall be
deemed to be his designated beneficiary and shall receive the full
amount of the death benefit attributable to the Participant unless the
spouse consents or has consented to the Participant's designation of
another beneficiary. Any such consent to the designation of another
beneficiary must acknowledge the effect of the consent, must be
witnessed by a Plan representative or by a notary public and shall be
effective only with respect to that spouse. A spouse's consent may be
either a restricted consent (which may not be changed as to the
beneficiary or (except as otherwise permitted by law) form of payment
unless the spouse consents to such change in the manner described
herein) or a blanket consent (which acknowledges that the spouse has
the right to limit consent only to a specific beneficiary or a specific
form of payment, and that the spouse voluntarily elects to relinquish
one or both of such rights). Notwithstanding the preceding provisions
of this subparagraph (3), a Participant shall not be required to obtain
a spousal consent if (A) the Participant is legally separated or the
Participant has been abandoned, and the Participant provides the
Administrative Committee with a court order to such effect, or (B) the
spouse cannot be located.
ARTICLE IX
FORM AND PAYMENT OF BENEFITS
(a) TIME FOR DISTRIBUTION OF BENEFITS.
(1) Except as otherwise provided under this Article IX, the amount
of the benefit to which a Participant is entitled under paragraphs (a),
(b) or (d) of Article VIII shall be paid to him or, in the case of a
death benefit, shall be paid to said Participant's beneficiary or
beneficiaries as provided in paragraph (b) of this Article IX,
beginning as soon as practicable following the Participant's
retirement, disability or death, as the case may be.
32
<PAGE> 33
(2) Except as otherwise provided under this Article IX, the amount
of the severance of employment benefit to which a Participant is
entitled under paragraph (c) of Article VIII shall be paid to a
Participant as provided in paragraph (b) of this Article IX, as soon as
practicable following the Participant's severance of employment.
(3) Notwithstanding the provisions of subparagraphs (1) and (2):
(A) Any distribution paid to a Participant (or, in the case of
a death benefit, to his beneficiary or beneficiaries) pursuant to
subparagraph (1) or (2) shall commence not later than the earlier
of:
(i) the 60th day after the last day of the Plan Year in
which the Participant's employment is terminated or, if later,
in which occurs the Participant's Normal Retirement Date, or in
the case of a retirement benefit, such later date as the
Participant may request; or
(ii) a. for calendar years beginning before January 1,
1997, he reaches age 70 1/2 (except that a Participant who is
still employed after December 31, 1996 may elect to defer all
further distributions under this section until after his
retirement), or
b. for calendar years beginning after December 31,
1997, he attains age 70 1/2 or retires, whichever is later;
provided, however, that an Employee who is a 5% owner (as
defined in Section 416 of the Code) shall begin receiving
payment of his retirement benefit no later than the April 1
after the end of the calendar year in which he attains age 70
1/2, even if he has not actually retired from the employ of his
Employer at that time.
Notwithstanding the foregoing, nothing contained herein shall
affect a Participant's right to begin receiving his benefit in
accordance with the minimum distribution requirements under Section
401(a)(9) of the Code.
(B) No distribution shall be made of the benefit to which a
Participant is entitled under paragraph (a), (b) or (c) of Article
VIII prior to his Normal Retirement Date unless the value of his
benefit does not exceed $5,000 (or, for Plan Years beginning before
March 1, 1998, $3,500), or unless the Participant consents to the
distribution. In the event that a Participant does not consent to a
distribution of a benefit in excess of $5,000 (or, for Plan Years
beginning before March 1, 1998, $3,500) to which he is entitled
under paragraph (a), (b) or (c) of Article VIII, the amount of his
benefit shall begin to be paid to the Participant not later than
sixty (60) days after the last day of the Plan Year in which the
Participant reaches his Normal Retirement Date, or in the case of a
retirement benefit, such later date as the Participant may request.
33
<PAGE> 34
(b) MANNER OF PAYMENT.
(1) Solely with respect to the retirement benefit provided under
paragraph (a) of Article VIII, the manner of payment shall be
determined by the Participant. The options are:
(A) Option A - Such amount shall be paid or applied in annual
installments as nearly equal as practicable; provided, however,
that no annual payment shall be less than $100; and provided,
further, that the Participant may elect to accelerate the payment
of any part or all of the unpaid installments or to provide that
the unpaid balance shall be used for the benefit of the Participant
under Option B. In the event this option is selected, the portion
of the account of a Participant that is not needed to make annual
payments during the then current Plan Year shall remain a part of
the Trust Fund under Article VII and shall participate in the net
increase or net decrease in the value of said Trust Fund as
provided therein. In no event shall payments under this Option A
extend beyond the life expectancy of the Participant or the joint
life expectancy of the Participant and his designated beneficiary.
If the Participant dies before receiving the entire amount payable
to him, the balance shall be paid in a lump sum to his designated
beneficiary as specified in paragraph (d) of Article VIII.
(B) Option B - Such amount shall be paid in a lump sum.
(2) With respect to all benefits other than a retirement benefit,
the benefit shall be paid in a lump sum.
(3) The Participant (or his spouse) shall be permitted to elect
whether life expectancies will be recalculated for purposes of
distributions hereunder. Such election must be made by the Participant
(or his spouse) no later than the date that distributions are required
to commence pursuant to Section 401(a)(9) of the Code. If the
Participant (or his spouse) fails to make such election, life
expectancies shall not be recalculated.
(4) Notwithstanding the foregoing, payments under any of the
options described in this paragraph shall satisfy the incidental death
benefit requirements and all other applicable provisions of Section
401(a)(9) of the Code, the regulations issued thereunder (including
Prop. Reg. Section 1.401(a)(9)-2), and such other rules thereunder as
may be prescribed by the Commissioner.
(c) LUMP SUM PAYMENT. Notwithstanding the provisions of paragraphs (a)
and (b) of this Article IX, any benefit provided under this Plan that is not
more than $5,000 (or, for Plan Years beginning before March 1, 1998, $3,500)
shall be paid in the form of a lump sum.
(d) PERIODIC ADJUSTMENTS. To the extent the balance of a Participant's
Account has not been distributed and remains in the Plan as of a Valuation Date
and notwithstanding anything contained in the Plan to the contrary, the value of
such remaining balance shall be subject to adjustment pursuant to the provisions
of Article VII.
34
<PAGE> 35
(e) DISTRIBUTION ELECTIONS BEFORE JANUARY 1, 1984. To the extent
permitted by the Code and other applicable law, the provisions of this Article
IX shall not apply to the distribution of any portion of the balance of a
Participant's Account that is subject to a designation made by the Participant
prior to January 1, 1984, if such designation was accepted by the Plan
Administrator and met the requirements of applicable law on December 31, 1983.
(f) DIRECT ROLLOVER DISTRIBUTIONS. Notwithstanding any provision of
this Plan to the contrary that would otherwise limit a Distributee's election
under this Article IX, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have all or any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover. In the event that a Distributee elects to
have only a portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan, the portion must not be less than $500 (adjusted under
such regulations as may be issued from time to time by the Secretary of the
Treasury).
ARTICLE X
DESIGNATED INVESTMENTS
(a) SELECTION OF INVESTMENT FUNDS. The Plan Administrator shall select
four or more mutual funds to be available to Participants for the investment of
their Accounts. The available funds shall include at least one fund meeting the
description below for Fund A, at least one fund meeting the description below
for Fund B, at least one fund meeting the description below for Fund C, and at
least one fund meeting the description below for Fund D:
(1) Fund A - a money market fund or short-term income fund, which
shall consist of commercial paper, U.S. Government or federal agency
obligations, short term corporate obligations, bank certificates of
deposit and/or other types of similar short maturity investments;
(2) Fund B - an income fund, which fund may consist of United
States treasury and agency bonds, notes and bills, corporate bonds,
fixed rate annuity contracts (provided, however, that no such annuity
contract shall be deemed to permit any Participant to receive any
benefit under this Plan in the form of a life annuity), mortgages,
savings accounts or comparable investments;
(3) Fund C - an equity fund, which shall consist of common stock
and other equity investments;
(4) Fund D - an international fund, which shall consist of equity
securities and/or fixed income securities issued outside of the United
States.
In addition to the foregoing mutual and collective fund offerings, each
Participant shall also be given an election to designate that all or a portion
of the funds in his Accounts are to be invested in an employer stock fund, which
shall invest primarily in the Company's common stock; provided, however,
35
<PAGE> 36
that the Agreement of Trust that provides for custody of such fund shall permit
the Trustee thereof to invest such funds, or any part thereof, in other
investments. Notwithstanding the foregoing, no Participant may direct an
investment in the employer stock fund with respect to amounts previously
allocated to his Accounts at the time of the direction, and, with respect to
future contributions, no Participant may direct more than 10% of such future
contributions be invested in the employer stock fund.
(b) ELECTION PROCEDURE. The election described in paragraph (a) shall
be made in writing on such forms as may be approved by the Plan Administrator,
with the Participant designating the percentage of the funds held in his
Accounts that are to be allocated to the various fund offerings; provided,
however, that:
(1) such designation shall be in increments of 1% only; and
(2) the percentage to be allocated to the various fund offerings
shall be the same for each Account of a Participant.
Funds in a Participant's accounts that are not specifically elected to be
invested in the fund offerings (including those situations where a Participant
fails to make any election at all) shall be invested by the Trustee in
accordance with the general provisions of Article V of the Agreement and
Declaration of Trust.
ARTICLE XI
IN-SERVICE WITHDRAWALS
(a) HARDSHIP WITHDRAWALS.
(1) If a Participant incurs a Hardship, such Participant may apply
to the Administrator for the withdrawal of a portion of the vested
balance in his Accounts not in excess of the amount of such Hardship;
provided, however, that in the case of his Employee Contribution
Account, withdrawals may not exceed the actual contributions thereto,
less previous distributions. The Administrator shall determine whether
an immediate and heavy financial need exists and the amount necessary
to meet the need (which amount may include the amount necessary to pay
income taxes and penalties reasonably anticipated to result from the
withdrawal), or the lesser amount, if any, to be distributed to such
Participant, in a uniform and nondiscriminatory manner.
(2) An immediate and heavy financial need shall be deemed to
include
(A) expenses of medical care (as defined in Section 213(d) of
the Code) incurred by the Participant or his spouse or other
dependents (as defined in Section 152 of the Code) or necessary for
such persons to obtain such medical care,
36
<PAGE> 37
(B) payments (other than mortgage payments) directly related to
the purchase of the Participant's principal residence,
(C) payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant or
his spouse, children or other dependents,
(D) payments necessary to prevent the eviction of the
Participant from his principal residence or the foreclosure on the
mortgage of such residence, or
(E) such other events as may be prescribed by the Commissioner
of the Internal Revenue Service in revenue rulings, notices and
other documents of general applicability.
A financial need shall not fail to qualify as immediate and heavy
merely because such need was reasonably foreseeable or voluntarily
incurred by the Participant.
(3) A distribution of elective contributions will be deemed
necessary to satisfy the financial need of a Participant if
(A) the distribution is not in excess of the amount of the
immediate and heavy financial need of the employee (including any
amount necessary to pay income taxes and penalties reasonably
anticipated to result from the distribution);
(B) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by an Employer;
(C) the Participant's elective contributions to the Plan or any
other qualified or nonqualified plans of deferred compensation
maintained by an Employer are suspended and he is not permitted to
make further elective contributions to the Plan or any other plan
maintained by an Employer for the Participant's taxable year
immediately following the taxable year of the hardship distribution
in excess of the applicable limit under Section 402(g) of the Code
for such next taxable year less the amount of such Participant's
elective contributions for the taxable year of the hardship
distribution; and
(D) the Participant's elective contributions to the Plan or any
other plan maintained by an Employer are suspended and he is not
permitted to make further elective contributions until the day
following the expiration of 12 months from the date of such
distribution; and
(4) Any Participant who withdraws an amount pursuant to
subparagraph (1) shall be subject to the limitations of paragraphs
(a)(1)(A)(ii) and (a)(6) of Article VI.
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<PAGE> 38
(b) WITHDRAWALS AFTER AGE 59 1/2. Upon reaching age 59 1/2, a
Participant may apply to the Administrator for the withdrawal of his Elective
Contribution Account in a lump sum. The Administrator shall establish uniform
and nondiscriminatory rules and procedures regarding the distribution of
benefits pursuant to this paragraph. The Administrator shall direct the Trustee
to distribute to a Participant who has applied for such a withdrawal the amount
held in his Elective Contribution Account.
ARTICLE XII
LOANS TO PARTICIPANTS
(a) AVAILABILITY OF LOANS.
(1) The Plan Administrator, in accordance with its uniform
nondiscriminatory policy, may direct the Trustee, upon application of a
Participant who is actively employed by an Employer, to make a loan to
such Participant out of his Accounts as a designated investment by such
Participant.
(2) Unless otherwise directed by the Administrator, Merrill Lynch
shall act as agent of the Administrator for purposes of the loan
program and shall be authorized to coordinate the loan program set
forth herein on behalf of the Administrator. Applications shall be
submitted to such person on forms obtained from such person.
(3) The amount advanced, when added to the outstanding balance of
all other loans to the Participant from this Plan or any other
qualified retirement plan adopted by the Participant's Employer or an
Affiliate, may not exceed the lesser of:
(A) $50,000, reduced by the excess, if any, of:
(i) the Participant's highest aggregate outstanding
balance of all loans from the Plan (or any other qualified
retirement plan adopted by the Participant's Employer or an
Affiliate) during the one (1) year period ending on the day
before the date on which the loan is made, over
(ii) the aggregate outstanding balance of all loans
from the Plan (or any other qualified retirement plan
adopted by the Participant's Employer or an Affiliate) on
the date on which the loan is made; or
(B) 50% of the vested aggregate balances of the Participant's
Accounts.
(4) The minimum amount that may be borrowed by the Participant
shall be $500.
(5) A Participant may have only one loan outstanding at any one
time; and a Participant may obtain only one loan in any one
twelve-month period.
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<PAGE> 39
(6) Notwithstanding the foregoing, no Participant shall be entitled
to borrow an amount that the Plan Administrator determines could not be
adequately secured by the portion of such Participant's Accounts that
is permitted to be held as security pursuant to applicable Department
of Labor Regulations.
(7) Each loan shall be secured by 50% of the vested interest of the
Participant in his Accounts. The Administrator shall not accept any
other form of security.
(b) TIME AND MANNER OF REPAYMENT. Any loan made under this Article
shall be repayable to the Trust at such times and in such manner as may be
provided by the Administrator, subject to the following limitations:
(1) The Administrator may, but is not obligated to, require each
Participant to agree to have each required loan payment deducted from
his pay and remitted to the Trustee.
(2) Each loan shall bear interest at a reasonable rate and shall
provide for substantially level amortization of principal and interest
no less frequently than quarterly. The interest rate charged shall be
comparable to the rate charged by commercial lending institutions in
the region in which the Employer is located for comparable loans as
determined by the Plan Administrator at the time the loan is approved.
(3) Each loan shall be repaid within a specified period of time.
Such period shall not exceed (5) years, unless the loan is used to
acquire the principal residence of the Participant.
