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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: January 4, 1999
(Date of earliest event reported): December 31, 1998
--------------------------------
LAI WORLDWIDE, INC. (FORMERLY, LAMALIE ASSOCIATES, INC.)
- - -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Florida 0-22645 59-3547281
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
200 Park Avenue New York, New York 33694-0468
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(Address of Principal Executive Offices) (Zip code)
(212) 953-7900
-------------------------------
(Registrant's Telephone Number, Including
Area Code)
LAMALIE ASSOCIATES, INC.
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
Effective at the close of business on December 31, 1998, Lamalie
Associates, Inc., a Florida corporation ("LAI") reorganized into a holding
company structure (the "Reorganization") whereby LAI Worldwide, Inc., a Florida
corporation ("Registrant") became the holding company. The Reorganization is
intended to provide greater flexibility for international and domestic
expansion, broaden the alternatives available for future financing and
generally provide for greater administrative and operational flexibility.
The Reorganization was effected through the formation by LAI of the
Registrant as a wholly-owned subsidiary and the formation by the Registrant of
a wholly-owned subsidiary, LAI MergerSub, Inc., a Florida corporation
("MergerSub"). An Agreement and Plan of Merger dated December 23, 1998 was
entered into by and among LAI, Registrant and MergerSub (the "Merger
Agreement"), and, pursuant to the Merger Agreement, MergerSub merged with and
into LAI (the "Merger"), with LAI as the surviving corporation. Registrant and
MergerSub were organized in connection with the Merger.
LAI became a wholly owned subsidiary of Registrant as a result of the
Merger. The Merger Agreement was duly approved by the Board of Directors of LAI
at a meeting thereof held on December 16, 1998, and by written consent of the
Boards of Directors and sole stockholders of each of Registrant and MergerSub.
The Reorganization was effected in accordance with the provisions of Section
607.11045, Florida Statutes, accordingly, approval of the stockholders of LAI
was not required.
Pursuant to the Merger Agreement, each outstanding share of common
stock, $.01 par value, of LAI issued and outstanding immediately prior to the
Merger, together with the preferred stock purchase right associated therewith
was converted into one share of common stock, $.01 par value, of Registrant,
together with one preferred stock purchase right associated therewith. As a
result, LAI stockholders now hold common stock and preferred stock purchase
rights in Registrant (instead of LAI) which is deemed to have been registered
under Section 12(b) of the Securities Exchange Act of 1934 because the
Reorganization constitutes a "succession" and Registrant constitutes a
"successor issuer" of LAI for securities law purposes.
In addition, pursuant to the terms of the Merger Agreement and an
Assumption Agreement between LAI and Registrant, each outstanding option to
purchase shares of LAI common stock has been converted into an option to
purchase, on the same terms and conditions, an identical number of shares of
Registrant's common stock.
Because the corporate name of the Registrant after the Effective Time
of the Merger is different than the corporate name of LAI prior to the
Effective Time of the Merger, Section 607.11045, Florida Statutes requires a
physical exchange of certificates. Accordingly, certificates formerly
representing shares of common stock of LAI should be submitted to Registrant's
exchange
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agent, ChaseMellon Shareholder Services, L.L.C., for transfer. The
Reorganization was tax free for federal income tax purposes for the
stockholders of LAI.
Registrant's common stock will trade on The Nasdaq Stock Market under
the trading symbol LAIX, the same trading symbol under which LAI common stock
traded.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Exhibits to this report are listed in the Index to Exhibits set
forth elsewhere herein.
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 hereunto duly authorized.
LAI WORLDWIDE, INC.
Date: January 4, 1999 By: /s/ Philip R. Albright
------------------------ -------------------------------------------
Philip R. Albright, Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.3 Agreement and Plan of Merger dated December 23, 1998 by and among LAI,
Registrant and MergerSub
3.1 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
4.2 Stockholder Rights Agreement dated December 30, 1998, between Registrant
and ChaseMellon Shareholder Services, L.L.C.
8 Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A., as
to certain tax matters
10.1 1997 Omnibus Stock and Incentive Plan as now in effect
10.2 Non-Employee Directors' Stock Option Plan as now in effect
10.3 Profit Sharing and Savings Plan as now in effect
10.4 1997 Employee Stock Purchase Plan as now in effect
10.9 1998 Omnibus Stock and Incentive Plan as now in effect
10.12 Directors' Deferral Plan as now in effect
99.1 Assumption Agreement dated December 31, 1998 between Registrant and
LAI
99.2 Letter to Stockholders of Lamalie Associates, Inc. describing the
Reorganization
</TABLE>
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EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
AMONG
LAMALIE ASSOCIATES, INC.,
LAI WORLDWIDE, INC.
AND
LAI MERGERSUB, INC.
Dated December 23, 1998
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated December
23, 1998 is made and entered into by and among Lamalie Associates, Inc., a
Florida corporation (the "Company"), LAI Worldwide, Inc., a Florida corporation
and a wholly-owned subsidiary of the Company ("HoldingCo"), and LAI MergerSub,
Inc., a Florida corporation and a wholly-owned subsidiary of HoldingCo
("MergerSub").
RECITALS:
The respective boards of directors of each of HoldingCo, MergerSub and
the Company have approved the merger of MergerSub with and into the Company (the
"Merger"), further approved the terms and conditions of the Merger set forth in
this Agreement and approved this Agreement. HoldingCo and MergerSub are newly
formed corporations organized for the purpose of participating in the
transactions contemplated by this Agreement. The purpose of the Merger is to
implement a new holding company organizational structure for the Company under
which HoldingCo will become the holding company and the Company will become a
direct wholly-owned subsidiary of HoldingCo. After the Effective Time (as
defined herein), the stockholders of the Company will own equity interests in
HoldingCo by consummating the Merger and converting each outstanding Share (as
defined herein) into one share of HoldingCo Common Stock (as defined herein),
all in accordance with the terms of this Agreement. Pursuant to Section
607.11045 of the Florida Business Corporation Act ("FBCA"), it is not necessary
to submit this Agreement to a vote of the stockholders of the Company. The sole
stockholder of HoldingCo and the sole stockholder of MergerSub have each
approved this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME
1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement and the FBCA, at the Effective Time (as defined in
Section 1.2), MergerSub shall be merged with and into the Company and the
separate corporate existence of MergerSub shall thereupon cease. The
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Company shall be the surviving corporation in the Merger (the "Surviving
Corporation"), and except as provided herein, the separate corporate existence
of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The Merger shall have the
effects specified in the FBCA.
1.2. Effective Time. The Company and MergerSub will cause Articles of
Merger (the "Articles of Merger") to be executed as provided in Section 607.1105
of the FBCA and delivered to the Department of State of the State of Florida.
The Merger shall become effective upon the later of the filing of the Articles
of Merger and the close of business on December 31, 1998 (the "Effective Time").
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION
2.1. Articles of Incorporation. The amended and restated articles of
incorporation of the Company, as amended, in effect immediately prior to the
Effective Time shall be the articles of incorporation of the Surviving
Corporation (the "Articles of Incorporation"), until duly amended as provided
therein or by applicable law, except that they shall again be restated, and the
following amendments thereto shall become effective as of the Effective Time:
(a) Article IV, Section 1. Section 1 of Article IV shall be
amended by deleting Article IV, Section 1.(b)(iii) in its entirety.
(b) Article IX. A new Article IX shall be added as follows:
SECTION 607.11045, FLORIDA STATUTES
Pursuant to the provisions of Section 607.11045, Florida Statutes, any
act or transaction by or involving this Corporation which requires for
its adoption under the Florida Business Corporation Act or under these
Articles of Incorporation the approval of the stockholders of this
Corporation must also be approved by the stockholders of LAI Worldwide,
Inc., a Florida corporation which is the parent corporation of this
Corporation, or the successor by merger of LAI Worldwide, Inc., by the
same vote as is required under the Florida Business Corporation Act or
these Articles of Incorporation.
2.2. The By-laws. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or otherwise in accordance with
applicable law.
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ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION AND
HOLDINGCO AFTER THE EFFECTIVE TIME
3.1. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation,
to serve at the pleasure of the Board of Directors of the Surviving Corporation.
The officers of the Company at the Effective Time shall, from and after the
Effective Time, be the officers of HoldingCo, to serve at the pleasure of the
Board of Directors of HoldingCo.
3.2. Directors. The directors of MergerSub at the Effective Time, whose
names and addresses are set forth on Exhibit A hereto, shall, from and after the
Effective Time, be the directors of the Surviving Corporation until their
successors have been duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Articles of Incorporation or
Bylaws of the Surviving Corporation or as otherwise provided by law. The
directors of the Company at the Effective Time shall, from and after the
Effective Time, be the directors of HoldingCo until their successors have been
duly elected and qualified or until their earlier death, resignation or removal
in accordance with the Articles of Incorporation or Bylaws of HoldingCo or as
otherwise provided by law.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of HoldingCo, the Company, MergerSub
or the holder of any capital stock of the Company:
(a) Merger Consideration. Each share of the Common Stock, par
value $.01 per share, of the Company (a "Share" or, collectively, the "Shares")
issued and outstanding immediately prior to the Effective Time, together with
the preferred stock purchase right associated therewith (the "Company Right")
under and pursuant to, and as further described in, that certain Stockholder
Rights Agreement dated November 6, 1998 between the Company and ChaseMellon
Shareholder Services, L.L.C. ("ChaseMellon") as Rights Agent (the "Company
Rights Agreement") shall be converted into one share of Common Stock, par value
$.01 per share, of HoldingCo ("HoldingCo Common Stock") together with one
preferred stock purchase right (the "HoldingCo Right") under and pursuant to,
and as further described in, that certain Stockholder Rights Agreement dated
December 30, 1998 between HoldingCo and ChaseMellon Shareholder Services, L.L.C.
as Rights Agent (the "HoldingCo Rights Agreement").
(b) Cancellation of Shares. Each share of HoldingCo Common
Stock owned by the Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the Company, cease to
be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
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(c) MergerSub. At the Effective Time, each share of Common
Stock, par value $.01 per share, of MergerSub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common stock of
the Surviving Corporation.
(d) Benefit Plans. At the Effective Time, (i) each option or
right to purchase (each, a "Company Option") Shares pursuant to any of the
Company's incentive plans or employee benefit plans, including but not limited
to the Company's 1997 Omnibus Stock and Incentive Plan, the 1998 Omnibus Stock
and Incentive Plan and the Non-Employee Directors' Stock Option Plan (the
"Option Plans") shall become an option or right to purchase shares of HoldingCo
Common Stock on the same terms as an option or right to purchase Shares under an
Option Plan at an exercise price equal to the exercise price per share of such
Company Option under an Option Plan, (ii) each right or obligation to receive a
Share or payment of an amount based on a Share under any of the Company's
incentive plans or benefit plans, including but not limited to the Company's
1997 Employee Stock Purchase Plan and the LAI Directors' Deferral Plan shall
become a right or obligation, as the case may be, to receive shares or payment
of an amount based on shares of HoldingCo Common Stock on the same terms as the
right or obligation to receive Shares or payment of an amount based on Shares
existed under any of such plans immediately prior to the Effective Time, (iii)
each participant's right to direct an investment of his account balance under
the LAI Ward Howell Profit Sharing and Savings Plan into Shares shall become a
right to direct an investment of his account balance under the LAI Ward Howell
Profit Sharing and Savings Plan into HoldingCo Common Stock on the same terms as
permitted under the LAI Ward Howell Profit Sharing and Savings Plan immediately
prior to the Effective Time, and (iv) the definition of "Company" under the
Options Plans, the 1997 Employee Stock Purchase Plan, the LAI Directors'
Deferral Plan and the LAI Ward Howell Profit Sharing and Savings Plan
(collectively, the "Benefit Plans") and the name of each such Benefit Plan shall
be amended to reflect the fact that HoldingCo will, as of the Effective Time, be
considered the "Company" and the plan sponsor for all purposes of such Benefit
Plans.
(e) Exchange of Certificates. At or prior to the Effective
Time, the Company shall deposit with ChaseMellon Shareholder Services, L.L.C.
(the "Exchange Agent") certificates representing the HoldingCo Common Stock.
Promptly after the Effective Time, the Company shall cause the Exchange Agent to
mail to each of its stockholders: (i) a letter of transmittal and (ii)
instructions for use in effecting the surrender of the Company Common Stock
certificates in exchange for the HoldingCo Common Stock certificates. After the
Effective Time, each stockholder of the Company as of the Effective Time shall
surrender the certificate or certificates representing the shares of Company
Common Stock owned by such person, duly endorsed as the Exchange Agent may
require, together with the transmittal materials properly and duly executed, to
the Exchange Agent, and shall promptly receive in exchange therefor a
certificate representing an equal number of shares of HoldingCo Common Stock.
The Company Common Stock certificates so surrendered shall forthwith be
canceled. The Company shall not be obligated to deliver the certificates
representing the HoldingCo Common Stock to any of its stockholders until they
surrender their certificate or certificates representing shares of Company
Common Stock for exchange as provided herein. Until surrendered for exchange in
accordance with this Agreement, each certificate representing shares of Company
Common Stock and Company Rights shall from and after the Effective Time
represent for all purposes only the right to receive an equal number of shares
of HoldingCo Common Stock and HoldingCo Rights. Whenever a dividend or other
distribution is declared by the Company, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
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distributions on all shares issuable pursuant to this Agreement, but no dividend
or other distribution payable to the holders of record of Company Common Stock
at or subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Company Common Stock issued and outstanding
at the Effective Time until such holder physically surrenders such certificate
for exchange as provided in this Agreement, promptly after which time all such
dividends or distributions shall be paid (without any interest thereon).
ARTICLE V
ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER
5.1. Assumption of Plans and Agreements. HoldingCo and the Company
hereby agree that they shall, at or prior to the Effective Time, execute,
acknowledge and deliver an assumption agreement pursuant to which HoldingCo
will, from and after the Effective Time, be substituted for, assume and agree to
perform, or cause the Company to perform, all obligations of the Company
existing immediately prior to the Effective Time pursuant to the Benefit Plans,
lockup agreements, indemnification agreements, and other agreements pertaining
to the Company Common Stock as shall be deemed appropriate by the officers of
the Company. In connection with such assumption and without further action by
the stockholders of HoldingCo or the Company, the Benefit Plans shall be amended
such that all references to the Company and the Shares shall become references
to HoldingCo and HoldingCo Common Stock, respectively.
5.2. Compliance with the FBCA. Prior to the Effective Time, the parties
hereto will take all steps necessary to comply with Section 607.11045 of the
FBCA, including without limitation, the following:
(a) Articles of Incorporation and ByLaws of HoldingCo. At the Effective
Time, the Articles of Incorporation and By-Laws of HoldingCo shall be in the
form of the Articles of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, subject to the exceptions permitted by
Section 607.11045.
(b) Directors and Officers of HoldingCo. At the Effective Time, the
directors and officers of the Company immediately prior to the Effective Time
shall become the directors and officers of HoldingCo, in the case of directors,
until their successors are elected and qualified and, in the case of officers,
to serve at the pleasure of the Board of Directors of HoldingCo.
(c) Listing of HoldingCo Common Stock. The HoldingCo Common Stock to be
issued and initially reserved for issuance pursuant to the transactions
contemplated herein shall have been approved for listing by the Nasdaq Stock
Market.
(d) Filings. Prior to the Effective Time, the Surviving Corporation
shall cause this Agreement to be executed and filed with the Florida Secretary
of State. Prior to the Effective Time, to the extent necessary to effectuate the
amendments to the Articles of Incorporation of the Surviving Corporation
contemplated by this Agreement, the Surviving Corporation shall cause to be
filed with the Florida Secretary of State such certificates or documents
required to give effect thereto.
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ARTICLE VI
CONDITIONS
The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Effective Time of the following
condition: the shares of HoldingCo Common Stock issuable to the stockholders of
the Company pursuant to this Agreement shall have been authorized for listing on
the Nasdaq Stock Market.
ARTICLE VII
TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by mutual written consent of the Company and
HoldingCo by action of their respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1. Modification or Amendment. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement by written agreement approved by the respective parties'
Boards of Directors and executed and delivered by duly authorized officers of
the respective parties, except that no amendment shall alter or change the
amount or kind of shares to be received by stockholders of the Company or
otherwise alter or change any of the terms and conditions of this Agreement so
as to adversely affect the Company's stockholders.
8.2. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
8.3. Governing Law. This Agreement shall be deemed to be made in and in
all respect shall be interpreted, construed and governed by and in accordance
with the laws of the State of Florida, without regard to the conflict of law
principles thereof.
8.4. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of the parties hereto as of the date first
written above.
LAMALIE ASSOCIATES, INC.
By: /s/: Patrick J. McDonnell
----------------------------------------
Patrick J. McDonnell, President and
Chief Operating Officer
LAI WORLDWIDE, INC.
By: /s/: Patrick J. McDonnell
----------------------------------------
Patrick J. McDonnell, President and
Chief Operating Officer
LAI MERGERSUB, INC.
By: /s/: Patrick J. McDonnell
----------------------------------------
Patrick J. McDonnell, President and
Chief Operating Officer
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EXHIBIT A
BOARD OF DIRECTORS OF MERGERSUB AND
BOARD OF DIRECTORS OF SURVIVING CORPORATION
AFTER THE EFFECTIVE TIME
NAME ADDRESS
Robert L. Pearson Suite 4150, Thanksgiving Tower,
1601 Elm Street,
Dallas, Texas 75201
Patrick J. McDonnell Suite 2100, 225 West Wacker
Drive, Chicago, Illinois 60606
Philip R. Albright Suite 200E, Northdale Plaza,
3903 Northdale
Boulevard, Tampa, Florida 33624
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EXHIBIT 3.1
AS FILED WITH THE FLORIDA DEPARTMENT OF STATE ON DECEMBER 18, 1998
ARTICLES OF INCORPORATION
OF
LAI WORLDWIDE, INC.
ARTICLE I
NAME
The name of this Corporation shall be:
LAI WORLDWIDE, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The address of the principal office and the mailing address of this
corporation shall be:
Suite 200E, Northdale Plaza
3903 Northdale Blvd., P.O. Box 340468
Tampa, Florida 33694-0468
ARTICLE III
TERM OF EXISTENCE
This Corporation is to exist perpetually.
ARTICLE IV
GENERAL PURPOSE
The general purpose for which this Corporation is organized is the
transaction of any and all lawful business for which corporations may be
incorporated under the Business Corporation Act of the State of Florida, and any
amendments or successor thereto, and in connection therewith, this Corporation
shall have and may exercise any and all powers conferred from time to time by
law upon corporations formed under such Act.
<PAGE> 2
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 2
ARTICLE V
CAPITAL STOCK
1. AUTHORIZED CAPITALIZATION.
(a) The total number of shares of capital stock authorized to
be issued by this Corporation shall be:
35,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock"); and
3,000,000 shares of preferred stock, par value $0.01 per share
(the "Preferred Stock").
(b) The designation, relative rights, preferences and
liabilities of each class of stock, itemized by class, shall be as follows:
(i) Preferred. Shares of the Preferred Stock may be
issued from time to time in one or more series. The board of directors
of this Corporation (hereafter the "Board of Directors" or "Board") by
resolution shall establish each series of Preferred Stock and fix and
determine the number of shares and the designations, preferences,
limitations and relative rights of each such series, provided that all
shares of the Preferred Stock shall be identical except as to the
following relative rights and preferences, as to which there may be
variations fixed and determined by the Board of Directors between
different series:
(A) The rate or manner of payment of dividends.
(B) Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of
redemption.
(C) The amount payable upon shares in the event of
voluntary and involuntary liquidation.
(D) Sinking fund provisions, if any, for the
redemption or purchase of shares.
(E) The terms and conditions, if any, on which the
shares may be converted.
(F) Voting rights, if any.
(G) Any other rights or preferences now or hereafter
permitted by the laws of the State of Florida as
variations between different series of preferred
stock.
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LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 3
(ii) Common. Each share of Common Stock shall be
entitled to one vote on all matters submitted to a vote of
stockholders, except matters required to be voted on exclusively by
holders of Preferred Stock or of any series of Preferred Stock. The
holders of Common Stock shall be entitled to such dividends as may be
declared by the Board of Directors from time to time, provided that
required dividends, if any, on the Preferred Stock have been paid or
provided for. In the event of the liquidation, dissolution, or winding
up, whether voluntary or involuntary, of this Corporation, the assets
and funds of this Corporation available for distribution to
stockholders, and remaining after the payment to holders of Preferred
Stock of the amounts to which they are entitled, shall be divided and
paid to the holders of the Common Stock according to their respective
shares.