(c) REPAYMENT UPON DISTRIBUTION. If, at the time benefits are to be
distributed (or to commence being distributed) to a Participant upon his
retirement, death, disability or separation from service, there remains any
unpaid balance of a loan hereunder, such unpaid balance shall, to the extent
consistent with Department of Labor regulations, become immediately due and
payable in full. Whether or not there is a default pursuant to paragraph (d) of
this Article XII, such unpaid balance, together with any accrued but unpaid
interest on the loan, shall be deducted from such Participant's Accounts before
any distribution is made. Except as may be required in order to comply (in a
manner consistent with continued qualification of the Plan under Section 401(a)
of the Code) with Department of Labor regulations, no loans shall be made or
remain outstanding with respect to a Participant under this Article XII after
the time distributions to the Participant are to be paid or commence.
(d) DEFAULT. In the event of default, the Trustee, at the direction of
the Administrator, may proceed to collect said loan with any legal remedy
available, including reducing the amount of any distribution permitted under
Articles VIII and IX by the amount of any such loan that may be due and owing as
of the date of distribution or any other action that may be permitted by law.
"Events of Default" shall include any failure to make a payment of principal or
interest attributable to the loan when due; failure to perform or to comply with
any obligations imposed by any agreement executed by the Borrower securing his
loan obligation; and any other conditions or requirements set forth within a
promissory note or security agreement that may be required in order to ensure
that the terms of the loan are consistent with commercially reasonable
practices. Failure to make any installment payment when due in accordance with
the terms of the loan results in a deemed distribution at the time of such
39
<PAGE> 40
failure (or, if later, the last day of any grace period permitted by the Plan
Administrator). However, in no event shall the Plan Administrator apply the
defaulting Participant's Accounts to satisfy his repayment obligation, unless
the amount so applied otherwise could be distributed in accordance with the
terms of the Plan, the Code and any applicable Treasury Regulations.
ARTICLE XIII
TRUST FUND
The Trust Fund shall be held by Jack P. Wissman and Philip R. Albright,
as Trustees, or by a successor trustee or trustees, for use in accordance with
the Plan under the Agreement and Declaration of Trust. The Agreement and
Declaration of Trust may from time to time be amended in the manner therein
provided. Similarly, the Trustee(s) may be changed from time to time in the
manner provided in the Agreement and Declaration of Trust.
ARTICLE XIV
EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND
The Company shall bear all expenses of implementing this Plan and the
Trust. For its services, any corporate trustee shall be entitled to receive
reasonable compensation in accordance with its rate schedule in effect from time
to time for the handling of a retirement trust. Any individual Trustee shall be
entitled to such compensation as shall be arranged between the Company and the
Trustee by separate instrument; provided, however, that no person who is already
receiving full-time pay from any Employer or any Affiliate shall receive
compensation from the Trust Fund (except for the reimbursement of expenses
properly and actually incurred). The Company may pay all expenses of the
administration of the Trust Fund, including the Trustee's compensation, the
compensation of any investment manager, the expense incurred by the Plan
Administrator in discharging its duties, all income or other taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon or
in respect of the Trust Fund, and any interest that may be payable on money
borrowed by the Trustee for the purpose of the Trust and any Employer may pay
such expenses as relate to Participants employed by such Employer. Any such
payment by the Company or an Employer shall not be deemed a contribution to this
Plan. Such expenses shall be paid out of the assets of the Trust Fund unless
paid or provided for by the Company or another Employer. Notwithstanding
anything contained herein to the contrary, no excise tax or other liability
imposed upon the Trustee, the Plan Administrator or any other person for failure
to comply with the provisions of any federal law shall be subject to payment or
reimbursement from the assets of the Trust.
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<PAGE> 41
ARTICLE XV
AMENDMENT AND TERMINATION
(a) RESTRICTIONS ON AMENDMENT AND TERMINATION OF THE PLAN. It is the
present intention of the Company to maintain the Plan set forth herein
indefinitely. Nevertheless, the Company specifically reserves to itself the
right at any time and from time to time to amend or terminate this Plan in whole
or in part; provided, however, that no such amendment:
(1) shall have the effect of vesting in any Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent funds held subject to the terms of the Trust;
(2) shall cause or permit any property held subject to the terms of
the Trust to be diverted to purposes other than the exclusive benefit
of the Participants and their beneficiaries or for the administrative
expenses of the Plan Administrator and the Trust;
(3) shall reduce any vested interest of a Participant on the later
of the date the amendment is adopted or the date the amendment is
effective, except as permitted by law;
(4) shall reduce the Accounts of any Participant;
(5) shall amend any vesting schedule with respect to any
Participant who has at least three Years of Service at the end of the
election period described below, except as permitted by law, unless
each such Participant shall have the right to elect to have the vesting
schedule in effect prior to such amendment apply with respect to him,
such election, if any, to be made during the period beginning not later
than the date the amendment is adopted and ending no earlier than sixty
(60) days after the latest of the date the amendment is adopted, the
amendment becomes effective or the Participant is issued written notice
of the amendment by his Employer or the Plan Administrator; or
(6) shall increase the duties or liabilities of the Trustee without
its written consent.
(b) AMENDMENT OF PLAN. Subject to the limitations stated in paragraph
(a), the Company shall have the power to amend this Plan in any manner that it
deems desirable, and, not in limitation but in amplification of the foregoing,
it shall have the right to change or modify the method of allocation of
contributions hereunder, to change any provision relating to the administration
of this Plan and to change any provision relating to the distribution or
payment, or both, of any of the assets of the Trust.
(c) TERMINATION OF PLAN. Any Employer, in its sole and absolute
discretion, may permanently discontinue making contributions under this Plan or
may terminate this Plan and the Trust (with respect to all Employers if it is
the Company, or with respect to itself alone if it is an Employer other than the
Company), completely or partially, at any time without any liability whatsoever
for such permanent discontinuance or complete or partial termination. In any of
such events, the affected Participants, notwithstanding any other provisions of
this Plan, shall have fully vested interests in the
41
<PAGE> 42
amounts credited to their respective Accounts at the time of such complete or
partial termination of this Plan and the Trust or permanent discontinuance of
contributions. All such vested interests shall be nonforfeitable.
(d) METHOD OF DISCONTINUANCE. In the event an Employer decides to
permanently discontinue making contributions, such decision shall be evidenced
by an appropriate resolution of its Board and a certified copy of such
resolution shall be delivered to the Plan Administrator and the Trustee. All of
the assets in the Trust Fund belonging to the affected Participants on the date
of discontinuance specified in such resolutions shall, aside from becoming fully
vested as provided in paragraph (c), be held, administered and distributed by
the Trustee in the manner provided under this Plan. In the event of a permanent
discontinuance of contributions without such formal documentation, full vesting
of the interests of the affected Participants in the amounts credited to their
respective Accounts will occur on the last day of the year in which a
substantial contribution is made to the Trust.
(e) METHOD OF TERMINATION.
(1) In the event an Employer decides to terminate this Plan and the
Trust, such decision shall be evidenced by an appropriate resolution of
its Board and a certified copy of such resolution shall be delivered to
the Plan Administrator and the Trustee. After payment of all expenses
and proportional adjustments of individual accounts to reflect such
expenses and other changes in the value of the Trust Fund as of the
date of termination, each affected Participant or the beneficiary of
any such Participant shall be entitled to receive, in a lump sum, any
amount then credited to his Accounts.
(2) At the election of the Participant, the Plan Administrator may
transfer the amount of any Participant's distribution under this
paragraph (e) to the trustee of another qualified plan or the trustee
of an individual retirement account or individual retirement annuity
instead of distributing such amount to the Participant. Any such
election by a Participant shall be in writing and filed with the Plan
Administrator.
ARTICLE XVI
MISCELLANEOUS
(a) MERGER OR CONSOLIDATION. This Plan and the Trust may not be merged
or consolidated with, and the assets or liabilities of this Plan and the Trust
may not be transferred to, any other plan or trust unless each Participant would
receive a benefit immediately after the merger, consolidation or transfer, if
the plan and trust then terminated, that is equal to or greater than the benefit
the Participant would have received immediately before the merger, consolidation
or transfer if this Plan and the Trust had then terminated.
(b) ALIENATION.
(1) Except as provided in subparagraph (2), no Participant or
beneficiary of a Participant shall have any right to assign, transfer,
appropriate, encumber, commute, anticipate
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<PAGE> 43
or otherwise alienate his interest in this Plan or the Trust or any
payments to be made thereunder; no benefits, payments, rights or
interests of a Participant or beneficiary of a Participant of any kind
or nature shall be in any way subject to legal process to levy upon,
garnish or attach the same for payment of any claim against the
Participant or beneficiary of a Participant; and no Participant or
beneficiary of a Participant shall have any right of any kind
whatsoever with respect to the Trust, or any estate or interest
therein, or with respect to any other property or right, other than the
right to receive such distributions as are lawfully made out of the
Trust, as and when the same respectively are due and payable under the
terms of this Plan and the Trust.
(2) Notwithstanding the provisions of subparagraph (1), the Plan
Administrator shall direct the Trustee to make payments pursuant to a
Qualified Domestic Relations Order as defined in Section 414(p) of the
Code. The Plan Administrator shall establish procedures consistent with
Section 414(p) of the Code to determine if any order received by the
Plan Administrator or any other fiduciary of the Plan is a Qualified
Domestic Relations Order.
(c) GOVERNING LAW. This Plan shall be administered, construed and
enforced according to the laws of the State of Florida, except to the extent
such laws have been expressly preempted by federal law.
(d) VETERANS' REEMPLOYMENT RIGHTS. Notwithstanding any provision of
this Plan to the contrary, effective as of December 12, 1994, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
(e) ACTION BY EMPLOYER. Whenever the Company or another Employer under
the terms of this Plan is permitted or required to do or perform any act, it
shall be done and performed by the Board of Directors of the Company or such
other Employer and shall be evidenced by proper resolution of such Board of
Directors certified by the Secretary or Assistant Secretary of the Company or
such other Employer.
(f) ALTERNATIVE ACTIONS. In the event it becomes impossible for the
Company, another Employer, the Plan Administrator or the Trustee to perform any
act required by this Plan, then the Company, such other Employer, the Plan
Administrator or the Trustee, as the case may be, may perform such alternative
act that most nearly carries out the intent and purpose of this Plan.
(g) GENDER. Throughout this Plan, and whenever appropriate, the
masculine gender shall be deemed to include the feminine and neuter; the
singular, the plural; and vice versa.
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<PAGE> 44
IN WITNESS WHEREOF, this Twenty-Third Amendment has been executed this
___ day of July, 1998.
ATTEST: LAMALIE ASSOCIATES, INC.
(CORPORATE SEAL)
By:
- ------------------------------------- ----------------------------------
Secretary President
"COMPANY"
44
<PAGE> 45
TWENTY-THIRD AMENDMENT
OF THE
LAI WARD HOWELL
PROFIT SHARING AND SAVINGS PLAN
AMENDED AND RESTATED
AS OF
AUGUST 1, 1998
<PAGE> 46
TWENTY-THIRD AMENDMENT
OF THE
LAI WARD HOWELL
PROFIT SHARING AND SAVINGS PLAN
AMENDED AND RESTATED
AS OF
AUGUST 1, 1998
<TABLE>
<CAPTION>
PAGE
ARTICLE TITLE NUMBER
<S> <C>
ARTICLE I Definitions................................... 1
ARTICLE II Name of the Plan.............................. 10
ARTICLE III Purpose of the Plan and the Trust............. 10
ARTICLE IV Plan Administrator............................ 11
ARTICLE V Eligibility and Participation................. 13
ARTICLE VI Contributions to the Trust.................... 13
ARTICLE VII Participants' Accounts and
Allocation of Contributions................. 23
ARTICLE VIII Benefits Under the Plan....................... 28
ARTICLE IX Form and Payment of Benefits.................. 32
ARTICLE X Designated Investments........................ 35
ARTICLE XI In-Service Withdrawals........................ 36
ARTICLE XII Loans to Participants......................... 38
ARTICLE XIII Trust Fund.................................... 40
ARTICLE XIV Expenses of Administration of
the Plan and the Trust Fund................. 40
ARTICLE XV Amendment and Termination..................... 41
ARTICLE XVI Miscellaneous................................. 42
</TABLE>
<PAGE> 1
EXHIBIT 10.9
(LOGO LAI WARD HOWELL)
LAMALIE ASSOCIATES, INC.
1998 OMNIBUS STOCK AND INCENTIVE PLAN
EFFECTIVE JANUARY 21, 1998
AS AMENDED THROUGH SEPTEMBER 29, 1998
<PAGE> 2
TABLE OF CONTENTS
EFFECTIVE JANUARY 21, 1998
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C> <C>
SECTION 1. Establishment; Purpose...................................... 2
SECTION 2. Definitions................................................. 2
SECTION 3. Types of Awards Under Plan.................................. 4
SECTION 4. Eligibility................................................. 4
SECTION 5. Number of Shares Covered by Awards.......................... 4
SECTION 6. Administration.............................................. 4
SECTION 7. Stock Options............................................... 5
SECTION 8. Stock Appreciation Rights................................... 8
SECTION 9. Performance Shares and Units................................ 9
SECTION 10. Restricted Stock, Restricted Stock Units, and Unrestricted
Stock....................................................... 10
SECTION 11. Adjustment of Number of Shares.............................. 11
SECTION 12. Change of Control........................................... 12
SECTION 13. Beneficiary Designation..................................... 12
SECTION 14. Tax Withholding............................................. 12
SECTION 15. Indemnification............................................. 12
SECTION 16. Gender and Number........................................... 12
SECTION 17. Controlling Law............................................. 13
SECTION 18. No Stockholder Rights....................................... 13
SECTION 19. Amendments; Termination or Suspension....................... 13
SECTION 20. Miscellaneous............................................... 13
</TABLE>
1
<PAGE> 3
LAMALIE ASSOCIATES, INC.
1998 OMNIBUS STOCK AND INCENTIVE PLAN
EFFECTIVE JANUARY 21, 1998
AS AMENDED THROUGH SEPTEMBER 29, 1998
SECTION 1. Establishment; Purpose. Lamalie Associates, Inc. (the
"Company") hereby establishes the 1998 Omnibus Stock and Incentive Plan (the
"Plan"), pursuant to which key employees of the Company will be given the
ability to participate in increases in value of the Company. Under the Plan, the
Company may grant any one or more type of incentive awards to professional and
managerial employees who measurably impact the performance of the Company.
SECTION 2. Definitions. The following words and terms as used herein shall
have that meaning set forth therefor in this Section 2 unless a different
meaning is clearly required by the context.
(a) "Awards" shall mean any Options, SARs, Performance Units, Performance
Shares, Restricted Stock Units, Restricted Stock and Unrestricted Stock granted
or awarded under the Plan.
(b) "Award Agreement(s)" shall mean any document, agreement or certificate
deemed by the Committee as necessary or advisable to be entered into with or
delivered to a Participant in connection with or as a condition precedent to the
valid completion of the grant of an Award under the Plan. Award Agreements
include Stock Option Agreements, Stock Appreciation Right Agreements,
Performance Agreements and Restriction Agreements.
(c) "Board" or "Board of Directors" shall mean the Board of Directors of
the Company.
(d) "Change in Control" shall mean:
(i) a change in control of the Company of a nature that is required,
pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), to be
reported in response to Item 1(a) of a Current Report on Form 8-K or Item
6(e) of Schedule 14A, in each case as such requirements are in effect on
June 1, 1998;
(ii) the adoption by the Company of a plan of dissolution or
liquidation;
(iii) the closing of a sale of all or substantially all of the assets
of the Company;
(iv) the closing of a merger, reorganization or similar transaction (a
"Transaction") involving the Company in which the Company is not the
surviving corporation or, if the Company is the surviving corporation,
immediately following the closing of the Transaction, persons who were
shareholders of the Company immediately prior to the Transaction own less
than 75% of the combined voting power of the surviving corporation's voting
securities;
(v) the acquisition of "Beneficial Ownership" (as defined in Rule
13d-3 under the 1934 Act) of the Company's securities comprising 25% or
more of the combined voting power of the Company's outstanding securities
by any "person" (as that term is used in Sections 13(d) and 14(d)(2) of the
1934 Act and the rules and regulations promulgated thereunder, but not
including any trustee or fiduciary acting in that capacity for an employee
benefit plan sponsored by the Company) and such person's "affiliates" and
"associates" (as those terms are defined under the 1934 Act); or
(vi) the failure of the "Incumbent Directors" (as defined below) to
constitute at least a majority of all directors of the Company (for these
purposes, "Incumbent Directors" mean individuals who were the directors of
the Company on June 1, 1998, and, after his or her election, any individual
becoming a director subsequent to June 1, 1998, whose election, or
nomination for election by the Company's shareholders, is approved by a
vote of at least two-thirds of the directors then comprising the Incumbent
Directors, except that no individual shall be considered an Incumbent
Director whose initial assumption of office as a director is in connection
with an actual or threatened "election contest" relating to the "election
of directors" of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 1934 Act).
Notwithstanding any provision above to the contrary, no Change in Control shall
be deemed to have occurred with respect to any particular Participant by virtue
of a transaction, or series of transactions, that results in the
2
<PAGE> 4
Participant, or a group of persons that includes the Participant, acquiring the
Beneficial Ownership of more than 25% of the combined voting power of the
Company's outstanding securities.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include a reference to any
successor provision.
(f) "Committee" shall mean the Compensation Committee of the Board of
Directors, as defined in Section 6.
(g) "Common Stock" shall mean the common stock of the Company.
(h) "Company" shall mean Lamalie Associates, Inc. and its successors.
(i) "Fair Market Value" of the Common Stock is defined in Section 7(a).
(j) "Incentive Stock Option" shall mean an Option that is intended to
qualify under Section 422 of the Code.
(k) "Non-Incentive Stock Option" shall mean an Option that is not intended
to qualify under Section 422 of the Code.
(l) "Option" shall mean an Incentive Stock Option or a Non-Incentive Stock
Option granted in accordance with the provisions of Section 7.
(m) "Option Period" is defined in Section 7(c).
(n) "Participant" shall mean any individual employed by the Company or any
Subsidiary to whom the Committee grants an Award.
(o) "Performance Account" is defined in Section 9(b).
(p) "Performance Award" shall mean an Award of Performance Shares and/or
Performance Units.
(q) "Performance Period" is defined in Section 9(c).
(r) "Performance Shares" shall mean shares of Common Stock granted in
accordance with the provisions of Section 9.
(s) "Performance Units" shall mean an Award in a form other than shares of
Common Stock granted in accordance with the provisions of Section 9.
(t) "Plan" shall mean the Lamalie Associates, Inc. 1998 Omnibus Stock and
Incentive Plan, as set forth herein and as amended from time to time.
(u) "Restricted Stock" shall mean shares of Common Stock subject to the
provisions of Section 10 and such other terms and conditions as the Committee
may prescribe, and granted in accordance with the provisions of Section 10.
(v) "Restricted Stock Units" shall mean the right to receive shares of
Common Stock or the cash equivalent thereof subject to the provisions of Section
10 and such other terms and conditions as the Committee may prescribe, and
granted in accordance with the provisions of Section 10.
(w) "Restriction Period" is defined in Section 10(b).
(x) "SAR" shall mean a Stock Appreciation Right granted in accordance with
the provisions of Section 8.
(y) "Stock Appreciation Right" shall mean a SAR.
(z) "Subsidiary" shall mean any corporation that at the time qualifies as a
subsidiary of the Company under the definition of "subsidiary corporation"
contained in Section 424(f) of the Code.
(aa) "Unrestricted Stock" shall mean shares of Common Stock granted in
accordance with the provisions of Section 10 and not subject to restrictions.
3
<PAGE> 5
SECTION 3. Types of Awards Under Plan. The Company may grant under this
Plan Incentive Stock Options, Non-Incentive Stock Options, SARs, Performance
Units, Performance Shares, Restricted Stock, Restricted Stock Units, and
Unrestricted Stock.
SECTION 4. Eligibility. The Company may grant an Award to any person,
including any officer but not a person who is solely a director, who is in the
employ of the Company or any Subsidiary on the date of a grant of such Award.
Awards shall primarily be made to officers and other management and professional
employees of the Company. Any individual to whom the Committee has granted an
Award (a "Participant") shall be bound by the terms of this Plan and the Award
Agreement applicable to him or her.
SECTION 5. Number of Shares Covered by Awards. The total number of shares
that may be issued and sold pursuant to Awards under this Plan shall be One
Million Five Hundred Thousand (1,500,000) shares of Common Stock (or the number
and kind of shares of common stock of the Company or other securities of the
Company which, in accordance with Section 11, shall be substituted for such
shares of Common Stock or to which said shares shall be adjusted; hereinafter,
all references to Common Stock includes references to said shares to which said
shares are adjusted). The issuance of shares of Common Stock pursuant to the
provisions of this Plan for Awards shall be free from any preemptive or
preferential right of subscription or purchase on the part of any stockholder.
If any outstanding Option or Restricted Stock granted or awarded under this Plan
expires, is terminated or is forfeited for any reason, the shares of Common
Stock subject to the unexercised portion of such Option or grant of Restricted
Stock will again be available for Awards under this Plan.
SECTION 6. Administration. (a) This Plan shall be administered by the
committee (the "Committee") referred to in subsection (b) of this Section 6.
However, until such time as the Committee is appointed, the Board of Directors
shall administer the Plan pursuant to the provisions of this Section 6 as if it
were the Committee. Subject to the express provisions of this Plan, the
Committee shall have complete authority, in its discretion,
(i) to interpret this Plan, and to prescribe, amend and rescind rules
and regulations relating to the Plan;
(ii) to determine the terms and provisions of Awards granted hereunder
and to make such determinations as to the Participants to receive Awards,
the form, amount and timing of such Awards, the terms and provisions of
such Awards, and the Award Agreements evidencing the same, which need not
be uniform and which the Committee may make selectively among Participants
who receive, or who are to receive, Awards under the Plan, whether or not
the Participants are similarly situated;
(iii) to determine to whom the Options shall be granted, the times and
the prices at which Options are granted, the Option periods, the number of
shares of Common Stock to be subject to each Option, whether each Option
shall be an Incentive Stock Option or a Non-Incentive Stock Option, and to
determine the terms and provisions of each Option (which need not be
identical);
(iv) to determine to whom SARs shall be granted, the times and
duration of each SAR, the number of shares of Common Stock to which each
SAR relates, whether an SAR is granted with respect to Options or alone,
without reference to any related stock option, and to determine the terms
and provisions of each SAR (which need not be identical);
(v) to determine to whom Performance Shares and Performance Units
shall be granted, the applicable Performance Period, and the number of
shares of Common Stock represented by Performance Shares and Performance
Units, to maintain Performance Accounts, and to determine the terms and
provisions of Performance Awards (which need not be identical);
(vi) to determine to whom Restricted Stock, Restricted Stock Units and
Unrestricted Stock shall be granted, the Restriction Period (if
applicable), the number of shares of Restricted Stock and/or Unrestricted
Stock, the terms and provisions (which need not be identical) of awards of
Restricted Stock and Restricted Stock Units and whether the Participant has
met the goals on or before the close of the Restriction Period;
4
<PAGE> 6
(vii) to impose such limitations with respect to Options and
Restricted Stock, including without limitation, any relating to the
application of federal or state securities laws, as the Committee may deem
necessary or desirable;
(viii) to determine the dates of employment of any employee of the
Company, and the reasons for termination of any Participant;
(ix) to determine whether any leave of absence constitutes a
termination of employment for purposes of this Plan and the impact, if any,
of such leave of absence on awards theretofore made under this Plan;
(x) to determine when a person's change of status with respect to the
Company constitutes a termination of such person's employment for purposes
of this Plan;
(xi) to make such determinations as it deems equitable with respect to
the impact, if any, of leaves of absence from the Company upon Awards
hereunder;
(xii) to grant dividend equivalents upon Awards (other than Restricted
Stock or Unrestricted Stock, for which Participants are entitled to receive
dividends and other distributions paid with respect to shares of Common
Stock so held), provided that any such dividend equivalents shall be
subject to the terms and conditions imposed by the Committee; and
(xiii) to make all other determinations necessary or advisable for the
administration of the Plan.
In making determinations under this Section 6, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the success of the Company and such other
factors as the Committee, in its discretion, deems relevant. The Committee's
determination on all of the matters referred to in this Section 6 shall be
conclusive.
(b) The Committee shall consist of the Compensation Committee of the Board
of Directors of the Company, which shall be comprised of two (2) or more outside
directors. The Committee shall be appointed by the Board, which may at any time
and from time to time, remove any member of the Committee, with or without
cause, appoint additional members to the Committee and fill vacancies, however
caused, in the Committee. A majority of members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination of the Committee reduced
to writing and signed by all of the members of the Committee shall be fully
effective as if it had been made at a meeting duly called and held.
(c) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan.
(d) Nothing contained in this Plan shall be deemed to give any individual
any right to be granted an Award except to the extent and upon such terms and
conditions as may be determined by the Committee.
SECTION 7. Stock Options. Each Option granted under this Plan shall be
evidenced by a written agreement (the "Stock Option Agreement"), which shall be
executed by the Company and by the Participant, and shall be subject to the
following terms and conditions:
(a) The price at which shares of Common Stock covered by each Option may be
purchased pursuant thereto shall be determined in each case on the date of grant
by the Committee; provided, however, that with respect to Incentive Stock
Options, the price shall be an amount not less than the Fair Market Value of the
shares of Common Stock at the time the Incentive Stock Option is granted. The
date on which the Committee approves the grant of an Option shall be considered
to be the date on which such Option is granted. For purposes of this Section,
the Fair Market Value of shares of Common Stock on any day shall be:
(i) in the event the Common Stock is not publicly traded, the fair
market value of such shares on such day as determined by the Committee in
good faith and based on all relevant factors; or
(ii) in the event the Common Stock is publicly traded, the closing
price of such shares on the date in question (or, if no shares are traded
on such day, on the next preceding day on which shares were
5
<PAGE> 7
traded), of the Common Stock on the principal securities exchange in the
United States on which such stock is listed, or if such stock is not listed
on a securities exchange in the United States, the closing price on such
day on the Nasdaq Stock Market ("Nasdaq"), or Nasdaq's successor, or if not
reported on Nasdaq, the fair market value of such stock as determined by
the Committee in good faith and based on all relevant factors or as
otherwise determined by the Committee in its discretion pursuant to any
reasonable method contemplated by Section 422 of the Code and any Treasury
regulations issued pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to each Option
shall be paid in full (i) in United States dollars in cash or by check, bank
draft or money order payable to the order of the Company; (ii) in the discretion
of and in the manner determined by the Committee, by the delivery of shares of
Common Stock already owned by the Participant; (iii) by any other legally
permissible means acceptable to the Committee at the time of grant of the Option
(including cashless exercise as permitted under the Federal Reserve Board's
Regulation T, subject to applicable legal restrictions); or (iv) in the
discretion of the Committee, through a combination of (i), (ii) and (iii) of
this subsection (b). Shares of Common Stock delivered will be valued on the day
of delivery for the purpose of determining the extent to which the option price
has been paid thereby, in the same manner as provided for in the determination
of Fair Market Value as set forth in subsection (a) of this Section 7, or as
otherwise determined by the Committee in its discretion pursuant to any
reasonable method contemplated by Section 422 of the Code and any Treasury
regulations issued pursuant to that Section.
(c) Each Stock Option Agreement shall provide that such Option may be
exercised by the Participant, in such parts and at such times, as may be
specified in such Stock Option Agreement, within a period ending not later than
ten years after the date on which the Option is granted (the "Option Period");
provided, however, that the Option Period shall end on the earlier of the date
specified in such Stock Option Agreement or the ending date of the period
specified in the next sentence. Options may be exercised only during the Option
Period and only
(i) during the continuance of the Participant's employment with the
Company or a Subsidiary;
(ii) if the Participant terminates employment with the Company or a
Subsidiary other than by reason of death, during the period ending ninety
(90) days after the date of termination of employment, but only to the
extent that the right to exercise such Options had accrued on or before the
date of termination and had not previously been exercised; provided, that
if the Participant terminates such employment by reason of disability
(within the meaning of Section 22(e)(3) of the Code) or if the Participant
dies during the ninety (90) day period, the ninety (90) day period shall be
extended to one (1) year; or
(iii) if the Participant dies while employed by the Company or a
Subsidiary, during the period ending on the first anniversary of the
Participant's death, but only to the extent that the right to exercise such
Options had accrued on or before the date of death and had not previously
been exercised.
Whether an authorized leave of absence or absence for military or governmental
service shall constitute termination of employment for purposes of the Plan
shall be determined by the Committee, whose determination shall be final and
conclusive. In the event of the death of a Participant, Options held by the
Participant may be exercised, to the extent specified in the Stock Option
Agreement and this subsection (c), by the person or persons entitled to do so
under the Participant's will, or, if the Participant fails to make testamentary
disposition of said Options, or dies intestate, by the Participant's legal
representative or representatives.
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<PAGE> 8
(d) Unless otherwise specified by the Committee, each Option shall be
exercisable, in whole or in part, only in accordance with the following chart:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF YEARS FROM SHARES
DATE OPTION IS GRANTED EXERCISABLE
- ---------------------- -------------
<S> <C>
Less than 1 year............................................ 0%
1 year but less than 2 years................................ 25%
2 years but less than 3 years............................... 50%
3 years but less than 4 years............................... 75%
4 years or more............................................. 100%
</TABLE>
Notwithstanding the foregoing, a Participant shall be 100% vested in the number
of shares of Common Stock originally covered by an Option in the event
Participant dies or becomes totally and permanently disabled (as determined in
the sole discretion of the Committee) while still employed by the Company or
upon a Change in Control while the Participant is still so employed. When it
deems special circumstances to exist, the Committee in its discretion may
accelerate the time at which an Option may be exercised if, under previously
established exercise terms, such Option was not immediately exercisable in full,
even if the acceleration would permit the Option to be exercised more rapidly
than the vesting set forth above in the chart, or as otherwise specified by the
Committee, would permit.