(iii) Series A Junior Participating Preferred Stock.
Of the 3,000,000 shares of Preferred Stock authorized by these Articles
of Incorporation, a series of 500,000 of such shares shall be and are
authorized and designated as follows:
(a) Designation and Amount. The shares of
such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A
Preferred Stock shall be 500,000. Such number of shares may be
increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number
of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into
Series A Preferred Stock.
(b) Dividends and Distributions.
(1) Subject to the rights of the
holders of any shares of any series of Preferred Stock of
the Company (the "Preferred Stock") (or any similar stock)
ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common
Stock, par value $.01 per share, of the Company (the "Common
Stock") and of any other stock of the Company ranking junior
to the Series A Preferred Stock, shall be entitled to
receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April,
July, and October in each year (each such date being
referred to herein as a "Dividend Payment Date"), commencing
on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions other than
a dividend payable in shares of Common Stock, declared on
the Common Stock since the immediately preceding Dividend
Payment Date or, with respect to the first Dividend Payment
Date, since the first issuance of any share
<PAGE> 4
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 4
or fraction of a share of Series A Preferred Stock. In the
event the Company shall at any time after December 30, 1998
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination
or con solidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
(2) The Company shall declare a
dividend or distribution on the Series A Preferred Stock as
provided in Section 2(a) immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable, when, as and
if declared, on such subsequent Dividend Payment Date.
(3) Dividends shall begin to accrue
and be cumulative, whether or not earned or declared, on
outstanding shares of Series A Preferred Stock from the
Dividend Payment Date next preceding the date of issue of
such shares, unless the date of issue of such shares is
prior to the Record Date for the first Dividend Payment
Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the
date of issue is a Dividend Payment Date or is a date after
the Record Date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a Record Date
for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which Record Date shall be
not more than 60 days prior to the date fixed for the
payment thereof.
(c) Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting
rights;
(1) Subject to the provision for
adjustment hereinafter set forth and except as otherwise
provided in the Articles of Incorporation or required by
law,
<PAGE> 5
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 5
each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters upon which the
holders of the Common Stock of the Company are entitled to
vote. In the event the Company shall at any time after
December 30, 1998 declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(2) Except as otherwise provided in
the Articles of Incorporation, as hereby or otherwise
hereafter amended, and except as otherwise required by law,
the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Company.
(3) Except as set forth herein, or
as otherwise provided by law, holders of Series A Preferred
Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
(d) Certain Restrictions.
(1) Whenever quarterly dividends or
other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares
of Series A Preferred Stock outstanding shall have been paid
in full, the Company shall not:
a. declare or pay
dividends, or make any other distributions, on any shares of
stock ranking junior (as to dividends) to the Series A
Preferred Stock;
b. declare or pay
dividends, or make any other distributions, on any shares of
stock ranking on a parity (as to dividends) with the Series
A Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are
then en titled;
<PAGE> 6
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 6
c. redeem or purchase
or otherwise acquire for consideration shares of any stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock,
provided that the Company may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking
junior (as to dividends and upon dissolution, liquidation or
winding up) to the Series A Preferred Stock or rights,
warrants or options to acquire such junior stock;
d. redeem or purchase
or otherwise acquire for consideration any shares of Series
A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(2) The Company shall not permit any
Subsidiary of the Company to purchase or otherwise acquire
for consideration any shares of stock of the Company unless
the Company could, under Section 4(a), purchase or otherwise
acquire such shares at such time and in such manner.
(e) Reacquired Shares. Any shares of Series
A Preferred Stock purchased or otherwise acquired by the
Company in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their retirement become authorized but
unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
(f) Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Company, no distribution shall be made (A) to the holders of
the Common Stock or of shares of any other stock of the
Company ranking junior, upon liquidation, dissolution or
winding up, to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock
shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not earned or declared, to the date of such
payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common
Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, except distributions made ratably on
the Series A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of
<PAGE> 7
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 7
all such shares are entitled upon such liquidation,
dissolution or winding up. In the event, however, that there
are not sufficient assets available to permit payment in full
of the Series A liquidation preference and the liquidation
preferences of all other classes and series of stock of the
Company, if any, that rank on a parity with the Series A
Preferred Stock in respect thereof, then the assets available
for such distribution shall be distributed ratably to the
holders of the Series A Preferred Stock and the holders of
such parity shares in the proportion to their respective
liquidation preferences. In the event the Company shall at any
time after December 30, 1998 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause
(A) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(g) Consolidation, Merger, etc. In case the
Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at
the same time be similarly converted into, exchanged for or
changed into an amount per share (subject to the provision for
adjustment hereinaf ter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or
for which each share of Common Stock is converted, exchanged
or converted. In the event the Company shall at any time after
December 30, 1998 declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence
with respect to the conversion, exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
(h) No Redemption. The shares of Series A
Preferred Stock shall not be redeemable from any holder.
<PAGE> 8
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 8
(i) Rank. The Series A Preferred Stock shall
rank, with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or
winding up of the Company, junior to all other series of
Preferred Stock and senior to the Common Stock.
(j) Amendment. If any proposed amendment to
the Articles of Incorporation (including as amended by these
Articles of Amendment) would alter, change or repeal any of
the preferences, powers or special rights given to the Series
A Preferred Stock so as to affect the Series A Preferred Stock
adversely, then the holders of the Series A Preferred Stock
shall be entitled to vote separately as a class upon such
amendment, and the affirmative vote of two-thirds of the
outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption
thereof, in addition to such other vote as may be required by
the laws of the State of Florida.
(k) Fractional Shares. Series A Preferred
Stock may be issued in fractions of a share that shall entitle
the holder, in proportion to such holder's fractional shares,
to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
2. NO PREEMPTIVE RIGHTS.
(a) Preferred Stock. Unless otherwise specifically provided in
the terms of the Preferred Stock, the holders of any class of Preferred Stock of
this Corporation shall have no preemptive right to subscribe for and purchase
their proportionate share of any additional Preferred Stock (of the same class
or otherwise) or Common Stock issued by this Corporation, from and after the
issuance of the shares originally subscribed for by the stockholders of this
Corporation, whether such additional shares be issued for cash, property,
services or any other consideration and whether or not such shares be presently
authorized or be authorized by subsequent amendment to these Articles of
Incorporation.
(b) Common Stock. The holders of Common Stock of this
Corporation shall have no preemptive right to subscribe for and purchase their
proportionate share of any additional Preferred Stock or Common Stock issued by
this Corporation, from and after the issuance of the shares originally
subscribed for by the stockholders of this Corporation, whether such additional
shares be issued for cash, property, services or any other consideration and
whether or not such shares be presently authorized or be authorized by
subsequent amendment to these Articles of Incorporation.
3. PAYMENT FOR STOCK. The consideration for the issuance of shares of
capital stock may be paid, in whole or in part, in cash, in promissory notes, in
other property (tangible or intangible), in
<PAGE> 9
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 9
labor or services actually performed for this Corporation, in promises to
perform services in the future evidenced by a written contract, or in other
benefits to this Corporation at a fair valuation to be fixed by the Board of
Directors. When issued, all shares of stock shall be fully paid and
nonassessable.
4. TREASURY STOCK. The Board of Directors of this Corporation shall
have the authority to acquire by purchase and hold from time to time any shares
of its issued and outstanding capital stock for such consideration and upon such
terms and conditions as the Board of Directors in its discretion shall deem
proper and reasonable in the interest of this Corporation.
ARTICLE VI
REGISTERED OFFICE AND REGISTERED AGENT
The initial registered office of this corporation shall be located at
Suite 200E, Northdale Plaza, 3903 Northdale Boulevard, Tampa, Florida 33624, and
the initial registered agent of this corporation at such office shall be Philip
R. Albright. This corporation shall have the right to change such registered
office and such registered agent from time to time, as provided by law.
ARTICLE VII
DIRECTORS
1. NUMBER. The Board of Directors of this Corporation shall consist of
no fewer than three (3) nor more than twelve (12) members, the exact numbers of
directors to be fixed from time to time as provided in the bylaws of this
Corporation.
2. CLASSIFICATION. The Board of Directors shall be divided into three
classes, Class I, Class II and Class III, as nearly equal in number as possible.
Upon the effectiveness of this provision, and determined on the basis of prior
election, directors of the first class (Class I) shall hold office for a term
expiring at the 2001 annual meeting of stockholders; directors of the second
class (Class II) shall be elected to hold office for a term expiring at the 1999
annual meeting of stockholders; and directors of the third class (Class III)
shall be elected to hold office for a term expiring at the 2000 annual meeting
of stockholders. Subject to adjustment as contemplated by the following
paragraph, at each annual meeting of stockholders after 1997, the successors to
the class of directors whose terms then shall expire shall be identified as
being the same class as the directors they succeed and elected to hold office
for a term expiring at the third succeeding annual meeting of stockholders.
If the number of directors is changed, any increase or decrease shall
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional directors of any
class elected by stockholders to fill a vacancy shall hold office for a term
that shall coincide with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any incumbent director.
A director shall hold office until the annual
<PAGE> 10
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 10
meeting for the year in which his or her term expires and until his or her
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
Notwithstanding the foregoing, if and whenever the holders of any one
or more classes or series of Preferred Stock issued by this Corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
terms of these Articles of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article IV hereof, and such
directors so elected shall not be divided into classes pursuant to this Article
V unless expressly provided by such terms.
3. POWERS. The business and affairs of this Corporation shall be
managed by the 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 directed or
required to be exercised or done by the stockholders.
4. QUORUM. A quorum for the transaction of business at all meetings of
the Board of Directors shall be a majority of the number of directors determined
from time to time to comprise the Board of Directors, and the act of a majority
of the directors present at a meeting at which a quorum is present shall be the
act of the directors.
5. 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.
6. 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.
7. NOMINATIONS AND ELECTIONS. Subject to the rights, if any, of the
holders of shares of Preferred Stock then outstanding, only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors at meetings of stockholders.
<PAGE> 11
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 11
Nominations of persons for election to the Board of Directors of this
Corporation may be made at a meeting of stockholders by or at the direction of:
(a) the Board of Directors; (b) by any nominating committee or person appointed
by the Board; (c) or by any stockholder of this Corporation entitled to vote for
the election of directors at the meeting who complies with the notice procedures
set forth in this Article VII, Section 7.