(e) In the discretion of the Committee, a single Stock Option Agreement may
include both Incentive Stock Options and Non-Incentive Stock Options, or
separate Stock Option Agreements may be set forth for Incentive Stock Options
and Non-Incentive Stock Options.
(f) Each Option granted under this Plan shall be non-transferable, and its
terms shall state that it is non-transferable and that, during the lifetime of
the Participant, shall be exercisable only by the Participant; notwithstanding
the foregoing, Options shall be transferable by will or the laws of descent and
distribution as set forth in subsection (c) of this Section 7. However, a
Participant may transfer a Non-Incentive Stock Option to a trust, provided that
the Committee may require that the Participant submit an opinion of his or her
legal counsel, satisfactory to the Committee, that such holding has no adverse
tax or securities law consequences for the Company.
(g) Notwithstanding anything contained herein to the contrary, if Options
as to 100 or more shares of Common Stock are held by a Participant, then the
Participant may exercise such Options only with respect to at least 100 shares
at any one time, and if Options for less than 100 shares are held by a
Participant, then the Participant must exercise Options for all shares at one
time.
(h) The Stock Option Agreements under this Plan may contain such other
terms, provisions and conditions not inconsistent herewith as shall be
determined by the Committee, in its discretion, including, without limitation,
provisions (i) relating to the vesting and termination of Options; (ii)
restricting the transferability of such shares during a specified period; and
(iii) requiring the resale of such shares to the Company, at a price as
specified in the Stock Option Agreement, if the Participant's employment by the
Company terminates prior to a time specified in the Stock Option Agreement.
(i) All grants of Options made prior to the date on which shareholders
approve this Plan shall be contingent upon subsequent approval of the
shareholders of this Plan.
(j) This Section 7 shall terminate on, and no additional Awards shall be
granted after, ten years from the first to occur of (i) the date on which the
Plan is adopted or (ii) the date on which the shareholders of the Company
approve the Plan.
(k) Each Option that is intended to qualify as an Incentive Stock Option
pursuant to Section 422 of the Code, and each Option that is intended to qualify
as another type of incentive stock option that may subsequently be authorized by
law, shall comply with the applicable provisions of the Code pertaining to such
options. Accordingly, the provisions of this Plan with respect to Incentive
Stock Options shall be construed in a manner consistent with such requirements,
and no person shall be eligible to receive any Incentive Stock Options under the
Plan if such person would not be able qualify for the benefits of incentive
stock options
7
<PAGE> 9
under Section 422 of the Code. Without limitation on the foregoing, and
notwithstanding the foregoing provisions of this Section 7, if any Incentive
Stock Option is granted to any person at a time when such person owns, within
the meaning of Section 424(d) of the Code, more than ten percent (10%) of the
total combined voting power of all classes of stock of the employer corporation
(or a parent or subsidiary of such corporation within the meaning of Section 424
of the Code), the price at which each share of Common Stock covered by such
Option may be purchased pursuant to such Option shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the shares of Common
Stock at the time the Option is granted, and such Option must be exercised no
event later than the fifth anniversary of the date on which the Option was
granted. Moreover, as long as and to the extent required by the Code, the
aggregate Fair Market Value (determined as of the time an Incentive Stock Option
is granted) of the shares of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any Participant in any calendar
year under the Plan and under all other incentive stock option plans of the
Company and any parent and subsidiary corporations of the Company (as those
terms are defined in Section 424 of the Code) shall not exceed $100,000.
SECTION 8. Stock Appreciation Rights. (a) An SAR is a right to receive,
without payment (except for applicable withholding taxes) to the Company, a
number of shares of Common Stock, cash or a combination thereof, the amount of
which is determined under subsection (e) of this Section 8. An SAR may be
granted (i) with respect to any Option granted under this Plan, either
concurrently with the grant of such Option, or at such later time as determined
by the Committee (as to all or any portion of the shares of Common Stock subject
to the Option), or (ii) alone, without reference to any related Option. Each SAR
granted by the Committee under this Plan shall be subject to the terms and
conditions of this Section 8.
(b) Each SAR granted to any Participant shall relate to the number of
shares of Common Stock as shall be determined by the Committee, subject to
adjustment as provided in Section 11. In the case of an SAR granted with respect
to an Option, the number of shares of Common Stock to which the SAR relates
shall be reduced in the same proportion that the holder of such Option exercises
with respect to such related Option, and the number of shares subject to an
Option shall be reduced in the same proportion that the holder of the SAR
exercises with respect to the related Option.
(c) The term of each SAR shall be determined by the Committee. Unless
otherwise provided by such Committee, an SAR granted in connection with an
Option shall be exercisable only at such time or times, to such extent and by
such persons as the Option to which it relates shall be exercisable, provided
that an SAR granted in connection with an Incentive Stock Option shall not be
exercisable on any date on which the Fair Market Value of a share of Common
Stock is less than or equal to the per share exercise price of the Incentive
Stock Option. An SAR shall be canceled when, and to the extent that, any related
Option is exercised, and an Option shall be canceled when, and to the extent
that, the Option is surrendered to the Company upon the exercise of a related
SAR. The Committee, in its discretion, may accelerate the time within which a
SAR may be exercised.
(d) An SAR may be exercised, in whole or in part, by giving written notice
to the Committee, specifying the number of SARs that the holder wishes to
exercise. Upon receipt of such written notice, the Committee shall direct the
Company to deliver to the exercising holder within ninety (90) days after
receipt of the notice a certificate for the shares of Common Stock or cash or
both, as determined by the Committee, to which the holder is entitled.
(e) Subject to the right of the Committee to deliver cash in lieu of shares
of Common Stock, the number of shares of Common Stock that shall be issuable
upon the exercise of an SAR shall be determined by dividing:
(i) the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of appreciation in such shares (for this
purpose, the "appreciation" shall be the amount by which the Fair Market
Value of the shares of Common Stock subject to the SAR on the exercise date
exceeds (A) in the case of an SAR related to an Option, the purchase price
of the shares of Common Stock under the Option or (B) in the case of an SAR
granted alone, without reference to a related Option, an amount
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<PAGE> 10
that shall be determined by the Committee at the time of the grant, subject
to adjustment under Section 11); by
(ii) the Fair Market Value of a share of Common Stock on the exercise
date.
In lieu of issuing shares of Common Stock upon the exercise of an SAR, the
Committee may elect to pay the holder of an SAR cash equal to the Fair Market
Value on the exercise date of any or all of the shares that would otherwise be
issuable. No fractional shares of Common Stock shall be issued upon the exercise
of an SAR; instead, the holder of the SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market Value of a share of
Common Stock on the exercise date or to purchase the portion necessary to make a
whole share at its Fair Market Value on the date of exercise.
(f) SARs awarded under the Plan shall be evidenced by either a Stock Option
Agreement or a separate signed Stock Appreciation Right Agreement between the
Company and the Participant to whom the SAR is granted.
SECTION 9. Performance Shares and Units. (a) The Committee may award to
any Participant Performance Shares and/or Performance Units ("Performance
Awards"). Each Performance Share shall represent one share of Common Stock. Each
Performance Unit shall represent the right of a Participant to receive an amount
equal to the value to be determined in the manner established by the Committee
at the time of the award, which value may, without limitation, be equal to the
Fair Market Value of one share of Common Stock. Each Performance Award under the
Plan shall be evidenced by a signed written agreement containing such terms and
conditions as the Committee may from time to time determine (the "Performance
Agreement").
(b) At the time of the Performance Award, the Committee shall establish an
account (the "Performance Account") for each Participant to whom a Performance
Award has been granted. Performance Units and Performance Shares awarded to a
Participant shall be credited to the Participant's Performance Account.
(c) The performance period for each Performance Award shall be of such
duration as the Committee shall establish at the time of the award (the
"Performance Period"). There may be more than one Performance Award in existence
for a Participant at any time, and more than one Performance Period applicable
to a Participant, and the duration of Performance Periods may differ.
(d) At the time of each Performance Award, the Committee may, in its
complete discretion, establish performance target(s) to be achieved within the
Performance Period(s). The performance target(s) shall be determined by the
Committee using such measures of performance of the Company over the Performance
Period as the Committee shall select. During any Performance Period, the
Committee may adjust the performance targets for such Performance Period as it
deems equitable in recognition of unusual or non-recurring events affecting the
Company, changes in applicable tax laws or accounting principles or such other
factors as the Committee may determine. If the Committee determines that the
Participant has failed to meet the performance target(s), the Participant will
not receive payment of the Performance Award.
(e) Performance Awards will be earned as determined by the Committee in
respect of a Performance Period in relation to the degree of attainment of
performance target(s).
(f) Performance Awards shall be earned to the extent that their terms and
conditions are met. Notwithstanding the foregoing, Performance Awards and any
other amounts credited to the Participant's Performance Account shall be payable
to the Participant only in accordance with the Performance Agreement. The
Committee shall make all payment determinations during the four-month period
beginning on the first day following the close of the Performance Period.
Payment for Performance Awards may be made in a lump sum or in installments, in
cash, in shares of Common Stock or in a combination thereof as the Committee may
determine.
(g) In the event that a Participant's employment by the Company terminates
before the end of a Performance Period with the consent of the Committee, or
upon a Participant's death or disability before the end of a Performance Period,
the Committee, taking into consideration the performance of such Participant and
the performance of the Company over such portion of the Performance Period, may
authorize the
9
<PAGE> 11
payment to such Participant (or his or her legal representative or designated
beneficiary) of all or a portion of the amount that would have been paid to the
Participant had he or she continued employment until the end of the Performance
Period. In the event a Participant ceases his or her employment for any other
reason, any unpaid amounts for any outstanding Performance Periods shall be
forfeited.
SECTION 10. Restricted Stock, Restricted Stock Units, and Unrestricted
Stock. (a) The Committee may award to any Participant shares of Common Stock
subject to no restrictions ("Unrestricted Stock").
(b) At the time of an Award under subsection (c) or (d) below, there shall
be established for each Participant a restriction period (the "Restriction
Period"), which shall lapse (i) upon the completion of a period of time ("Time
Goal") as shall be determined by the Committee, or (ii) upon the achievement of
stock price goals within certain time periods ("Price/Time Goal") as shall be
determined by the Committee.
(c) The Committee may award to any Participant shares of Common Stock,
subject to this Section 10 and such other terms and conditions as the Committee
may prescribe ("Restricted Stock"). Each certificate for Restricted Stock shall
be registered in the name of the Participant and deposited by the Participant,
together with a stock power endorsed in blank, with the Committee. Restricted
Stock awarded under this Plan shall be evidenced by a signed written agreement
containing such terms and conditions as the Committee may from time to time
determine in its discretion (the "Restriction Agreement"). Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered, except as
hereinafter provided, during the Restriction Period. Except for such
restrictions on transfer, the Participant as owner of such Restricted Stock
shall have all the rights of a holder of such Common Stock. A Participant may
transfer Restricted Stock to a trust, provided that the Committee may require
that the Participant submit an opinion of his or her legal counsel, satisfactory
to the Committee, that such holding has no adverse tax or securities law
consequences for the Company.
With respect to Restricted Stock that is issued subject to a Time Goal, the
Committee shall redeliver to the Participant (or the Participant's legal
representative or designated beneficiary) the certificates deposited pursuant to
this subsection (c) at the expiration of the Restriction Period. With respect to
Restricted Stock that is issued subject to a Price/Time Goal, the Committee
shall redeliver to the Participant (or the Participant's legal representative or
designated beneficiary) the certificates deposited pursuant to this subsection
(c) at the expiration of the Restriction Period. Notwithstanding the foregoing,
if Restricted Stock is issued subject to a Price/Time Goal or Time Goal and the
Committee determines that a Participant has not achieved the Time Goal or
Price/Time Goal before the end of the Restriction Period, the Participant shall
have no further rights with respect to the Restricted Stock, all such shares
shall be forfeited and the Committee shall have the right to complete a blank
stock power in order to return such shares to the Company.
(d) The Committee may award to a Participant a right to receive Common
Stock or the cash equivalent of the Fair Market Value of the Common Stock, in
the Committee's discretion, at the end of the Restriction Period ("Restricted
Stock Units") subject to achievement of a Time Goal or Price/Time Goal
established by the Committee. Restricted Stock Units awarded under this Plan
shall be evidenced by a signed written agreement containing such terms and
conditions as the Committee may from time to time determine in its discretion
(the "Restriction Agreement"). With respect to Restricted Stock Units that are
subject to a Time Goal, the Committee shall deliver notice to the Participant
(or the Participant's legal representative or designated beneficiary) at the end
of the Restriction Period as to whether the Participant has achieved the Time
Goal. With respect to Restricted Stock Units that are awarded subject to a
Price/Time Goal, the Committee shall deliver notice to the Participant (or the
Participant's legal representative or designated beneficiary) at the end of the
Restriction Period as to whether the Participant has achieved the Price/Time
Goal. If the Committee determines that a Participant has not achieved the Time
Goal or Price/Time Goal before the end of the Restriction Period, the
Participant shall have no further rights with respect to the Restricted Stock
Units.
(e) In the event a Participant ceases employment with the Company with the
consent of the Committee or upon the Participant's death or disability before
the end of the Restriction Period and the Participant has received an Award
subject to a Time Goal, the restrictions imposed under this Section 10 shall
lapse with
10
<PAGE> 12
respect to the number of those shares or units subject to a Time Goal as shall
be determined by the Committee. In no event, however, shall the number of shares
or units be less than a number equal to the product of (i) a fraction, the
numerator of which is the number of completed months elapsed after the date of
the Award subject to a Time Goal to the date of termination and the denominator
of which is the number of months in the Restriction Agreement, multiplied by
(ii) the number of shares of Restricted Stock or Restricted Stock Units awarded
to the Participant subject to the Time Goal.
In the event a Participant ceases employment with the Company with the
consent of the Committee or upon the Participant's death or disability before
the end of the Restriction Period and the Participant has received an Award
subject to a Price/Time Goal, the restrictions imposed under this Section 10
shall lapse upon the achievement of the Price/Time Goal within two (2) years of
the Participant's termination of employment with respect to such number of
shares or units subject to a Price/Time Goal as shall be determined by the
Committee. In no event, however, shall the number of shares or units be less
than a number equal to the product of (i) a fraction, the numerator of which is
the number of completed months elapsed after the date of the Award subject to a
Price/Time Goal to the date of termination and the denominator of which is the
number of months elapsed after the date of the Award subject to a Price/Time
Goal to the date of achievement of the Price/Time Goal, multiplied by (ii) the
number of shares of Restricted Stock or Restricted Stock Units awarded to the
Participant subject to the Price/Time Goal.
In the event a Participant ceases employment with the Company for any other
reason, all Restricted Stock or Restricted Stock Units theretofore awarded to
that Participant that are still subject to restrictions shall be forfeited and
the Committee shall have the right to complete the blank stock power with
respect to any such Restricted Stock.
SECTION 11. Adjustment of Number of Shares. (a) In the event of any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split or other division or consolidation of shares or the payment
of a stock dividend (but only on Common Stock) or any other increase or decrease
in the number of shares of Common Stock effected without any receipt of
consideration by the Company, then, in any such event, the number of shares of
Common Stock that remain available under the Plan, the number of shares covered
by each outstanding Option, the exercise price per share covered by each
outstanding Option, the number of shares covered by each outstanding SAR and the
exercise price per share and the number and any purchase price for any other
Award shares (or equivalents) granted but not yet issued, in each case, shall be
proportionately and appropriately adjusted for any such increase or decrease.
(b) Subject to any required action by the stockholders, if any change
occurs in the Common Stock by reason of any recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or of any
similar change affecting Common Stock, then, in any such event, the number and
type of shares of Common Stock then covered by each outstanding Option, the
purchase price per share covered by each outstanding Option, the number of
shares covered by each outstanding SAR and the exercise price per share and the
number and any purchase price for any other Award shares (or equivalents)
granted but not yet issued, in each case, shall be proportionately and
appropriately adjusted for any such change.
(c) In the event of a change in the Common Stock as presently constituted
that is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any change shall be deemed to be Common Stock within the
meaning of the Plan.
(d) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by, and in the
discretion of, the Board of Directors, whose determination in that respect shall
be final, binding and conclusive; provided, however, that any Incentive Stock
Option granted pursuant to Section 7 shall not be adjusted in a manner that
causes such Option to fail to continue to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
(e) Except as hereinabove expressly provided in this Section 11, a
Participant shall have no rights by reason of any division or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease the number of shares of stock of any class or by reason of
any dissolution,
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<PAGE> 13
liquidation, merger or consolidation, or spin-off of assets or stock of another
corporation; and any issuance by the Company of shares of stock of any class,
securities convertible into shares of stock of any class, or warrants or options
for shares of stock of any class shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock, any Option, any SAR or any other Award shares (or equivalents) granted
but not yet issued.
(f) The existence of the Plan, or the grant of an Option, SAR or other
Award under the Plan, shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate, or to dissolve,
to liquidate, to sell, or to transfer all or any part of its business or assets.
SECTION 12. Change of Control. In the event of a Change of Control, any
Option, SAR (whether or not granted with respect to an Option) or Restricted
Stock subject to a Time Goal shall immediately become fully vested without
regard to any other terms of the Award.
SECTION 13. Beneficiary Designation. Each Participant under the Plan may
name, from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit (other than an Option) under
the Plan is to be paid in case of his or her death before the Participant
receives any or all of such benefit. Each designation will be effective only
with the written consent of the Participant's spouse and will revoke all prior
designations by that Participant, shall be in the form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits (other than those under Options) that are vested and
remain unpaid at the Participant's death shall be paid to his or her estate.
SECTION 14. Tax Withholding. (a) The Company shall have the power to
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy any federal, state or local withholding or other tax due from the
Company with respect to any amount payable and/or shares issuable under the
Plan, and the Company may defer such payment or issuance unless indemnified to
its satisfaction. Whenever under the Plan payments are to be made in cash, such
payments shall be made net of an amount sufficient to satisfy any federal, state
or local withholding tax liability.
(b) Subject to the consent of the Committee, with respect to (i) the
exercise of a Non-Incentive Stock Option, (ii) the lapse of restrictions on
Restricted Stock, or (iii) the issuance of any other stock Award under the Plan,
a Participant may make an irrevocable election (an "Election") to (A) have
shares of Common Stock otherwise issuable under (i) withheld, or (B) tender back
to the Company shares of Common Stock received pursuant to (i), (ii), or (iii),
or (C) deliver back to the Company pursuant to (i), (ii), or (iii) previously
acquired shares of Common Stock having a Fair Market Value sufficient to satisfy
all or part of the Participant's estimated tax obligations associated with the
transaction. Such Election must be made by a Participant prior to the date on
which the relevant tax obligation arises. The Committee may disapprove of any
Election, may suspend or terminate the right to make Elections, or may provide
with respect to any Award under this Plan that the right to make Elections shall
not apply to such Awards.
SECTION 15. Indemnification. To the fullest extent permitted by law, each
person who is or shall have been a member of the Committee shall be indemnified
and held harmless by the Company against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided that the person shall
give the Company an opportunity, at its own expense, to handle and defend the
same before the person undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
SECTION 16. Gender and Number. Except where otherwise indicated by the
context, words in the masculine gender when used in the Plan will include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
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<PAGE> 14
SECTION 17. Controlling Law. This document shall be construed under the
laws of the State of Florida.
SECTION 18. No Stockholder Rights. No Participant hereunder shall have any
rights of a stockholder of the Company by reason of being granted an Award under
this Plan until the date on which he or she becomes a record owner of shares of
Common Stock purchased upon the exercise of an Option or otherwise received
under this Plan (the "record ownership date"). No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions, or other rights for which the record date is prior to
the record ownership date.
SECTION 19. Amendments; Termination or Suspension. (a) This Plan may be
amended from time to time by written resolution of the Board of Directors of the
Company; provided, however, that no Participant's existing rights are adversely
affected thereby without the consent of such person, and provided further that,
without approval of the stockholders of the Company, no amendment shall (i)
increase the total number of shares of Common Stock that may be issued pursuant
to Awards granted under this Plan, (ii) change the designation of the class of
employees eligible to receive Incentive Stock Options or Non-Incentive Stock
Options, (iii) decrease the minimum Option price set forth in subsection (a) of
Section 7 of this Plan, (iv) extend the period during which an Option may be
granted or exercised beyond the maximum period specified in this Plan, (v)
otherwise materially modify the requirements as to eligibility for participation
in the Plan, (vi) otherwise materially increase the benefits under the Plan, or
(vii) withdraw the authority to administer this Plan from the Committee.
Notwithstanding the foregoing, the Board may amend the Plan to incorporate or
conform to requirements imposed by and amendments made to the Code or
regulations promulgated thereunder which the Board deems to be necessary or
desirable to preserve (A) incentive stock option status for outstanding
Incentive Stock Options and to preserve the ability to issue Incentive Stock
Options pursuant to this Plan, (B) the deductibility by the Company of amounts
taxed to Plan Participants as ordinary compensation income, and (C) the status
of any Award as exempt from registration requirements under any securities law
for which the Award was intended to be exempt. The foregoing prohibitions in
this Section 19 shall not be affected by adjustments in shares and purchase
price made in accordance with the provisions of Section 11.
(b) The Board of Directors of the Company may terminate the Plan or any
portion thereof at any time by written resolution. No suspension or termination
shall impair the rights of Participants under outstanding Awards without the
consent of the Participants affected thereby.
SECTION 20. Miscellaneous. (a) Listing and Registration of Common
Stock. Each Award shall be subject to the requirement that if at any time the
Board of Directors shall determine, in its discretion, that the listing,
registration or qualification of the Common Stock that is the subject thereof or
that is covered thereby upon any securities exchange or under any state or
federal laws, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Award or the issuance or purchase of Common Stock thereunder, such Award
may not be exercised unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board of Directors. Notwithstanding anything in the Plan
to the contrary, if the provisions of this Section 20(a) become operative, and
if, as a result thereof, the exercise of an Award is delayed, then and in that
event, the term of the Award shall not be affected. Notwithstanding the
foregoing or any other provision in the Plan, the Company shall have no
obligation under the Plan to cause any shares of Common Stock to be registered
or qualified under any federal or state law or listed on any stock exchange or
admitted to any national marketing system.
(b) No Implied Rights to Employees. The existence of the Plan and the
granting of Awards under the Plan shall in no way give any employee the right to
continued employment, give any employee the right to receive any additional
Awards or any additional compensation under the Plan, or otherwise provide any
employee any rights not specifically set forth in the Plan or in any Award
Agreement.
(c) Conditions Precedent to Effectiveness. The Plan shall become effective
upon the adoption of the Plan by the Board of Directors.
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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 15th day of
September, 1998, by and between LAMALIE ASSOCIATES, INC., a Florida corporation
(the "Company"), and PATRICK J. MCDONNELL, residing at 1110 North Sheridan Road,
Lake Forest, Illinois 60045 (the "Executive").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall be effective as of the date first
above written and shall continue through September 14, 2001; provided, however,
that beginning on September 15, 2000 and on each September 15 thereafter (each
such date being referred to as a "Renewal Date"), the term of this Agreement
shall automatically be extended for an additional one year, so that on each
Renewal Date the then remaining unexpired term of this Agreement shall be two
years, unless either party gives the other written notice of non-renewal at
least ninety (90) days prior to any such Renewal Date.
3. COMPENSATION
(a) Base Salary. The Company shall pay to the Executive a salary of
$500,000 per year, or such other sum in excess of that amount as the parties may
agree on from time to time (as in effect from time to time, the "Base Salary"),
payable monthly or in other more frequent installments, as determined by the
Company. The Executive shall also receive, along with such periodic payments of
Base Salary, on a monthly basis a pro rata portion of $25,000 per year, which
payments shall be treated as an advance against the annual Performance Bonus
which may be paid to the Executive pursuant to Section 3(c)of this Agreement
(the "Advance Bonus").
(b) Sign On Benefit. (i) Upon the execution of this Agreement, the
Executive shall receive from the Company a lump sum payment equal to $525,000
(the "Sign On Benefit").
(ii) If the Executive's employment hereunder is terminated
either by the Executive voluntarily pursuant to Section 8(a)(i) hereof or by the
Company for Good Cause pursuant to Section 8(b)(i) hereof at any time prior to
September 15, 2001, the Executive is obligated to repay the following percentage
of the Sign On Benefit to the Company in cash immediately upon such termination:
(A) 100% if employment is terminated between September 15, 1998 and September
14, 1999, (B) 66 2/3 % if employment is terminated between September 15, 1999
and September 15, 2000, and (C) 33 1/3% if employment is terminated between
September 15, 2000 and September 15, 2001. Any such repayments, if unpaid, shall
accrue interest at the rate of 10% per annum from the date of such termination.
The Executive shall bear all the costs and fees of any arbitration or other
action which must be begun by the Company to collect the Sign On Benefit from
<PAGE> 2
the Executive pursuant to this Section 3(b) (including reasonable attorneys'
fees, arbitrator's fees, and administrative fees). Further, no delay or failure
on the part of the Company in exercising any right to collect the Sign On
Benefit pursuant to this Section 3(b) shall operate as a waiver of any such
right, nor shall any partial exercise of such right preclude further exercise of
such right.
(c) Performance Bonus. In addition to the Base Salary to be paid
pursuant to Section 3(a) of this Agreement, during the term of this Agreement or
any renewal or extension hereof, the Company shall pay to the Executive as
incentive compensation an annual performance bonus (the "Performance Bonus") in
accordance with the incentive bonus plan(s) adopted from time to time by the
Compensation and Management Development Committee (the "Committee") of the Board
the Board of Directors of the Company (the "Board"). The Committee shall
establish criteria for such Performance Bonus at the beginning of each fiscal
year. Initially, such plan shall provide for a Performance Bonus equal to
between 0% and 120% of Base Salary, with a "Target Bonus" equal to 65% of Base
Salary and a "Maximum Bonus" equal to 120% of the Base Salary. Except as
otherwise specifically provided in this Agreement, to receive a Performance
Bonus, the Executive must be employed by the Company on the last day of the year
to which the Performance Bonus relates. For the Company's fiscal year ending
February 28, 1999, the amount of any Performance Bonus shall be adjusted to take
into account the portion of the year during which the Executive was employed by
the Company.
(d) Stock Option Award. The Executive shall participate in the
Company's 1998 Omnibus Stock and Incentive Plan (the "Omnibus Plan"), in
accordance with the terms thereof, through the grant by the Committee of options
to purchase 200,000 shares of the Company's common stock (the "Options"). The
date of grant for the Options shall be the day two (2) business days after the
press release or releases are issued by the Company announcing (1) the
Executive's hiring and (2) the Company's financial results for the quarter ended
August 31, 1998. The initial exercise price for the Options shall be the closing
price for the Company's stock on the Nasdaq Stock Market (NMS) on the date of
grant. The Options shall be subject to the terms of the Omnibus Plan. Attached
hereto as Exhibit A is a Stock Option Certificate in the form to be issued to
evidence the Options.
(e) Reimbursement. The Company shall reimburse the Executive, in
accordance with the Company's policies and practices for senior management, for
all reasonable expenses incurred by the Executive in the performance of the
Executive's duties under this Agreement, provided, however, that the Executive
must furnish to the Company an itemized account, reasonably satisfactory to the
Company, in substantiation of such expenditures.
(f) Other Benefits; Life Insurance. The Executive shall be entitled to
such fringe benefits including, but not limited to, medical and other insurance
benefits as may be provided from time to time by the Company to other members of
senior management of the Company. In addition, during the term of this
Agreement, the Company shall provide the Executive term life insurance in
addition to that provided by the Company's standard benefits package for members
of senior management, so that the total amount of term life insurance provided
by the Company to the Executive shall be one million dollars in face amount;
provided, however, that in obtaining such term life insurance, the Company shall
not be obligated to pay rates in excess of the standard rates for male
nonsmokers the same age as the Executive.
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<PAGE> 3
(g) Other Incentive and Benefit Plans. The Executive shall be eligible
to participate, in accordance with the terms of such plans as they may be
adopted, amended and administered from time to time, in incentive, bonus,
benefit or similar plans, including without limitation, any stock option, bonus
or other equity ownership plan, any short, mid or long term incentive plan and
any other bonus, pension or profit sharing plans established by the Company from
time to time for its senior management.
(h) Deferral of Certain Compensation; Alternative Compensation.
Notwithstanding any other provisions of this Agreement to the contrary, any
portion of the Executive's compensation otherwise payable to the Executive under
this Agreement shall not be paid currently in cash to the Executive hereunder if
pursuant to the provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended, or any successor provision ("Section 162(m)"), the Company
would not be entitled to a current deduction for federal income tax purposes in
respect of the payment of such portion of the cash compensation (any such
compensation being referred to as "Section 162(m) Non-Deductible Compensation").
The payment of any such Section 162(m) Non-Deductible Compensation shall be
deferred and, in place of the current payment thereof, the amount of the
Non-Deductible Compensation shall be paid to the Executive no later than 90 days
after the close of the fiscal year to which such compensation relates in a form
(including, but not limited to, awards of stock options, phantom stock or
restricted stock) and in an amount that: (1) reasonably reflects the parties'
mutual good faith estimate of the current value of the Non-Deductible
Compensation, (2) is not treated as current compensation for purposes of
calculating the Section 162(m) limits and (3) is otherwise mutually acceptable
to the Executive and the Committee (the "Alternative Compensation"). The parties
agree to use their reasonable best efforts to reach mutual agreement on a timely
basis with respect to the form and amount of any Alternative Compensation. The
obligations of the parties under this Section 3(h) shall terminate when Section
162(m) no longer applies to the Executive's compensation.
4. DUTIES
The Executive shall serve as the Chief Operating Officer and President
of the Company and initially shall be elected as a director of the Company. In
addition, at the request of the Board, the Executive shall serve in the same
positions in any wholly owned subsidiary, joint venture or affiliate of the
Company, without any additional compensation. The Executive shall report
directly to the Chief Executive Officer. The Executive's duties and
responsibilities shall be commensurate with those customarily associated with
the chief operating officer and president of a corporation comparable to the
Company, with such specific duties and powers as shall be assigned by the Board.