Nominations by stockholders shall be made pursuant to timely notice in
writing to the Secretary of this Corporation. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of this Corporation not less than 60 days prior to the date of the
meeting at which the director(s) are to be elected, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than 70 days' notice or prior public disclosure
of the date of the scheduled meeting is given or made, notice by the
stockholder, to be timely, must be so delivered or received not later than the
close of business on the tenth day following the earlier of the day on which
notice was given or such public disclosure was made.
A stockholder's notice to the Secretary shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of this Corporation which are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Schedule 14A under the Securities Exchange Act
of 1934, as amended; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on this Corporation's books, of the stockholder
and (ii) the class and number of shares of this Corporation's stock which are
beneficially owned by the stockholder on the date of such stockholder notice.
This Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by this Corporation to determine the
eligibility of such proposed nominee to serve as a director of this Corporation.
The presiding officer of the meeting shall determine and declare at the
meeting whether the nomination was made in accordance with the terms of this
Article VII, Section 7. If the presiding officer determines that a nomination
was not made in accordance with the terms of this Article VII, Section 7, he or
she shall so declare at the meeting and any such defective nomination shall be
disregarded.
<PAGE> 12
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 12
ARTICLE VIII
INITIAL BOARD OF DIRECTORS
The initial Board of Directors of this corporation shall consist of the
following members, such members to hold office until their successors have been
duly elected and qualify. The name and street address of the initial directors
are:
NAME ADDRESS
---- -------
Robert L. Pearson Suite 4150, Thanksgiving Tower,
1601 Elm Street,
Dallas, Texas 75201
Patrick J. McDonnell Suite 2100, 225 West Wacker Drive,
Chicago, Illinois 60606
Philip R. Albright Suite 200E, Northdale Plaza,
3903 Northdale Boulevard,
Tampa, Florida 33624
ARTICLE IX
INCORPORATOR
The name and street address of the incorporator making these Articles
of Incorporation are:
NAME ADDRESS
---- -------
Becky A. Ferrell c/o Trenam, Kemker, Scharf, Barkin,
Frye, O'Neill & Mullis, P.A.
101 E. Kennedy Blvd., Suite 2700
Tampa, Florida 33602
ARTICLE X
STOCKHOLDER MEETINGS
1. ANNUAL MEETINGS. At an annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be acted upon, as
shall have been brought before the annual meeting (c) by, or at the direction
of, the Board of Directors, or (d) by any stockholder of this Corporation who
complies with the notice procedures set forth in this Article X, Section 1 and
the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
<PAGE> 13
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 13
For a proposal to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of this Corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of this
Corporation not less than 60 days prior to the scheduled annual meeting,
regardless of any postponements, deferrals or adjournments of that meeting to a
later date; provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the stockholder, to be timely, must be so delivered or received not later
than the close of business on the tenth day following the earlier of the day on
which such notice of the date of the scheduled annual meeting was given or the
day on which such public disclosure was made.
A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting, in addition
to any other information as may be required by law, (a) a brief description of
the proposal desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on this Corporation's books, of the stockholder proposing such
business and any other stock holders known by such stockholder to be supporting
such proposal, (c) the class and number of shares of this Corporation's stock
which are beneficially owned by the stockholder on the date of such stockholder
notice and by any other stockholders known by such stockholder to be supporting
such proposal on the date of such stockholder notice, and (d) any financial
interest of the stockholder in such proposal.
The presiding officer of the annual meeting shall determine and declare
at the annual meeting whether the stockholder proposal was made in accordance
with the terms of this Article X, Section 1. If the presiding officer determines
that a stockholder proposal was not made in accordance with the terms of this
Article X, Section 1, he or she shall so declare at the annual meeting and any
such proposal shall not be acted upon at the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but, in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
2. SPECIAL MEETINGS. Special meetings of the stockholders of this
Corporation for any purpose or purposes may be called at any time by (a) the
Board of Directors; (b) the Chairman of the Board of Directors (if one is so
appointed); (c) the President of this Corporation; or (d) by holders of not less
than 33-1/3% of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting, if such stockholders sign, date and
deliver to this Corporation's secretary one or more written demands for the
meeting describing the purpose or purposes 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.
At any special meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been set
forth in the notice of such special meeting.
<PAGE> 14
LAI WORLDWIDE, INC.
ARTICLES OF INCORPORATION PAGE 14
3. WRITTEN CONSENTS. Any action required or permitted to be taken at
any annual or special meeting of stockholders of this Corporation may be taken
only upon the vote of such stockholders at an annual or special meeting duly
called in accordance with the terms of this Article X, Section 1 and 2, and may
not be taken by written consent of such stockholders.
ARTICLE XI
AMENDMENTS
This Corporation reserves the right to amend, alter, change or repeal
any provisions contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are subject to this reservation. Notwithstanding anything contained in
these Articles of Incorporation to the contrary, the affirmative vote of at
least 66-2/3% of the outstanding shares of Common Stock of this Corporation
shall be required to amend or repeal this Article XI, Article VII or Article X
of these Articles of Incorporation or to adopt any provision inconsistent
therewith.
ARTICLE XII
BYLAWS
1. ADOPTION, AMENDMENT, ETC. The power to adopt the bylaws of this
Corporation, to alter, amend or repeal the bylaws, or to adopt new bylaws, shall
be vested in the Board of Directors of this Corporation; provided, however, that
any bylaw or amendment thereto as adopted by the Board of Directors may be
altered, amended, or repealed in accordance with the bylaws of this Corporation
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.
2. SCOPE. The bylaws of this Corporation shall be for the government of
this Corporation and may contain any provisions or requirements for the
management or conduct of the affairs and business of this Corporation, provided
the same are not inconsistent with the provisions of these Articles of
Incorporation, or contrary to the laws of the State of Florida or of the United
States.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles for the uses and purposes therein stated this 18th day of December,
1998.
/s/: Becky A. Ferrell
------------------------------
Becky A. Ferrell, Incorporator
<PAGE> 1
EXHIBIT 3.2
* * * * * *
BYLAWS
OF
LAI WORLDWIDE, INC.
* * * * * * *
As adopted December 23, 1998
<PAGE> 2
BYLAWS
OF
LAI WORLDWIDE, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
- - ----- ----
<S> <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>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
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>
<CAPTION>
<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
LAI WORLDWIDE, INC.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of LAI WORLDWIDE, 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
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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
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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
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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
10
<PAGE> 15
(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
11
<PAGE> 16
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
12
<PAGE> 17
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
13
<PAGE> 18
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.
14
<PAGE> 19
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.
15
<PAGE> 20
ARTICLE XIV
AMENDMENTS
Except as may be contrary to law or 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
16
<PAGE> 21
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.
17
<PAGE> 1
EXHIBIT 4.1
<TABLE>
<S> <C> <C> <C>
THIS CERTIFICATE IS
TRANSFERABLE
CS IN NEW YORK, NEW YORK (LAI Worldwide, Inc. LOGO) SEE REVERSE FOR
AND CERTAIN DEFINITIONS
RIDGEFIELD PARK, NEW
JERSEY
</TABLE>
LAI WORLDWIDE, INC.
CUSIP 501718 10 0
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
THIS CERTIFIES THAT [NAME OF SHAREHOLDER]
IS THE OWNER OF [NUMBER OF SHARES]
[GRAPHIC OMITTED]
SHARES OF THE FULLY PAID AND NON-ASSESSABLE COMMON STOCK, PAR VALUE $.01 PER
SHARE, OF
LAI WORLDWIDE, INC.
[GRAPHIC OMITTED]
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent and Registrar.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed with the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile seal of the Corporation.
Dated
/s/ /s/
- - -------------------------------- -------------------------------------
Secretary President and Chief Operating Officer
(CORPORATE SEAL)
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
By
AUTHORIZED SIGNATURE
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIFT (TRAN) MIN ACT -- .......... Custodian ..........
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts (Transfers)
survivorship and not as tenants in to Minors Act .................