5. EXTENT OF SERVICES; VACATIONS AND DAYS OFF
(a) Extent of Services. During the term of the Executive's employment
under this Agreement, except during customary vacation periods and periods of
illness, the Executive shall devote full-time energy and attention during
regular business hours to the benefit and business of the Company as may be
reasonably necessary in performing the Executive's duties pursuant to this
Agreement. Notwithstanding the foregoing, the Executive may (i) serve on
corporate, trade association, civic, religious or charitable boards or
committees, (ii) deliver lectures, fulfill speaking
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<PAGE> 4
engagements or teach at educational institutions and (iii) manage personal
investments, so long as such activities do not interfere with the performance of
the Executive's duties and responsibilities and do not create a conflict of
interest.
(b) Vacations. The Executive shall be entitled to vacations with pay
and to such personal and sick leave with pay in accordance with the policy of
the Company as may be established from time to time by the Company and applied
to other members of senior management of the Company.
6. FACILITIES
The Company shall provide the Executive with a fully furnished office
in Chicago, Illinois. The facilities of the Company shall be generally available
to the Executive in the performance of the Executive's duties pursuant to this
Agreement, it being understood and contemplated by the parties that all
equipment, supplies and office personnel required in the performance of the
Executive's duties under this Agreement shall be provided by and at the sole
expense of the Company in Chicago, Illinois. The Executive shall also be
entitled to be provided with an executive assistant of his choice, who shall be
compensated at her current salary plus a reasonable sign on inducement to join
the Company in an amount to be agreed upon by the Executive and the Company.
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Executive dies during the term of the Executive's
employment, the Company shall pay to the estate of the Executive within 30 days
after the date of death such Base Salary as would otherwise have been payable to
the Executive up to the end of the month in which the Executive's death occurs.
After receiving the payment provided in this Section 7(a), the Executive and the
Executive's estate shall have no further rights under this Agreement (other than
those rights already vested or accrued).
(b) Disability. (i) The Executive's employment shall terminate
immediately upon the Executive's "Permanent Disability" (as defined below). Upon
such termination, the Company shall pay to the Executive during the unexpired
term of this Agreement a monthly payment (the "Disability Payment") equal to the
(i) sum of (A) the Base Salary paid in the same monthly or other period
installments as in effect at the time of the Executive's Permanent Disability
plus (B) an equal monthly pro rata portion of an amount of cash equal to the
greater of (x) the Target Bonus payable to the Executive under Section 3(c) of
this Agreement in respect of the year in which such termination occurs (subject
to any upward adjustment provided in Section 8(c)(iii) of this Agreement, the
"Termination Target Bonus") or (y) the minimum amount of any similar bonus or
incentive plans or programs then in effect if greater than the Target Bonus in
respect of the fiscal year during which the Executive's termination as a result
of Permanent Disability occurs (ii) reduced by the amount of any monthly
payments under any policy of disability income insurance paid for by the Company
which payments are received during the time when any Disability Payment is being
made to the Executive following the Executive's Permanent Disability. The
Disability Payment shall be paid by the Company to the Executive in
substantially equivalent installments at the substantially same time or times as
would have been the case for payment of Base Salary over the unexpired term of
this Agreement if the Executive had not become permanently disabled and had
remained employed by the Company
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<PAGE> 5
hereunder. Except as provided in this Section 7(b), all rights of the Executive
under this Agreement (other than rights already vested or accrued) shall
terminate upon the termination of the Executive's employment under this
Agreement as a result of the Executive's "Permanent Disability" (as that term is
defined in Section 7(b)(ii) below).
(ii) The term "Permanent Disability" as used in this Agreement
shall have the same meaning as provided in any disability insurance policy
provided or paid for by the Company covering the Executive at such time as such
policy is in full force and effect. If no such disability policy is so
maintained at such time and is then in full force and effect, the term
"Permanent Disability" shall mean the inability of the Executive, as reasonably
determined by the Board by reason of physical or mental disability to perform
the duties required of him under this Agreement for a period of one hundred and
twenty (120) days in any one-year period. Successive periods of disability,
illness or incapacity will be considered separate periods unless the later
period of disability, illness or incapacity is due to the same or related cause
and commences less than three months from the ending of the previous period of
disability. Upon such determination, the Board may terminate the Executive's
employment under this Agreement upon ten (10) days' prior written notice. If any
determination of the Board with respect to permanent disability is disputed by
the Executive, the parties hereto agree to abide by the decision of a panel of
three physicians. The Executive and Company shall each appoint one member, and
the third member of the panel shall be appointed by the other two members. The
Executive agrees to make himself available for and submit to examinations by
such physicians as may be directed by the Company. Failure to submit to any such
examination shall constitute a breach of a material part of this Agreement.
8. OTHER TERMINATIONS
(a) By the Executive. (i) The Executive may terminate the Executive's
employment hereunder at any time upon giving at least ninety (90) days' prior
written notice. If the Executive gives notice pursuant to this Section 8(a)(i),
the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive should no longer report to work, or any combination of the foregoing.
In any such event, the Executive shall be entitled to receive only the Base
Salary not yet paid as would otherwise have been payable to the Executive up to
the expiration of the 90 day notice period. If the Executive gives notice
pursuant to this Section 8(a)(i), upon receiving the payment provided for under
this Section 8(a)(i), all rights of the Executive to receive compensation or
other payments or benefits under this Agreement (other than rights already
vested or accrued) shall terminate.
(ii) If the Executive has not been offered the position of
Chief Executive Officer of the Company on or before the third anniversary of the
date of this Agreement, the Executive shall have the right to terminate the
Executive's employment hereunder for a period of sixty (60) days after the third
anniversary of the date of this Agreement, upon giving at least thirty (30)
days' prior written notice to the Company. If the Executive gives notice
pursuant to this Section 8(a)(ii), the Company shall have the right (but not the
obligation) to relieve the Executive, in whole or in part, of the Executive's
duties under this Agreement, or direct the Executive to no longer perform such
duties, or direct that the Executive should no longer report to work, or any
combination of the foregoing. In any such event, the Executive shall be entitled
to receive at the end of such 30 day notice period
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<PAGE> 6
a lump sum payment which shall be equal to one (1) year's Base Salary. If the
Executive gives notice pursuant to this Section 8(a)(ii), upon receiving the
payment provided for under this Section 8(a)(ii), all rights of the Executive to
receive compensation or other payments or benefits under this Agreement (other
than rights already vested or accrued) shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided in
this Agreement, the Company may terminate the employment of the Executive
hereunder only for "Good Cause," which shall mean (a) the substantial, continued
and unjustified refusal or failure of the Executive substantially to perform his
duties with the Company to the extent of his ability to do so (other than any
failure due to physical or mental incapacity) or (b) willful misconduct
materially and demonstrably injurious to the Company, financially or otherwise,
in each case, as determined in the reasonable discretion of the Board, but with
respect to each of the foregoing bases for termination specified in the
preceding clause, only if (1) the Executive has been provided with written
notice from the Board of any assertion that there is a basis for termination for
Good Cause which notice shall specify in reasonable detail specific facts
regarding any such assertion and the Executive has been given a reasonable
period of time within which to remedy or cure the problem or complaint (which
period of time shall in no event exceed 60 days after the receipt of such
notice), (2) an additional written notice is provided to the Executive 10 days
before the Board meets to consider making a determination that this Agreement
will be terminated for Good Cause, (3) at or prior to the meeting of the Board
to consider the matters described in the written notice concerning the upcoming
meeting of the Board, an opportunity is provided to the Executive and his
counsel to be heard by the Board with respect to the matters described in the
written notice, before it acts with respect to such matter, (4) any resolution
or other action by the Board with respect to any deliberation regarding or
decision to terminate the Executive for Good Cause is duly adopted by a vote of
a majority of the entire Board at a meeting of the Board duly called and held
and (5) the Executive is promptly provided with a copy of the resolution or
other corporate action taken with respect to such termination. No act or failure
to act by the Executive shall be considered willful unless done or omitted to be
done by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.
(ii) If the employment of the Executive is terminated for Good
Cause under Section 8(b)(i) of this Agreement, the Company shall pay to the
Executive any Base Salary earned prior to the effective date of termination
specified by the Board but not yet paid. Under such circumstances, such payment
shall be in full and complete discharge of any and all liabilities or
obligations of the Company to the Executive hereunder, and the Executive shall
be entitled to no further benefits under this Agreement (other than rights
already vested or accrued).
(iii) Termination by the Company of the employment of the
Executive other than as expressly specified above in Section 8(b)(i) for Good
Cause shall be deemed to be a termination of employment by the Company "Without
Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right to terminate the
Executive's employment Without Good Cause pursuant to the provisions of this
Section 8(c). If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date") but not during the six month and 60 day period
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<PAGE> 7
following the occurrence of a "Change in Control" as defined in Section 8(d)(i)
of this Agreement, the Executive, until the date which is two (2) years after
the Accelerated Termination Date, shall continue to receive (1) the Base Salary,
paid in the same monthly or other periodic installments as in effect prior to
the Accelerated Termination Date, plus (2) an equal monthly pro rata portion of
an amount of cash equal to the greater of (x) the Target Bonus payable to the
Executive under Section 3(c) of this Agreement (subject to any upward adjustment
as provided in Section 8(c)(iii) of this Agreement, the "Termination Target
Bonus") or (y) the minimum amount of any similar bonus or incentive plans or
programs then in effect if greater than the Target Bonus in respect of the
fiscal year during which the Executive's termination Without Good Cause occurs,
minus (3) an equal monthly pro rata portion of an amount of cash equal to the
Sign On Benefit received by the Executive pursuant to Section 3(b) hereof;
provided that, the Company shall have the right (but not the obligation) to
relieve the Executive, in whole or in part, of the Executive's duties under this
Agreement, or direct the Executive to no longer perform such duties, or direct
that the Executive no longer be required to report to work, or any combination
of the foregoing.
(ii) If the Company shall terminate the employment of the
Executive Without Good Cause effective on a date earlier than the termination
date provided for in Section 2 and during the six month and 60 day period
following the occurrence of a Change in Control as defined in Section 8(d) of
this Agreement, the Executive shall receive in cash a lump sum payment in an
amount equal to the sum of (1) two times the annual Base Salary then in effect,
(2) two times the Target Bonus payable to the Executive under Section 3(c) of
this Agreement (subject to any upward adjustment as provided in Section
8(c)(iii) of this Agreement, the "Termination Target Bonus") or the minimum
amount of any similar bonus or incentive plans or programs then in effect if
greater than the Target Bonus in respect of the fiscal year during which such
termination Without Good Cause occurs and (3) the additional payments necessary
to discharge certain tax liabilities (the "Gross Up") as that term is defined in
Section 13 of this Agreement; provided that, the Company shall have the right
(but not the obligation) to relieve the Executive, in whole or in part, of the
Executive's duties under this Agreement, or direct the Executive to no longer
perform such duties, or direct that the Executive no longer be required to
report to work, or any combination of the foregoing.
(iii) The Termination Target Bonus shall be increased to an
amount in excess of the Target Bonus for the year in which the Executive's
employment is terminated if such Target Bonus is less than the amount of the
bonus that otherwise would have been payable to the Executive in respect of the
Company's full fiscal year if the Executive had remained employed by the Company
for the entire fiscal year. Any such increase shall be determined by the
Committee in its reasonable discretion no later than 90 days after the close of
the fiscal year during which the Executive's employment terminates. If the
Termination Target Bonus increases as a result of application of the first
sentence of this Section 8(c)(iii), the amount of such increase shall be paid
pro rata over the remaining period of time during which payments are to be made
to the Executive under Section 8(c)(i), if applicable, or paid in a lump sum
pursuant to Section 8(c)(ii), if applicable.
(iv) The parties agree that, because there can be no exact
measure of the damage that would occur to the Executive as a result of a
termination by the Company of the Executive's employment Without Good Cause, the
payments and benefits paid and provided pursuant to this Section 8(c), in
addition to being consideration for the release required to be delivered
pursuant to Section 8(g) of this Agreement, also shall be deemed to constitute
full consideration for any such
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damages and shall be considered as liquidated damages and not a penalty for the
Company's termination of the Executive's employment Without Good Cause.
(d) Termination Following Change of Control. (i) For purposes of this
Agreement, a "Change in Control" shall mean the first to occur of:
(1) a change in control of the Company of a nature that is
required, pursuant to the Securities Exchange Act of 1934 (the
"1934 Act"), to be reported in response to Item 1(a) of a
Current Report on Form 8-K or Item 6(e) of Schedule 14A under
the 1934 Act (in each case under this Agreement, references to
provisions of the 1934 Act and the rules and regulations
promulgated thereunder being understood to refer to such law,
rules and regulations as the same are in effect on April 1,
1997); or
(2) the acquisition of "beneficial ownership" (as defined in Rule
13d-3 under the 1934 Act) of the Company's securities
comprising 35% or more of the combined voting power of the
Company's outstanding securities by any "person" (as that term
is used in Sections 13(d) and 14(d)(2) of the 1934 Act and the
rules and regulations promulgated thereunder, but not including
the Company or any trustee or fiduciary acting in that capacity
for an employee benefit plan sponsored by the Company) and such
person's "affiliates" and "associates" (as those terms are
defined under the 1934 Act), but excluding any ownership by the
Executive and his affiliates and associates; or
(3) the failure of the "Incumbent Directors" (as defined below) to
constitute at least a majority of all directors of the Company
(for these purposes, "Incumbent Directors" means individuals
who were the directors of the Company on September 1, 1998,
and, after his or her election, any individual becoming a
director subsequent to September 1, 1998, whose election, or
nomination for election by the Company's stockholders, is
approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Directors, except that no individual
shall be considered an Incumbent Director who is not
recommended by management and whose initial assumption of
office as a director is in connection with an actual or
threatened "election contest" relating to the "election of
directors" of the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the 1934 Act); or
(4) the closing of a sale of all or substantially all of the assets
of the Company;
(5) the Company's adoption of a plan of dissolution or liquidation;
or
(6) the closing of a merger or consolidation involving the Company
in which the Company is not the surviving corporation or if,
immediately following such merger or consolidation, less than
sixty-six and two-thirds (66 2/3%) of the surviving
corporation's outstanding voting stock is held or is
anticipated to be held by persons who are stockholders of the
Company immediately prior to such merger or consolidation.
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(ii) Six months after the occurrence of a Change of Control,
the Executive shall have the right, exercisable for a period of 60 days
thereafter by delivering a written statement to that effect to the Company, to
immediately terminate this Agreement and, upon such delivery, the Executive
shall have the right to receive and the Company shall be obligated to pay to the
Executive in cash a lump sum payment in an amount equal to the sum of (1) two
times the annual Base Salary then in effect, (2) two times the Target Bonus
payable to the Executive under Section 3(c) of this Agreement or the minimum
amount of any similar bonus or incentive plans or programs then in effect if
greater than the Target Bonus in respect of the fiscal year during which the
Executive exercises his rights to terminate his employment under this Section
8(d)(ii) and (3) the additional payments necessary to discharge certain tax
liabilities (the "Gross Up") as that term is defined in Section 13 of this
Agreement (the sum of the foregoing amounts other than the Gross Up being
referred to as the "Change of Control Termination Payment"). If the Executive
fails to exercise his rights under this Section 8(d)(ii) within the 60 day
period specified in the first sentence of this Section 8(d)(ii), such rights
shall expire and be of no further force or effect.
(e) Certain Rights Mutually Exclusive. The provisions of Section
8(c)(i) and Section 8(d) are mutually exclusive, provided, however, that if
during the payout period under Section 8(c)(i), there shall be a Change in
Control as defined in Section 8(d)(i), then the Executive shall be entitled to
receive a lump sum payment equal to the sum of (1) the amounts remaining to be
paid pursuant to Section 8(c)(i) on the date of the Change in Control and (2)
the additional payments necessary to discharge certain tax liabilities (the
"Gross Up") as that term is defined in Section 13 of this Agreement. The
triggering of the lump sum payment requirements of Section 8(d) or this Section
8(e) shall cause the provisions of Section 8(c)(i) to become inoperative.
(f) Release. Payment of any compensation to the Executive under this
Section 8 following termination of employment shall be conditioned upon the
prior receipt by the Company of a release executed by the Executive in
substantially the form attached to this Agreement as Exhibit B.
(g) Effect on Certain Covenants. Notwithstanding any termination of the
Executive's employment, the Executive's covenants set forth in Section 10 and
Section 11 are intended to and shall remain in full force and effect.
9. DISCLOSURE
The Executive agrees that during the term of the Executive's employment
by the Company, the Executive will disclose and disclose only to the Company all
ideas, methods, plans, developments or improvements known by him which relate
directly or indirectly to the business of the Company, whether acquired by the
Executive before or during the Executive's employment by the Company. Nothing in
this Section 9 shall be construed as requiring any such communication where the
idea, plan, method or development is lawfully protected from disclosure as a
trade secret of a third party or by any other lawful prohibition against such
communication. The covenants of this Section 9 shall not be violated by ordinary
and customary communications with reporters, bankers and securities analysts and
other members of the investment community.
9
<PAGE> 10
10. CONFIDENTIALITY
The Executive agrees to keep in strict secrecy and confidence any and
all information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Company, including but not limited to information regarding the Company's focus
account strategy both generally and as it may be directed at particular existing
and prospective clients, the Company's past, current and future strategic plans
and underlying data and confidential and proprietary information regarding
search candidates and companies, including but not limited to that available on
the Company's CMS system (collectively, the "Confidential Information"). The
Executive agrees that both during and after the term of the Executive's
employment by the Company, the Executive will not, without the prior written
consent of the Company, disclose any Confidential Information to any third
person, partnership, joint venture, company, corporation or other organization.
The foregoing covenants shall not be breached to the extent that any such
confidential information becomes a matter of general knowledge other than
through a breach by a person with an obligation to the Company to maintain such
confidentiality, including but not limited to the Executive's obligations to the
Company under this Section 10.
11. NONCOMPETITION; NONSOLICITATION
(a) General. The Executive hereby acknowledges that, during and solely
as a result of the Executive's employment by the Company, the Executive has
received and shall continue to receive: (1) special training and education with
respect to the operations of the Company's business and other related matters,
and (2) access to confidential information and business and professional
contacts. In consideration of the special and unique opportunities afforded to
the Executive by the Company as a result of the Executive's employment, as
outlined in the previous sentence, the Executive hereby agrees to the
restrictive covenants in this Section 11.
(b) Noncompetition. (i) During the term of the Executive's employment,
whether pursuant to this Agreement, any automatic or other renewal hereof or
otherwise, and, except as may be otherwise herein provided, during the
"Noncompetition Period" (as that term is defined in Section 11(b)(ii) of this
Agreement), regardless of the reason for such termination, the Executive shall
not, directly or indirectly, enter into, engage in, be employed by or consult
with any business which competes with the Company's retained executive search
consulting business or the retained executive search consulting business of any
of the Company's affiliates. The Executive shall not engage in such prohibited
activities, either as an individual, partner, officer, director, stockholder,
employee, advisor, independent contractor, joint venturer, consultant, agent, or
representative or salesman for any person, firm, partnership, corporation or
other entity so competing with the Company or any of its affiliates. The
restrictions of this Section 11 shall not be violated by (i) the ownership of no
more than 2% of the outstanding securities of any company whose stock is traded
on a national securities exchange or is quoted on the Nasdaq Stock Market, or
(ii) other outside business investments that do not in any manner conflict with
the services to be rendered by the Executive for the Company and that do not
diminish or detract from the Executive's ability to render the Executive's
required attention to the business of the Company.
10
<PAGE> 11
(ii) The Noncompetition Period shall be (1) any period of time
when the Company is obligated to make periodic payments under Section 8 to the
Executive following termination of the Executive's employment or (2) if the
Company is obligated to make payments of Base Salary or other compensation in a
lump sum, for the number of years or fractions thereof equal to the number of
years or fractions thereof of Base Salary or other compensation being paid in a
lump sum.
(c) Nonsolicitation. During the Executive's employment with the
Company, whether pursuant to this Agreement, any automatic or other renewal or
extension hereof or otherwise, and, except as may be otherwise herein provided,
for a period of two (2) years following the termination of the Executive's
employment with the Company, regardless of the reason for such termination, the
Executive agrees the Executive will refrain from and will not, directly or
indirectly, as an individual, partner, officer, director, stockholder, employee,
advisor, independent contractor, joint venturer, consultant, agent,
representative, salesman for any person, firm, partnership, corporation or other
entity, or otherwise (i) solicit any of the current or former employees,
consultants, directors or officers of the Company or any of its affiliates to
terminate any business relationship with the Company or any of its affiliates or
(2) employ or retain as an independent contractor, consultant or agent any of
the current or former employees, consultants, directors or officers of the
Company or any of its affiliates, unless such persons have been separated from
any relationship with the Company or any of its affiliates for at least one (1)
year; unless any such employees, consultants, directors or officers of the
Company or any of its affiliates are or have been terminated by the Company or
any of its affiliates.
(d) Term Extended or Suspended. The period of time during which the
Executive is prohibited from engaging in certain business practices pursuant to
Sections 11(b) or (c) shall be extended by any length of time during which the
Executive is in breach of such covenants.
(e) Essential Element. It is understood by and between the parties
hereto that the foregoing restrictive covenants set forth in Sections 11(a)
through (c) are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Such covenants by the Executive shall
be construed as agreements independent of any other provision in this Agreement.
The existence of any claim or cause of action of the Executive against the
Company, whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenants.
(f) Severability. It is agreed by the Company and Executive that if any
portion of the covenants set forth in this Section 11 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The Company and Executive agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area
applicable to this Section 11 to be invalid, unreasonable, arbitrary or against
public policy, a lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may be enforced
against the Executive. The Company and the Executive agree that the foregoing
covenants are appropriate and reasonable when considered in light of the nature
and extent of the business conducted by the Company.
11
<PAGE> 12
12. SPECIFIC PERFORMANCE
The Executive agrees that damages at law will be an insufficient remedy
to the Company if the Executive violates the terms of Sections 9, 10 or 11 of
this Agreement and that the Company would suffer irreparable damage as a result
of such violation. Accordingly, it is agreed that the Company shall be entitled,
upon application to a court of competent jurisdiction, to obtain injunctive
relief to enforce the provisions of such Sections, which injunctive relief shall
be in addition to any other rights or remedies available to the Company.
13. PAYMENT OF EXCISE TAXES
(a) Payment of Excise Taxes. If the Executive is to receive any (1)
Change of Control Payment under Section 8(d) of this Agreement, (2) any benefit
or payment under Section 7 as a result of or following the death or Permanent
Disability of the Executive, or (3) any benefit or payment under Section 8(c) as
a result of or following any termination of employment hereunder Without Good
Cause (such sections being referred to as the "Covered Sections" and the
benefits and payments to be received thereunder being referred to as the
"Covered Payments"), the Executive shall be entitled to receive the amount
described below to the extent applicable: If any Covered Payment(s) under any of
the Covered Sections or by the Company under another plan or agreement
(collectively, the "Payments") are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (as amended from time to time, the
"Code"), or any successor or similar provision of the Code (the "Excise Tax"),
the Company shall pay the Executive an additional cash amount (the "Gross Up")
such that the net amount retained by the Executive after deduction of any Excise
Tax on the Payments (and other state or federal income tax and Excise Tax on any
amounts paid as Gross Up under this Section 13) shall be equal to the Payments.
(b) Certain Adjustment Payments. For purposes of determining the Gross
Up, the Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 39.6%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount thereof shall be made upon the
opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive. The Gross Up, if any, that is due as a result of such determination
shall be paid to the Executive in cash in a lump sum within thirty (30) days of
such computation. Appropriate adjustments shall be computed (without interest
but with additional Gross Up, if applicable) by such tax counsel based upon the
amount of the Excise Tax finally determined by the Internal Revenue Service or a
court of law; any additional amount due the Executive as a result of such
adjustment shall be paid to the Executive by the Company in cash in a lump sum
within thirty (30) days of such computation, or if less than the Gross Up any
amount due the Company as a result of such adjustment shall be paid to the
Company by the Executive in cash in a lump sum within thirty (30) days of such
computation.
14. ARBITRATION
(a) General. The parties agree that all actions, claims, controversies
or disputes of any kind (e.g. whether in contract or in tort, statutory or
common law) between them relating, directly or indirectly, to this Agreement,
whether now existing or hereafter arising ("Disputes"), are to be
12
<PAGE> 13
resolved by arbitration as provided in this Agreement. This agreement to
arbitrate will survive the recission or termination of this Agreement. All
arbitration will be conducted pursuant to and in accordance with the following,
in order of priority (i) the terms of this Agreement, (ii) the Commercial
Arbitration Rules of the American Arbitration Association, (iii) the Federal
Arbitration Act and (iv) to the extent the foregoing are inapplicable,
unenforceable or invalid, the laws of the State of Florida. All Disputes arising
shall be resolved finally by a single arbitrator. Any hearing regarding
arbitration will be held in Atlanta, Georgia or at another location mutually
acceptable to the Company and the Executive. The arbitrator will use his or her
best efforts to conduct the arbitration hearing no later than three months from
the service of the statement of claim and demand for arbitration and will use
his or her best efforts to render a decision within four months from the service
of the statement of claim and demand.
(b) Effect of Arbitration; Enforcement. An arbitration proceeding
commenced pursuant to this Section 14 is a condition precedent to and is a
complete defense to the commencement of any suit, action or proceeding in any
court or before any tribunal with respect to any Dispute. Either party may bring
an action in court to compel arbitration. Any party who fails or refuses to
submit to binding arbitration following demand by the other party shall, if the
Dispute is within the scope of this Section 14, bear all costs and expenses
incurred by the opposing party in compelling arbitration. The decision of the
arbitrator shall be final and binding upon the parties, and such decision shall
be enforceable as a judgment in a court of competent jurisdiction. Other than
the Company's right to seek specific performance by way of injunctive relief to
enforce the provisions of Sections 9, 10 and 11 set forth in Section 12 above,
each party to this Agreement covenants not to institute any suit or other
proceeding in any court with respect to any matter arising under or pursuant to
or directly or indirectly relating to this Agreement, the subject matter hereof
or any other agreements, documents and instruments delivered or required to be
delivered hereunder or in connection herewith unless the intended subject matter
thereof has first been submitted for arbitration in accordance with the
foregoing procedure and such arbitration proceeding has been completed. To the
extent permitted by applicable law, the arbitrator(s) will have the power to
award recovery of all costs and fees (including attorneys' fees, administrative
fees, and arbitrator's fees) to the prevailing party.
(c) Selection of Arbitrator. The arbitrator will be chosen by mutual
agreement of the Company and the Executive. If they cannot agree within 30 days
upon a single arbitrator, the party not electing to submit the matter to
arbitration (the "Non-Electing Party") shall provide to the other party (the
"Electing Party") a list of three proposed arbitrators, each of whom shall be
knowledgeable as to matters that are the subject of the dispute and each of whom
shall be completely independent of and with no prior affiliation or direct or
indirect relationship with any party or any of their affiliates. The Electing
Party shall then select the arbitrator from such list or, if all such proposed
arbitrators are reasonably unacceptable to such party, so advise the
Non-Electing Party, whereupon such party shall prepare a new list of three
proposed arbitrators and the selection process shall begin anew.
(d) Authority of Arbitrator. The arbitrator will have the sole
authority to resolve issues regarding whether Disputes are subject to
arbitration, including the applicability of any statute of limitations. The
choice of law provisions of Section 15(g) shall be applicable to any arbitration
under this Agreement. The statute of limitations applicable to any Dispute shall
be tolled upon the initiation of arbitration under this Agreement and shall
remain tolled until the arbitration process is completed.
13
<PAGE> 14
(e) Confidentiality of Arbitration. In order to maintain the
confidentiality of the dispute intended to be resolved by arbitration as
provided in this Agreement as well as the information adduced and contentions
asserted in any such arbitration, the parties agree to maintain in strict
confidence and agree to neither make nor suffer any public disclosure of the
fact of, contentions or evidence, discovered, developed or introduced in and the
result of any such arbitration; provided, however, the foregoing to the contrary
notwithstanding, the Company may make public disclosures regarding the existence
of the arbitration, the nature of the dispute and the results thereof as may be
necessary or appropriate to satisfy the Company's disclosure obligations under
applicable securities or other laws.
15. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement of a
breach of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any subsequent breach by such other party.
(b) Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any agreement to which the Executive is a party or by which the
Executive is or may be bound.
(c) Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
(d) Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
(e) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(f) No Duty to Mitigate. The Executive shall be under no duty to
mitigate any loss of income as result of the termination of his employment
hereunder and any payments due the Executive upon termination of employment
shall not be reduced in respect of any other employment compensation received by
the Executive following such termination.
(g) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the application of such provision
would result in the application of the law of a state or jurisdiction other than
Florida).
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<PAGE> 15
(h) Venue; Process. To the extent it is necessary to resolve any
disputes arising under this Agreement, and the agreements and instruments and
documents contemplated hereby in a court and resolution by a court is consistent
with the provisions of Section 14, the parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in the Circuit Court of the Thirteenth Judicial
Circuit of the State of Florida in and for Hillsborough County (the "Circuit
Court") or in the United States District Court for the Middle District of
Florida, Tampa Division. Such jurisdiction and venue are merely permissive;
jurisdiction and venue shall also continue to lie in any court where
jurisdiction and venue would otherwise be proper. The parties further agree that
the mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful service of
process against them, without the necessity for service by any other means
provided by statute or rule of court. The parties agree that they will not
object that any action commenced in the foregoing jurisdictions is commenced in
a forum non conveniens.
(i) Severability. Any provision of this Agreement which is determined
pursuant to arbitration under Section 14 of this Agreement (or to the extent it
is necessary to resolve any disputes arising under this Agreement, and the
agreements and instruments and documents contemplated hereby in a court and
resolution by a court is consistent with the provisions of Section 14, by a
court of competent jurisdiction) to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect. If any provision or term of this Agreement is susceptible to
two or more constructions or interpretations, one or more of which would render
the provision or term void or unenforceable, the parties agree that a
construction or interpretation which renders the term or provision valid shall
be favored.