common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED ______________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
| |
|_____________________________________|
-----------------------------------------
- - --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - ------------------------------------------------------------------------- SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
- - ----------------------------------------------------------------------- ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED:
------------------------------------------
------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED
THE PROVISIONS OF THE CORPORATION'S ARTICLES OF INCORPORATION, AS PRESENTLY IN
EFFECT, SHOWING THE CLASSES AND SERIES OF STOCK AUTHORIZED TO BE ISSUED BY THE
CORPORATION AND THE DISTINGUISHING CHARACTERISTICS THEREOF, ARE HEREBY
INCORPORATED BY REFERENCE TO THE SAME EXTENT AS IF HEREIN SET FORTH AT LENGTH; A
COPY OF SAID PROVISIONS, CERTIFIED BY AN OFFICER OF THE CORPORATION, WILL BE
FURNISHED BY THE CORPORATION OR BY ITS TRANSFER AGENT, WITHOUT COST, TO AND UPON
THE REQUEST OF THE HOLDER OF THIS CERTIFICATE. REQUESTS MAY BE ADDRESSED TO THE
SECRETARY OF THE CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICE OR TO THE
CORPORATION'S TRANSFER AGENT.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT BETWEEN LAI WORLDWIDE, INC. (THE
"COMPANY") AND CHASEMELLON SHAREHOLDER SERVICES, L.L.C. DATED AS OF DECEMBER 30,
1998 AS THE SAME MAY BE AMENDED FROM TIME TO TIME (THE "RIGHTS AGREEMENT"), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED
BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN
THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
<PAGE> 1
EXHIBIT 4.2
-----------------------------------------------------
STOCKHOLDER RIGHTS AGREEMENT
-----------------------------------------------------
LAI WORLDWIDE, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
-----------------------------------------------------
DATED AS OF DECEMBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 CERTAIN DEFINITIONS................................................................... 1
SECTION 2 APPOINTMENT OF RIGHTS AGENT........................................................... 4
SECTION 3 ISSUE OF RIGHT CERTIFICATES........................................................... 5
SECTION 4 FORM OF RIGHT CERTIFICATES............................................................ 6
SECTION 5 COUNTERSIGNATURE AND REGISTRATION..................................................... 7
SECTION 6 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE
OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES................................................................... 7
SECTION 7 EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS................................................................................... 8
SECTION 8 CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.................................... 9
SECTION 9 AVAILABILITY OF SHARES OF PREFERRED STOCK............................................. 9
SECTION 10 PREFERRED STOCK RECORD DATE......................................................... 11
SECTION 11 ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES
AND NUMBER OF RIGHTS....................................................................... 11
SECTION 12 CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES.................................................................................. 18
SECTION 13 CONSOLIDATION, MERGER, SHARE EXCHANGE OR SALE
OR TRANSFER OF ASSETS OR EARNINGS POWER.................................................... 18
SECTION 14 FRACTIONAL RIGHTS AND FRACTIONAL SHARES............................................. 22
SECTION 15 RIGHTS OF ACTION.................................................................... 23
SECTION 16 AGREEMENT OF RIGHT HOLDERS.......................................................... 23
SECTION 17 RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER................................... 24
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 18 CONCERNING THE RIGHTS AGENT......................................................... 24
SECTION 19 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT............................................................................... 25
SECTION 20 DUTIES OF RIGHTS AGENT.............................................................. 25
SECTION 21 CHANGE OF RIGHTS AGENT.............................................................. 28
SECTION 22 ISSUANCE OF NEW RIGHT CERTIFICATES.................................................. 28
SECTION 23 REDEMPTION.......................................................................... 29
SECTION 24 EXCHANGE............................................................................ 29
SECTION 25 NOTICE OF CERTAIN EVENTS............................................................ 30
SECTION 26 NOTICES............................................................................. 31
SECTION 27 SUPPLEMENTS AND AMENDMENTS; CERTAIN BOARD ACTIONS................................... 32
SECTION 28 SUCCESSORS.......................................................................... 33
SECTION 29 BENEFITS OF THIS AGREEMENT.......................................................... 33
SECTION 30 DETERMINATIONS AND ACTIONS BY THE BOARD
OF DIRECTORS............................................................................... 33
SECTION 31 SEVERABILITY........................................................................ 34
SECTION 32 GOVERNING LAW....................................................................... 34
SECTION 33 COUNTERPARTS........................................................................ 34
SECTION 34 DESCRIPTIVE HEADINGS................................................................ 34
</TABLE>
<PAGE> 4
STOCKHOLDER RIGHTS AGREEMENT
THIS STOCKHOLDER RIGHTS AGREEMENT (this "Agreement") is made and
entered into on and effective as of the 30th day of December, 1998 by and
between LAI WORLDWIDE, INC., a Florida corporation (the "Company" or "LAI"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company
(the "Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as defined below) of the Company
outstanding as of the close of business (as defined below) on December 30, 1998
(the "Record Date") each Right representing the right to purchase one-hundredth
(subject to adjustment) of a share of Preferred Stock (as defined below), upon
the terms and subject to the conditions herein set forth, and the Board of
Directors has further authorized and directed the issuance of one Right (subject
to adjustment as provided herein) with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are defined below); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final Expiration Date
in accordance with Section 22 hereof.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meaning
indicated:
(a) "Acquiring Person" shall mean any Person who or which shall at any
time be the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include a Person who is at such time an Exempt
Person; provided, however, that if the Board of Directors determines in good
faith that a Person who would otherwise be an Acquiring Person has become such
inadvertently (including, without limitation, because (i) such Person was
unaware that it Beneficially Owned a percentage of the shares of Common Stock
then outstanding that would otherwise cause such Person to be a Acquiring Person
or (ii) such Person was aware of the extent of its Beneficial Ownership of
Common Stock but had no actual knowledge of the consequences of such Beneficial
Ownership under this Stockholder Rights Agreement) and without any intention of
changing or influencing control of the Company, and such Person, as promptly as
practicable after being advised of such determination divested or divests
himself or itself of Beneficial Ownership of a sufficient number of shares of
Common Stock so that such Person would no longer be an Acquiring Person, then
such Person shall not be deemed to be or to have become an Acquiring Person for
any purposes of this Agreement. Notwithstanding the foregoing, no Person shall
become an Acquiring Person as the result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares Beneficially Owned by such Person
to 20% or more of the shares of Common Stock then outstanding, provided,
however, that if a Person shall become the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding by reason of such share acquisitions
by the Company and thereafter become the Beneficial Owner of any additional
shares of Common Stock (other than pursuant to a dividend or
<PAGE> 5
Stockholder Rights Agreement Page 2
distribution paid or made by the Company on the outstanding Common Stock in
shares of Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), then such Person shall be deemed to be an Acquiring Person unless
upon the consummation of the acquisition of such additional shares of Common
Stock such Person does not own 20% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, shall be deemed
to have "Beneficial Ownership" of and shall be deemed to "Beneficially Own" any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to Beneficially Own, directly or indirectly within the
meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, (x)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, (y) securities which such Person
has a right to acquire on the exercise of Rights at any time prior to the time a
Person becomes an Acquiring Person or (z) securities issuable upon exercise of
Rights from and after the time a Person becomes an Acquiring Person if such
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 hereof ("Original Rights") or pursuant to Section 11(i) or Section 11(n)
hereof with respect to an adjustment to Original Rights; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, any security by reason of such agreement, arrangement or understanding if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
<PAGE> 6
Stockholder Rights Agreement Page 3
(iii) which are Beneficially Owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B) hereof) or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Florida or the State in
which the principal office of the Rights Agent is located, are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., Tampa,
Florida time on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Tampa, Florida time on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the common stock, par value $.01 per share, of the Company. "Common Stock" when
used with reference to any Person other than the Company shall mean the capital
stock (or, in the case of an unincorporated entity, the equivalent equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(g) "Current Per Share Market Price" shall have the meaning set forth
in Section 11(d) hereof.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(j) "Exempt Person" shall mean (1) the Company, (2) any Subsidiary of
the Company, in each case including, without limitation, in its fiduciary
capacity, (3) any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity or trustee holding Common Stock for or pursuant to
the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company or of any
Subsidiary of the Company, (4) any "holding company" within the meaning of
Florida Statutes Section 607.1145 that, in a merger pursuant to such section,
becomes the owner of all shares of Common Stock issued and outstanding as of
immediately prior to the consummation of such merger, or (5) until January 1,
1999, Lamalie Associates, Inc., a Florida corporation.
(k) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Nasdaq" shall mean The Nasdaq Stock Market, Inc. ("Nasdaq") or any
successor organization.
<PAGE> 7
Stockholder Rights Agreement Page 4
(m) "New York Stock Exchange" shall mean the New York Stock Exchange,
Inc.
(n) "Person" shall mean any individual, firm, limited liability
company, corporation or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(o) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company.
(p) "Record Date" shall have the meaning set forth in the preamble to
this Agreement.
(q) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(r) "Securities Act" shall mean the Securities Act of 1933, as amended.
(s) "Stock Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such or such
earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.
(t) "Subsidiary" of any Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are Beneficially Owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.
(u) "Trading Day" shall mean, as to any security, (i) if the security
is listed or admitted to trading on any national securities exchange, any day on
which the principal national securities exchange on which such security is
listed or admitted to trading is open for the transaction of business, or (ii)
if the security is not listed or admitted to trading on any national securities
exchange but is listed or admitted to trading or has prices for such security
quoted on any market or quotation system operated by Nasdaq, any day on which
such market or quotation system is open for the transaction of business, or
(iii) otherwise, a Business Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable upon ten (10) days' prior
written notice to the Rights Agent. No co-Rights Agent shall have any duty to
supervise, nor shall any co-Rights Agent have any liability for or with respect
to any act or omission of, any other co-Rights Agent.
<PAGE> 8
Stockholder Rights Agreement Page 5
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the Stock Acquisition
Date or (ii) the tenth business day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or of the first public announcement of the intention of
such Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person (other than an Exempt
Person) becoming the Beneficial Owner of shares of Common Stock aggregating 20%
or more of the Common Stock then outstanding (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights), the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock registered in the names of the holders
thereof and not by separate Right Certificates, and (y) the Rights will be
transferable only in connection with the transfer of Common Stock. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested and provided with all necessary
information, send) by first-class, insured, postage-prepaid mail, to each record
holder of Common Stock as of the close of business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit A hereto (a "Right
Certificate"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Stockholder Rights Agreement, in
substantially the form of Exhibit B hereto (the "Summary of Stockholder Rights
Agreement"), by first-class, postage-prepaid mail, to each record holder of
Common Stock as of the close of business on the Record Date (other than any
Acquiring Person or any Associate or Affiliate of any Acquiring Person), at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with the Summary of Stockholder
Rights Agreement. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Stockholder Rights Agreement, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
<PAGE> 9
Stockholder Rights Agreement Page 6
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Stockholder Rights Agreement between
LAI Worldwide, Inc. (the "Company") and ChaseMellon Shareholder
Services, L.L.C. dated as of December 30, 1998 as the same may be
amended from time to time (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certifi cate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights owned by or transferred to
any Person who becomes an Acquiring Person (as defined in the Rights
Agreement) and certain transferees thereof will become null and void
and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding.
Notwithstanding this Section 3(c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall be substantially
in the form set forth in Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (which do not affect the
duties and responsibilities of the Rights Agent) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange, market or quotation system on which
the Rights may from time to time be listed or admitted to trading or on which
prices therefor may be quoted, or to conform to usage. Subject to the provisions
of Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price per one one-hundredth
of a share of Preferred Stock set forth therein (the "Purchase Price"), but the
number of such one one-hundredths of a share of Preferred Stock and the Purchase
Price shall be subject to adjustment as provided herein.
<PAGE> 10
Stockholder Rights Agreement Page 7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by the Chairman of the Board of Directors, the President, any of the Vice
Presidents, the Treasurer or the Controller of the Company, either manually or
by facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent of
any relevant information, the Rights Agent will keep or cause to be kept, at an
office or agency designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14
hereof, at any time after the Close of Business on the Distribution Date, and
prior to the close of business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-hundredths of a share of Preferred Stock as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office or
agency of the Rights Agent designated for such purpose. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. The Rights Agent shall have no
duty or obligation under this Section unless and until it is satisfied that all
such taxes and/or charges have been paid.
<PAGE> 11
Stockholder Rights Agreement Page 8
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the close of business on the earlier of
the Redemption Date or the Final Expiration Date, upon receipt by the Company
and the Rights Agent of evidence satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly and properly executed, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-hundredth of a
share of Preferred Stock as to which the Rights are exercised, at any time which
is both after the Distribution Date and prior to the earliest of (i) the close
of business on November 15, 2008 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date") or (iii) the time at which such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price shall be initially $50 for each one
one-hundredth of a share of Preferred Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-hundredths of a share of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with Section 7(c) hereof.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preferred Stock to be purchased and an amount equal to any
applicable tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock certificates for the number of shares of Preferred Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-hundredths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with
<PAGE> 12
Stockholder Rights Agreement Page 9
such request, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7
unless such registered holder shall have (i) properly completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof as the Company or
the Rights Agent shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
or any shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) If at any time, and for so long as, the shares of Preferred Stock
(and, following the time that a Person becomes an Acquiring Person, shares of
Common Stock and other securities) issuable upon
<PAGE> 13
Stockholder Rights Agreement Page 10
the exercise of Rights may be listed or admitted to trading or may have prices
therefor quoted on any national securities exchange or any market or quotation
system, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed or admitted to trading or have prices therefor quoted on such
exchange, market or quotation system upon official notice of issuance upon such
exercise.
(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person, shares of Common Stock
and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect (with prompt
written notice to the Rights Agent of such announcement). Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the Securities
Act (if required) shall have been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state taxes and charges which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
shares of Preferred Stock (or shares of Common Stock or other securities) upon
the exercise of Rights. The Company shall not, however, be required to pay any
tax or charge which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or shares of Common
Stock or other securities) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the exercise of any Rights
until any such tax or charge shall have been paid (any such tax or charge being
payable by that holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax or charge is due.
<PAGE> 14
Stockholder Rights Agreement Page 11
SECTION 10. PREFERRED STOCK RECORD DATE.
Each Person in whose name any certificate for Preferred Stock is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Preferred Stock represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable taxes or charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Stock transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Stock for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES AND NUMBER OF RIGHTS.
The Purchase Price, the number of shares of Preferred Stock or other
securities or property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of Preferred Stock or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the Record Date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, the holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.
(ii) Subject to Section 24 hereof, in the event that any Person
becomes an Acquiring Person, then (A) the Purchase Price shall be adjusted to be
the Purchase Price in effect immediately prior to such Person becoming an
Acquiring Person multiplied by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
Person becoming an Acquiring Person, whether or not such Right was then
exercisable, and (B) each holder of a Right, except as otherwise provided in
this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall thereafter have the
right to receive, upon exercise at a price equal to the Purchase Price (as so
<PAGE> 15
Stockholder Rights Agreement Page 12
adjusted), in accordance with the terms of this Agreement and in lieu of shares
of Preferred Stock, such number of shares of Common Stock (or at the option of
the Company, such number of one one-hundredths of shares of Preferred Stock) as
shall equal the result obtained by (x) multiplying the then current Purchase
Price by the number of one one-hundredths of a share of Preferred Stock for
which a Right is then exercisable and dividing that product by (y) 50% of the
then Current Per Share Market Price of the Company's Common Stock (determined
pursuant to Section 11(d) hereof) on the date such Person became an Acquiring
Person; provided, however, that the Purchase Price and the number of shares of
Common Stock so receivable upon exercise of a Right shall thereafter be subject
to further adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Agreement to the contrary, however, from and
after the time (the "Invalidation Time") when any Person first becomes an
Acquiring Person, any Rights that are Beneficially Owned by (x) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the Invalidation Time or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Invalidation Time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this Section 11(a)(ii), and subsequent
transferees of such Persons, shall be null and void without any further action
and any holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The Company shall
use all reasonable efforts to ensure that the provisions of this Section
11(a)(ii) are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. From and after the Invalidation Time, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become null and void pursuant to the
provisions of this Section 11(a)(ii), and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become null and void
pursuant to the provisions of this Section 11(a)(ii) shall be canceled. From and
after the occurrence of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exercised pursuant to this Section 11(a)(ii)
shall thereafter be exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with Section
11(a)(ii) hereof such number or fractions of shares of Preferred Stock having an
aggregate current market value equal to the Current Per Share Market Price of a
share of Common Stock. In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the
Board of Directors shall, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party (A) determine
the excess of (1) the value of the shares of Common Stock issuable upon the
exercise of a Right in accordance with Section 11(a)(ii) hereof (the "Current
Value") over (2) the then current Purchase Price multiplied by the number of one
one-hundredths of shares of Preferred Stock for which a Right was exercisable
immediately prior to the time that the Acquiring Person
<PAGE> 16
Stockholder Rights Agreement Page 13
became such (such excess, the "Spread"), and (B) with respect to each Right
(other than Rights which have become void pursuant to Section 11(a)(ii) hereof),
make adequate provision to substitute for the shares of Common Stock issuable in
accordance with Section 11(a)(ii) hereof upon exercise of the Right and payment
of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) shares of Preferred Stock or other equity securities of the Company
(including, without limitation, shares or fractions of shares of preferred stock
which, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of preferred stock and shares or fractions of shares
of preferred stock are hereinafter referred to as "Common Stock Equivalents"),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in
the Purchase Price), where such aggregate value has been determined by the Board
of Directors upon the advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors; provided, however, if the
Company shall not make adequate provision to deliver value pursuant to clause
(B) above within thirty (30) days following the date that the Acquiring Person
became such (the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If, upon the date any Person becomes an Acquiring Person, the
Board of Directors shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of Directors so elects,
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may
be extended, is herein called the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the second and/or
third sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof and the last sentence of this Section
11(a)(iii) hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made pursuant
to such second sentence and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect (with prompt
written notice of such announcements to the Rights Agent). For purposes of this
Section 11(a)(iii), the value of the shares of Common Stock shall be the Current
Per Share Market Price (as determined pursuant to Section 11(d)(i) hereof) on
the Section 11(a)(ii) Trigger Date and the per share or fractional value of any
"Common Stock Equivalent" shall be deemed to equal the Current Per Share Market
Price of the Common Stock. The Board of Directors may, but shall not be required
to, establish procedures
<PAGE> 17
Stockholder Rights Agreement Page 14
to allocate the right to receive shares of Common Stock upon the exercise of the
Rights among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a Record Date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such Record Date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("Equivalent Preferred
Shares")) or securities convertible into Preferred Stock or Equivalent
Preferred Shares at a price per share of Preferred Stock or Equivalent Preferred
Shares (or having a conversion price per share, if a security convertible into
shares of Preferred Stock or Equivalent Preferred Shares) less than the then
Current Per Share Market Price of the Preferred Stock (determined pursuant to
Section 11(d) hereof) on such Record Date, the Purchase Price to be in effect
after such Record Date shall be determined by multiplying the Purchase Price in
effect immediately prior to such Record Date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock and Equivalent Preferred
Shares outstanding on such Record Date plus the number of shares of Preferred
Stock and Equivalent Preferred Shares which the aggregate offering price of the
total number of shares of Preferred Stock and/or Equivalent Preferred Shares so
to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Preferred Stock and
Equivalent Preferred Shares outstanding on such Record Date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock and Equivalent Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a Record Date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such Record
Date had not been fixed.
(c) In case the Company shall fix a Record Date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such Record
Date shall be determined by multiplying the Purchase Price in effect immediately
prior to such Record Date by a fraction, the numerator of which shall be the
then Current Per Share Market Price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such Record Date, less the fair market value (as
determined in good faith by the Board of Directors whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Preferred Stock, and the
denominator of which shall be such Current Per Share Market Price (determined
pursuant to Section 11(d) hereof) of the Preferred
<PAGE> 18
Stockholder Rights Agreement Page 15
Stock. Such adjustments shall be made successively whenever such a Record Date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such Record Date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "Current Per Share Market Price" of any security on
any date shall be deemed to be the average of the daily closing prices per share
of such security for the 30 consecutive Trading Days (as such term is defined
below) immediately prior to but not including such date; provided, however, that
in the event that the Current Per Share Market Price of the security is
determined during a period following the announcement by the issuer of such
security of (A) a dividend or distribution on such security payable in shares of
such security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such security, and prior to the
expiration of 30 Trading Days after but not including the ex-dividend date for
such dividend or distribution, or the Record Date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such security. The closing price for any day shall
be (X) the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported by (1) the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, or (2) if the security is not listed or admitted to trading on
the New York Stock Exchange, the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the security is listed or admitted to trading, or (Y) if the
security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices, as reported by any market or quotation system operated
by Nasdaq, or (Z) if prices for the security are not reported by any such market
or quotation system, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the security and
selected by the Board of Directors.
(ii) For the purpose of any computation hereunder, if the
Preferred Stock is publicly traded, the Current Per Share Market Price of the
Preferred Stock shall be determined in accordance with the method set forth in
Section 11(d)(i) hereof. If the Preferred Stock is not publicly traded but the
Common Stock is publicly traded, the Current Per Share Market Price of the
Preferred Stock shall be conclusively deemed to be the Current Per Share Market
Price of the Common Stock as determined pursuant to Section 11(d)(i) hereof
multiplied by one hundred (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof). If
neither the Common Stock nor the Preferred Stock is publicly traded, Current Per
Share Market Price shall mean the fair value per share as determined in good
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Preferred Stock or share of
<PAGE> 19
Stockholder Rights Agreement Page 16
Common Stock or other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the expiration of
the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) hereof and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest one ten-
thousandth of a share of Preferred Stock) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right immediately prior to
such adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement (with prompt written notice
thereof to the Rights Agent) of its election to adjust the number of Rights,
indicating the Record Date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This Record Date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
may, as
<PAGE> 20
Stockholder Rights Agreement Page 17
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such Record Date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the Record Date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a share of Preferred Stock which were expressed in the initial Right
Certificates issued hereunder.
(k) The Company may take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock or other such
shares at the Purchase Price (including as adjusted from time to time in
accordance with the terms of this Agreement).
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a Record Date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such Record Date of
the Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash or Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of Preferred Stock or issuance of rights,
options or warrants referred to in Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision,
<PAGE> 21
Stockholder Rights Agreement Page 18
combination or consolidation of the Common Stock (by reclassification or
otherwise than by payment of a dividend payable in Common Stock) into a greater
or lesser number of Common Stock, then in any such case, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(o) The Company agrees that, after the earlier of the Distribution Date
or the Stock Acquisition Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief reasonably detailed statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights
Agent and with each transfer agent for the Common Stock or the Preferred Stock a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25 hereof (if so required under
Section 25 hereof). The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall have no duty
with respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER, SHARE EXCHANGE OR SALE OR TRANSFER OF ASSETS
OR EARNINGS POWER.