(j) Deduction for Tax Purposes. Subject to the provisions of Section
3(h), the Company's obligations to make payments under this Agreement are
independent of whether any or all of such payments are deductible expenses of
the Company for federal income tax purposes.
(k) Enforcement. If, within 10 days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not forthcoming, and
the party demanding compliance engages the services of an attorney to enforce
rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses of enforcement (including
reasonable attorneys' fees and reasonable expenses during investigation, before
and at trial and in appellate proceedings). In addition, each of the parties
agrees to indemnify the other in respect of any and all claims, losses, costs,
liabilities and expenses, including reasonable fees and reasonable disbursements
of counsel (during investigation prior to initiation of litigation and at trial
and in appellate proceedings if litigation ensues), directly or indirectly
resulting from or arising out of a breach by the other party of their respective
obligations hereunder. The parties' costs of enforcing this Agreement shall
include prejudgment interest. Additionally, if any party incurs any
out-of-pocket expenses in connection with the enforcement of this Agreement, all
such amounts shall accrue interest at 10% per annum (or such
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<PAGE> 16
lower rate as may be required to avoid any limit imposed by applicable law)
commencing 30 days after any such expenses are incurred.
(l) Executive's Expenses. The Company shall pay the reasonable out of
pocket legal expenses incurred by the Executive in connection with the
negotiation and preparation of this Agreement.
(m) Notices. All notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and three days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
<TABLE>
<S> <C>
To the Company: LAMALIE ASSOCIATES, INC.
Suite 220E
3903 Northdale Boulevard
Tampa, FL 33624
Attn: Chief Financial Officer
Fax: (813) 962-2138
</TABLE>
To the Executive at the Executive's address herein first above written,
or to such other address as either party may specify by written notice to the
other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ATTEST: LAMALIE ASSOCIATES, INC.
(Corporate Seal)
By:
- -------------------------------- -------------------------------
Secretary Robert L. Pearson, President
EXECUTIVE
Witnesses:
- -------------------------------- -------------------------------
PATRICK J. MCDONNELL
- --------------------------------
As to Executive
16
<PAGE> 17
EXHIBIT A
TO
EMPLOYMENT AGREEMENT WITH PATRICK MCDONNELL
DATED SEPTEMBER 15, 1998
STOCK OPTION AGREEMENT
17
<PAGE> 18
LAMALIE ASSOCIATES, INC.
1998 OMNIBUS STOCK AND INCENTIVE PLAN
STOCK OPTION CERTIFICATE
Date Granted: , 1998 Option Certificate No.: NISO-
---------- ----------
NON-INCENTIVE STOCK OPTION TO PURCHASE SHARES AT $ XYZ PER SHARE
-----
GRANTED TO:
-------------------------
THIS IS TO CERTIFY THAT, pursuant to the provisions of the Lamalie
Associates, Inc. 1998 Omnibus Stock and Incentive Plan (the "Plan"), and
effective as of the date indicated above, Lamalie Associates, Inc. (the
"Company") hereby grants to the person named above (the "Optionee"), subject to
the terms and conditions of the Plan and subject further to the terms and
conditions of this Certificate, a Non-Incentive Stock Option affording to the
Optionee the right and option (the "Option") to purchase from the Company a
total of shares (the "Option Shares") of the common stock of the Company (the
"Common Stock") at a per share purchase price of $ XYZ (the "Option Price"),
such option to be exercised as provided in this Certificate.
1. EXERCISE PERIOD. The Option shall expire on ____________, 2008 (the
"Scheduled Expiration Date"), except that the Option may expire prior to the
Scheduled Expiration Date upon termination of the Optionee's employment with the
Company, including by reason of death or disability, as provided in Section 5.
After the date of expiration of the Option (the "Final Expiration Date"),
whether the original Scheduled Expiration Date or an earlier date, the Option
may not be exercised in whole or in part. For the purposes of this paragraph,
the Optionee will be deemed employed by the Company if employed by a Subsidiary
of the Company.
2. VESTING SCHEDULE. The Optionee's rights under the Option shall vest
and become exercisable in accordance with the following schedule, reduced by the
number of Option Shares, if any, as to which the Option has then already been
exercised:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PERCENTAGE AND (NUMBER) OF
OPTION SHARES
VESTING DATES CUMULATIVELY VESTED AND
EXERCISABLE
- -------------------------------------------------------------------------------
<S> <C>
___________, 1999 25% ( )
- -------------------------------------------------------------------------------
___________, 2000 50% ( )
- -------------------------------------------------------------------------------
___________, 2001 75% ( )
- -------------------------------------------------------------------------------
___________, 2002 100% ( )
- -------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing schedule, the Optionee's rights under the Option
shall be fully vested and shall be exercisable as to all of the Option Shares
upon the occurrence of any of the following events which occurs during the
Optionee's employment with the Company: (i) the Optionee dies; (ii) the
Optionee's employment is terminated due to his or her "Permanent Disability" as
defined in the Optionee's employment agreement dated __________,1998 (the
"Employment Agreement") during the term of the Employment Agreement or,
thereafter, becomes totally and permanently disabled (as determined by the
Compensation and Management Development Committee of the Board of Directors (the
"Committee"); (iii) any termination of employment of the Optionee by the
Company, "Without Good Cause" (as defined in the Employment Agreement), during
the term of the Employment Agreement; or (iv) upon a "Change in Control" (as
defined in the Plan). For purposes of this paragraph, the "term of the
Employment Agreement" shall include any additional term provided by any renewal
or extension of the Employment Agreement.
3. EXERCISE OF OPTION.
(a) NOTICE. Subject to the limitations set forth in this
Certificate and in the terms of the Plan, the Option may be exercised (to the
extent then exercisable) by presenting this Certificate to the designated
representative of the Committee, together with written notice specifying the
number of Option Shares as to which the Option is being exercised and payment of
the Option Price for the number of Option Shares being purchased. This
Certificate, together with the notice and payment of the Option Price for the
number of Option Shares being purchased, shall be delivered in person or sent by
U.S. registered or certified mail, postage and fees prepaid, return receipt
requested, to the administrative executive offices of the Company at 3903
Northdale Boulevard, Tampa, Florida 33624, attention: Stock Option
Administrator. The exercise date shall be the date on which this Certificate,
notice of exercise and payment are received by the Committee's designated
representative.
(b) PAYMENT OF OPTION PRICE. The Option Price shall be paid in
full: (i) in United States dollars (in cash or by check, bank draft or money
order payable to the order of the Company); (ii) in the discretion and in the
manner determined
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<PAGE> 19
by the Committee by the delivery of shares of Common Stock already owned by the
Optionee; (iii) by cashless exercise as permitted under the Federal Reserve
Board's Regulation T (subject to applicable legal restrictions) or other legally
permissible means acceptable to the Committee; or (iv) in the discretion of the
Committee through a combination of the foregoing.
(c) MINIMUM NUMBER OF SHARES; NO FRACTIONAL SHARES. To the extent
exercisable, the Option may be exercised in whole or in part. However, at no
time may the Option be exercised for fewer than one hundred (100) Option Shares
unless the number of Option Shares to be acquired by exercise of the Option is
the total number then purchasable under the Option. The Option may be exercised
only for whole (not fractional) shares.
4. TRANSFERABILITY. The Option is not transferable by the Optionee
except by will or by the laws of descent and distribution upon the death of the
Optionee. Accordingly, during the lifetime of the Optionee, and subject to the
condition that the Option shall not be exercisable in whole or in part after the
Final Expiration Date, the Option shall be exercisable only by the Optionee.
However, a Participant may transfer an Option to a trust, provided that the
Committee may require that the Participant submit a legal opinion that such
holding has no adverse tax or securities law consequences for the company. After
the Optionee's death and prior to the Final Expiration Date, the Option may be
exercised by the personal representative of the Optionee or by any person or
persons who shall have acquired the Option directly from the Optionee by bequest
or inheritance, but no other person.
5. EARLY EXPIRATION UPON TERMINATION OF EMPLOYMENT. Notwithstanding
Sections 1 and 2, if the employment of the Optionee by the Company terminates,
then: (i) after the effective date of such termination, the Option shall not
become further vested or exercisable, and the Optionee shall have no right to
exercise the Option except to the extent that the Option was vested and
exercisable on the effective date of such termination; and (ii) the Option shall
expire on the earlier of the Scheduled Expiration Date or the date ninety (90)
days (one (1) year if such termination is because of the death or disability of
the Optionee, or if the Optionee dies during such ninety (90) day period) after
the effective date of such termination. For the purposes of this paragraph, the
Optionee will be deemed employed by the Company if employed by a Subsidiary of
the Company.
6. NO RIGHTS AS STOCKHOLDER. The Optionee shall have no rights as a
stockholder in the Company with respect to any Option Shares prior to the date
of issuance to the Optionee of such shares. The Optionee shall be under no
obligation to exercise the Option in whole or in part.
7. MODIFICATION; SURRENDER. Subject to the terms and conditions, and
within the limitations of the Plan, the Committee may modify the Option or
accept its whole or partial surrender by the Optionee at any time or from time
to time.
8. AUTHORITY OF THE COMMITTEE. The Committee shall have full authority
to interpret the terms of the Plan, the Option and this Certificate. The
decision of the Committee on any such matter of interpretation or construction
shall be final and binding.
9. NO EMPLOYMENT AGREEMENT. This Certificate and the Option do not,
and shall not be deemed to, confer upon the Optionee any right with respect to
continuance of employment by the Company, nor limit in any way the right of the
Company to terminate the Optionee's employment at any time.
10. WITHHOLDING. The Company shall have the right to withhold from any
payment or delivery of shares to the Optionee, or to require the Optionee to
remit to the Company, an amount (to be withheld or paid in the discretion of the
Company in cash, Common Stock or otherwise) sufficient to satisfy any federal,
state or local withholding tax liability relating to the Option or the Option
Shares prior to or simultaneously with the delivery of any certificate or
certificates for Option Shares.
11. OPTIONEE BOUND BY THE PLAN, ETC. The Option and its terms and
provisions are subject to the terms and conditions of the Plan and subject
further to the terms and conditions of this Certificate. The Optionee hereby
acknowledges receipt of a copy of the Plan, agrees to be bound by all the terms
and provisions of the Plan and this Certificate, and understands that, in the
event of any conflict between the terms of the Plan and of this Certificate, the
terms of the Plan shall control.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by the undersigned duly authorized officer.
LAMALIE ASSOCIATES, INC.
By:
----------------------------------
ACKNOWLEDGED AND ACCEPTED:
this day of , 1998.
--- ------------
- -----------------------------------
19
<PAGE> 20
EXHIBIT B
TO
EMPLOYMENT AGREEMENT WITH PATRICK MCDONNELL
DATED SEPTEMBER 15, 1998
RELEASE
WHEREAS, _______________________________ (the "Executive") is an
employee of Lamalie Associates, Inc., (the "Company") and is a party to the
Employment Agreement dated __________________ (the "Agreement");
WHEREAS, the Executive's employment has been terminated in accordance
with Section 8___ of the Agreement; and
WHEREAS, the Executive is required to sign this Release in order to
receive the payment of any compensation under Section 8 of the Agreement
following termination of employment.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:
1. This Release is effective on the date hereof and will continue in
effect as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, for the Executive and
the Executive's dependents, successors, assigns, heirs, executors and
administrators (and the Executive and their legal representatives of every
kind), hereby releases, dismisses, remises and forever discharges the Company,
its predecessors, parents, subsidiaries, divisions, related or affiliated
companies, officers, directors, stockholders, members, employees, heirs,
successors, assigns, representatives, agents and counsel (collectively the
"Released Party") from any and all arbitrations, claims, including claims for
attorney's fees, demands, damages, suits, proceedings, actions and/or causes of
action of any kind and every description, whether known or unknown, which the
Executive now has or may have had for, upon, or by reason of any cause
whatsoever ("claims"), against the Released Party, including but not limited to:
(a) any and all claims arising out of or relating to Executive's
employment by or service with the Company and the Executive's
termination from the Company.
(b) any and all claims of discrimination, including but not
limited to claims of discrimination on the basis of sex, race,
age, national origin, marital status, religion or handicap,
including, specifically, but without limiting the generality of
the foregoing, any claims under the Age Discrimination in
Employment Act, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Americans with Disabilities Act; and
(c) any and all claims of wrongful or unjust discharge or breach of
any contract or promise, express or implied.
3. The Executive understands and acknowledges that the Company does not
admit any violation of law, liability or invasion of any of the Executive rights
and that any such violation, liability or invasion is expressly denied. The
consideration provided for this Release is made for the purpose of settling and
extinguishing all claims and rights (and every other similar or dissimilar
matter) that the Executive ever had or now may have against the Company to the
extent provided in this Release.
20
<PAGE> 21
The Executive further agrees and acknowledges that no representations, promises
or inducements have been made that the Company other than as appear in the
Agreement.
4. The Executive further agrees and acknowledges that:
(a) The Release provided for herein releases claims to and
including the date of this Release;
(b) The Executive has been advised by the Company to consult with
legal counsel prior to executing this Release, has had an
opportunity to consult with and to be advised by legal counsel
of the Executive's choice, fully understands the terms of this
Release, and enters into this Release freely, voluntarily and
intending to be found.
(c) The Executive has been given a period of 21 days to review and
consider the terms of this Release, prior to its execution and
that the Executive may use as much of the 21 day period as the
Executive desires; and
(d) The Executive may, within 7 days after execution, revoke this
Release. Revocation shall be made by delivering a written
notice of revocation to the Chief Financial Officer at the
Company. For such revocation to be effective, written notice
must be actually received by the Chief Financial Officer at the
Company no later than the close of business on the 7th day
after the Executive executes this Release. If the Executive
does exercise the Executive's right to revoke this Release, all
of the terms and conditions of the Release shall be of no force
and effect and the Company shall not have any obligation to
make payments or provide benefits to the Executive as set forth
in Sections 8 of the Agreement.
5. The Executive agrees that the Executive will never file a lawsuit or
other complaint asserting any claim that is released in this Release.
6. The Executive waives and releases any claim that the Executive has
or may have to reemployment after ______________________________.
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated:
-------------------------------- -------------------------------------
Executive
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LAMALIE ASSOCIATES, INC. FOR THE SIX MONTHS ENDED
AUGUST 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 5,148
<SECURITIES> 38,402
<RECEIVABLES> 28,628
<ALLOWANCES> 1,850
<INVENTORY> 0
<CURRENT-ASSETS> 73,726
<PP&E> 11,112
<DEPRECIATION> 3,220
<TOTAL-ASSETS> 117,376
<CURRENT-LIABILITIES> 22,476
<BONDS> 0
0
0
<COMMON> 80
<OTHER-SE> 79,517
<TOTAL-LIABILITY-AND-EQUITY> 117,376
<SALES> 0
<TOTAL-REVENUES> 47,673
<CGS> 0
<TOTAL-COSTS> 43,122
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (188)
<INCOME-PRETAX> 4,739
<INCOME-TAX> 2,370
<INCOME-CONTINUING> 2,369
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,369
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
</TABLE>