(a) In the event, directly or indirectly, at any time after any Person
has become an Acquiring Person, (i) the Company shall merge with and into any
other Person, (ii) any Person shall consolidate with the Company, or any Person
shall merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, (iii) the Company shall effect a statutory share exchange with the
outstanding Common Stock of the Company being exchanged for stock or other
securities of any other Person, or for money or other property, or (iv) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or one or more of its wholly-owned Subsidiaries), then upon the
first occurrence of such
<PAGE> 22
Stockholder Rights Agreement Page 19
event, proper provision shall be made so that: (A) each holder of record of a
Right (other than Rights which have become null and void pursuant to Section
11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable (whether or not such Right was then exercisable) immediately prior
to the time that any Person first became an Acquiring Person (each as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c),
11(h), 11(i) and 11(m) hereof), in accordance with the terms of this Agreement
and in lieu of Preferred Stock, such number of validly issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the time that any Person first became an Acquiring Person
(as subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b),
11(c), 11(h), 11(i) and 11(m) hereof) and (2) dividing that product by 50% of
the then Current Per Share Market Price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d)(i) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided that the
Purchase Price and the number of shares of Common Stock of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided in
Section 11(f) hereof to reflect any events occurring in respect of such
Principal Party after the date of the such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (D)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; provided that, upon the subsequent occurrence of any consolidation,
merger, sale or transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Purchase Price as provided
in this Section 13(a), such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Stock of the Principal Party
receivable upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or (ii) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which the shares of Common Stock are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer
the shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person that
is the other party to the merger, if such Person
<PAGE> 23
Stockholder Rights Agreement Page 20
survives said merger, or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger (including
the Company if it survives) or (z) the Person resulting from the consolidation;
and
(ii) in the case of any transaction described in (iii) of the
first sentence in Section 13(a) hereof, the Person that is the issuer of any
securities for which shares of Common Stock of the Company are exchanged, and if
no securities are so exchanged, the Person that is the other party to such share
exchange; and
(iii) in the case of any transaction described in (iv) of the
first sentence in Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
clause (b)(i), (b)(ii) or b(iii), if the Common Stock of such Person is not at
such time or has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such other
Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more
than one Person, and the Common Stocks of all of such persons have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of Common Stock having the greatest aggregate market value of
shares outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain
<PAGE> 24
Stockholder Rights Agreement Page 21
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the New York Stock Exchange or
on another national securities exchange, to list or admit to trading (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on the New York Stock Exchange or such other securities exchange,
or, if the Common Stock of the Principal Party shall not be listed or admitted
to trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be
reported by such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its authorized
securities or in its articles or certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13 hereof,
then, in such event, the Company hereby agrees with each holder of Rights that
it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after a Person first becomes an Acquiring Person enter into any transaction of
the type contemplated by (i) - (iv) of Section 13(a) hereof if (x) at the time
of or immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (y)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer of other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (z) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights.
<PAGE> 25
Stockholder Rights Agreement Page 22
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights (except prior
to the Distribution Date in accordance with Section 11(n) hereof). In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be (W) the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported by (1) the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange, or (2) if the Rights are not listed or admitted to trading on the New
York Stock Exchange, the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or (X) if the Rights are
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices, as reported by any market or quotation system operated by Nasdaq, or (Y)
if prices for the Rights are not reported by any such market or quotation
system, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights and selected by the
Board of Directors, or (Z) if no such market maker is making a market in the
Rights, the fair value of the Rights on such date as deter mined in good faith
by the Board of Directors.
(b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-hundredth of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For the
purposes of this Section 14(b), the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to
<PAGE> 26
Stockholder Rights Agreement Page 23
the registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Stock), on his own behalf and for his own benefit, may enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate (or, prior to the Distribution Date, such
Common Stock) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
<PAGE> 27
Stockholder Rights Agreement Page 24
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, execution, delivery, amendment
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
any action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly. The indemnity provided for herein shall survive the expiration of
the Rights and the termination of this Agreement.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with, its acceptance and administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
(c) Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, indirect, consequential or incidental loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Rights Agent has been advised of the likelihood of such loss or
damage.
<PAGE> 28
Stockholder Rights Agreement Page 25
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes only the duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations) upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of, any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board of
Directors, the President, any Vice President, the Treasurer, the Controller or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the
<PAGE> 29
Stockholder Rights Agreement Page 26
Rights Agent and the Rights Agent shall incur no liability in respect of any
action taken, suffered or omitted in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for or be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 and 24
hereof, or the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate furnished
pursuant to Section 12 hereof, describing such change or adjustment); nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of Preferred Stock or other securities will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be one of the Chairman of the
Board of Directors, the President, the Chief Financial Officer or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken,
suffered or omitted by it in good faith in accordance with instructions of any
such officer or for any delay in acting while waiting for those instructions.
Any application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken, suffered or omitted by the Rights Agent under this Agreement and
the date on and/or after which such action shall be taken or suffered or such
omission shall be effective. The Rights Agent shall not be liable or responsible
for any action taken or suffered by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which
<PAGE> 30
Stockholder Rights Agreement Page 27
date shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person
or legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock or
Preferred Stock by registered or certified mail, and, following the Distribution
Date, to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or
<PAGE> 31
Stockholder Rights Agreement Page 28
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a Person organized and doing business under the laws of
the United States or any State thereof, which is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred Stock, and, following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such forms as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company may with respect to shares of Common
Stock so issued or sold pursuant to (i) the exercise of stock options, (ii)
under any employee plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company in each case existing prior to the
Distribution Date, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
SECTION 23. REDEMPTION.
(a) The Board of Directors may, at any time prior to such time as any
Person first becomes an Acquiring Person, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (the redemption price being hereinafter referred
to as the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on
<PAGE> 32
Stockholder Rights Agreement Page 29
the current market price of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(a) hereof (or at such later time
as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice (with prompt
written notice thereof to the Rights Agent), the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of redemption shall state the method by which the payment of the Redemption
Price will be made.
SECTION 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after any
Person first becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have not
become effective or that have become null and void pursuant to the provisions of
Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such amount per Right being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 hereof and may not be exchanged pursuant to this
Section 24(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the Board of
Directors ordering the exchange of any Rights pursuant to Section 24(a) hereof
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice (with prompt written notice thereof to
the Rights Agent) of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity
<PAGE> 33
Stockholder Rights Agreement Page 30
of such exchange. The Company shall promptly mail a notice of any such exchange
to all of the holders of the Rights so exchanged at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) The Company may at its option and, in the event that there shall
not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or
fraction thereof (or Equivalent Preferred Shares as such term is defined in
Section 11(b) hereof) such that the Current Per Share Market Price (determined
pursuant to Section 11(d) hereof) of one share of Preferred Stock (or Equivalent
Preferred Share) multiplied by such number or fraction is equal to the Current
Per Share Market Price of one share of Common Stock (determined pursuant to
Section 11(d) hereof) as of the date of such exchange).
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision or combination of
outstanding Preferred Stock), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to declare or pay any dividend on the Common
Stock payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the Record Date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such liquidation, dissolution or
winding up is to take place and the date of participation therein by the holders
of the Common Stock and/or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the Record Date for determining holders of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Stock
and/or Preferred Stock, whichever shall be the earlier.
<PAGE> 34
Stockholder Rights Agreement Page 31
(b) In case any event described in Section 11(a)(ii) or Section 13
hereof shall occur then the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.
SECTION 26. NOTICES.
Any notice, request, demand or other communication which is required or
may be given under this Agreement by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be in writing and shall be deemed
to have been duly given (1) if transmitted by telecopy, electronic telephone
line facsimile transmission or other similar electronic or digital transmission
method, when transmitted; (2) if sent by a nationally recognized next day
delivery service that obtains a receipt on delivery, the day after it is sent;
(3) if mailed, first class registered or certified United States mail, postage
prepaid, five days after it is sent; and (4) in any other case, when actually
received. In each case, such notice, request, demand or other communication
shall be sent to:
LAI Worldwide, Inc.
3903 Northdale Blvd.
Tampa, Florida 33624
Attention: Chief Financial Officer
or to such other address as the Company may have specified in writing to the
Rights Agent using the procedures specified above in this Section.
Subject to the provisions of Section 21 hereof, any notice, request,
demand or other communication which is required or may be given under this
Agreement by the Company or by the holder of any Right Certificate to or on the
Rights Agent shall be in writing and shall be deemed to have been duly given (1)
if transmitted by telecopy, electronic telephone line facsimile transmission or
other similar electronic or digital transmission method, when transmitted; (2)
if sent by a nationally recognized next day delivery service that obtains a
receipt on delivery, the day after it is sent; (3) if mailed, first class
registered or certified United States mail, postage prepaid, five days after it
is sent; and (4) in any other case, when actually received. In each case, such
notice, request, demand or other communication shall be sent to:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Attention: General Counsel
or to such other address as the Rights Agent may have specified in writing to
the Company using the procedures specified above in this Section.
<PAGE> 35
Stockholder Rights Agreement Page 32
Any notice, request, demand or other communication which is required or
may be given under this Agreement by the Company or the Rights Agent to or on
the holder of any Right Certificate shall be in writing and shall be deemed to
have been duly given (1) if transmitted by telecopy, electronic telephone line
facsimile transmission or other similar electronic or digital transmission
method, when transmitted; (2) if sent by a nationally recognized next day
delivery service that obtains a receipt on delivery, the day after it is sent;
(3) if mailed, first class registered or certified United States mail, postage
prepaid, five days after it is sent; and (4) in any other case, when actually
received. In each case, such notice, request, demand or other communication
shall be sent to such holder at the address of such holder as shown on the
registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS; CERTAIN BOARD ACTIONS.
(a) Except as otherwise provided in this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of the Rights. At any time when the Rights are no longer redeemable, except as
otherwise provided in this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, (iii) shorten or
lengthen any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable;
provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person), and no such amendment may cause
the rights again to become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which decreases the Redemption Price. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27 and,
if requested by the Rights Agent, an opinion of counsel, the Rights Agent shall
execute such supplement or amendment; provided, however, that, anything to the
contrary notwithstanding, the Rights Agent shall not be obligated to enter into
any amendment or supplement that change or increases the Rights Agent's duties,
liabilities or obligations.
(b) Notwithstanding anything to the contrary, no action by the Board of
Directors consenting to, approving, authorizing or directing any (1) supplement,
amendment or change to this Agreement, (2) redemption, cancellation, purchase or
acquisition of, or payment, exchange, grant, issuance or delivery of any
consideration for, any Rights, (3) suspension, cancellation, termination,
rescission, revocation or waiver of this Agreement or any provision of this
Agreement or (4) any similar action shall be effective unless (a) there are
"Disinterested Directors" (as that term is defined below) then in office and (b)
such action receives the approval by affirmative vote of a majority of such
Disinterested Directors. For the purposes of this paragraph, "Disinterested
Director" shall mean a member of the Board of Directors of the Company who is
not an Acquiring Person or Section
<PAGE> 36
Stockholder Rights Agreement Page 33
"3(a)(ii) Person" (as that term is defined below), not an Affiliate or Associate
of an Acquiring Person or Section 3(a)(ii) Person, and not a representative of
an Acquiring Person, of a Section 3(a)(ii) Person or of any such Affiliate or
Associate. For the purposes of this paragraph, "Section 3(a)(ii) Person" shall
mean a Person who has commenced or participated in the commencement of, or with
respect to whom there has been a public announcement of an intention to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming an Acquiring Person.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
SECTION 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights. The Rights Agent is
entitled to always assume that the Company's Board of Directors acted in good
faith and in compliance with applicable law, the Company's Articles of
Incorporation and Bylaws as then in effect and this Agreement, and shall be
fully protected and incur no liability in reliance thereon.
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement or
applicable to this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
<PAGE> 37
Stockholder Rights Agreement Page 34
SECTION 32. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Florida and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State; provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
preformed entirely within such state.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
LAI WORLDWIDE, INC.
By: /s/: Philip R. Albright
-------------------------------------------
Philip R. Albright, Chief Financial Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/: Kathy Gallagher
-------------------------------------------
Authorized Officer
<PAGE> 1
EXHIBIT 8
[TRENAM, KEMKER, SCHARF, BARKIN, FRYE, O'NEILL & MULLIS LETTERHEAD]
December 31, 1998
Lamalie Associates, Inc.
Northdale Plaza, Suite 220E
3903 Northdale Blvd.
Tampa, FL 33624-1824
Re: Lamalie Associates Holding Company Reorganization
Our File No. 98-3653
-------------------------------------------------
Gentlemen:
You have requested our opinion with respect to certain federal income
tax consequences of an internal reorganization of Lamalie Associates, Inc.
("LAI") involving, among other things the implementation of a new holding
company structure for the Lamalie group of companies (the "Holding Company
Reorganization"). Our opinion is based upon (i) the Agreement and Plan of Merger
(the "Merger Agreement") dated December 31, 1998, among Lamalie, LAI Worldwide,
Inc. ("Holdingco") and LAI MergerSub, Inc. ("MergerSub"), (ii) the financial
statements and other information you furnished to us with respect to LAI and its
subsidiaries, (iii) the facts, representations, law and analysis hereinafter set
forth, and (iv) the written representations of officers of LAI, a copy of which
are attached hereto, and (v) current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing regulations thereunder, current
administrative rulings of the Internal Revenue Service and court decisions. We
caution that statutes, regulations, judicial decisions and administrative
rulings and interpretations are subject to change at any time, and, in some
circumstances, with retroactive effect. A change in the authorities upon which
our opinion is based could affect our conclusions.
Capitalized terms used but not defined herein have the meanings
ascribed to them in the Merger Agreement.
As set forth in detail below, in our opinion, the Holding Company
Reorganization will constitute a tax-free Merger under section 368(a) of the
Code. As a result, no gain or loss will be recognized for United States federal
income tax purposes by LAI or the stockholders of LAI by reason of the Holding
Company Reorganization.
<PAGE> 2
DECEMBER 31, 1998
PAGE 2
FACTS
THE PARTIES
LAI. LAI is a Florida corporation with its principal office at
Northdale Plaza, Suite 220E, 3903 Northdale Blvd., Tampa, FL 33624-1824.
LAI maintains its books and records on an accrual basis of accounting
and its taxable year ends on the last day of February each year. LAI and its
wholly owned subsidiary, LAI Ward Howell, Inc., file consolidated federal income
tax returns. LAI's common stock is widely-held and traded on the Nasdaq National
Market System.
LAI's authorized capital stock consists of (i) 35,000,000 shares of
common stock, par value $.01 per share, of which 8,011,557 are shares were
issued and outstanding, as of December 30, 1998, and (ii) 3,000,000 shares of
preferred stock, par value $.01 per share, of which none is issued and
outstanding, a series of 500,000 shares of which have been designated Series A
Junior Participating Preferred Stock.
Holdingco. Holdingco is a wholly-owned subsidiary of LAI, incorporated
in Florida on December 18, 1998 for the purpose of acting as a holding company
for the LAI group of companies. Prior to the Holding Company Reorganization,
Holdingco will have no significant assets or liabilities. The authorized capital
stock of Holdingco consists of (i) 35,000,000 shares of common stock, par value
$.01 per share, of which 100 shares are issued and outstanding, all of which are
directly owned by LAI, and (ii) 3,000,000 shares of preferred stock, par value
$.01 per share, of which none is issued and outstanding, a series of 500,000
shares of which have been designated Series A Junior Participating Preferred
Stock.
MergerSub. MergerSub is a wholly-owned subsidiary of Holdingco,
incorporated in Florida on December 18, 1998 for the sole purpose of merging
with LAI in accordance with the Merger Agreement. Prior to the Holding Company
Reorganization, MergerSub will have no significant assets or liabilities and has
engaged in no business activities other than matters incident to its
organization and matters incident to the Merger Agreement. The issued and
outstanding capital stock of MergerSub consists of 10,000 shares of common
stock, par value $0.01 per share, all of which are directly owned by Holdingco.
THE HOLDING COMPANY REORGANIZATION
LAI conducts its executive search business both directly through the
LAI corporation and through its wholly owned subsidiary, LAI Ward Howell, Inc.,
a Connecticut corporation. Thus, LAI functions both as an operating company and
as a holding company. For the business reasons set forth below, management of
LAI has determined that it would be advisable and in the best interests of LAI
<PAGE> 3
DECEMBER 31, 1998
PAGE 3
and its subsidiaries to implement a new holding company structure. The holding
company structure will be accomplished as follows:
1. MergerSub will merge with and into LAI pursuant to the provisions
of the Florida Business Corporation Act (the "FBCA") hereinafter
described (the "LAI Merger") pursuant to which LAI would be the
surviving corporation, and
2. pursuant to the LAI Merger, each share of common stock of LAI,
$.01 par value, issued and outstanding immediately prior to the
Effective Time of the LAI Merger, together with the preferred
stock purchase right associated therewith under and pursuant to,
and as further described in, that certain Stockholder Rights
Agreement dated November 6, 1998 between LAI and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent (collectively, the
"LAI Common Stock") will be converted into one share of common
stock of Holdingco, par value $.01 per share, together with one
preferred stock purchase right associated therewith under and
pursuant to, and as further described in, that certain
Stockholder Rights Agreement dated December 30, 1998 between
Holdingco and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent (collectively, the "Holdingco Common Stock").
As a result of the LAI Merger, (i) each shareholder of LAI immediately
prior to the Effective Time of the LAI Merger will own, immediately after the
Effective Time of the LAI Merger, a number of shares of Holdingco Common Stock
exactly equal to the number of shares of LAI Common Stock held immediately prior
to the LAI Merger, and (ii) Holdingco will own all of the issued and outstanding
stock of LAI.
The LAI Merger will be accomplished pursuant to Section 607.11045 of
the FBCA which permits a Florida corporation to reorganize as a holding company
without stockholder approval. Section 607.11045 eliminates the requirement for a
stockholder vote on such a merger through several provisions designed to ensure
that the rights of stockholders are not changed by or as a result of the merger.
Appraisal rights are not available to dissenting stockholders in a merger that
qualifies under Section 607.11045.
Thus, in the LAI Merger (i) shareholder approval will not be sought nor
is it required under Section 607.11045 of the FBCA; (ii) LAI and MergerSub are
both Florida corporations and will be the only constituent corporations to the
LAI Merger, (iii) under Section 607.1301 of the FBCA, holders of LAI Common
Stock will not be entitled to dissenters' appraisal rights; (iv) the LAI Common
Stock will be automatically converted into Holdingco Common Stock evidencing the
same proportional interests in Holdingco; (v) the businesses conducted by LAI
and its affiliates will not change as a result of the LAI Merger; (vi) the board
of directors of Holdingco, after the effective time, will be identical to the
board of directors of LAI that existed immediately prior to the LAI Merger;
(vii) the rights, powers and preferences of the holders of Holdingco Common
Stock will be identical, in all material respects, as those of holders of LAI
Common Stock immediately prior to the LAI Merger; (viii) Holdingco will be a
newly-formed corporation and, immediately prior to the LAI
<PAGE> 4
DECEMBER 31, 1998
PAGE 4
Merger, will have no significant assets or liabilities; (ix) immediately
following consummation of the LAI Merger, the provisions of the articles of
incorporation and the provisions of the by-laws of Holdingco will be identical,
in all material respects, as the articles of incorporation and by-laws of LAI,
(x) immediately following consummation of the LAI Merger, on a consolidated
basis, Holdingco will have substantially the same assets and liabilities as LAI
had prior to consummation of the LAI Merger; (xi) immediately following
consummation of the LAI Merger, LAI will be a wholly owned subsidiary of
Holdingco, and (xii) the Holdingco Common Stock will be issued solely as part of
a merger of LAI effectuated to facilitate the implementation of a holding
company structure which is considered to be more appropriate under the
circumstances.
RELATED TRANSACTIONS
Following the consummation of the Holding Company Reorganization, LAI
may distribute cash to Holdingco. Following such distribution, Holdingco may
make a loan of an equivalent amount of cash to LAI.
BUSINESS PURPOSE FOR THE HOLDING COMPANY REORGANIZATION
We are advised that management of LAI believes that the full
implementation of a course of action that includes the Holding Company
Reorganization will provide numerous benefits to LAI and its subsidiaries, taken
as a whole, and that a number of valid business reasons for taking such actions
exist, among which are:
1. Creation of an organizational framework whereby the business
of LAI can more easily be divided up geographically on
structural parity (rather than utilizing different level
subsidiaries) and lines of responsibility and authority can be
clarified.
2. Creation of an organizational framework which tends to be more
conducive to future expansion and allows for flexibility in
effectuating future acquisitions and dispositions of operating
units/assets.
3. Clarification of the role of the ultimate parent company as
the provider of consolidated worldwide management, financing,
investor relations and certain other staff services to the
organization as a whole.
4. Creation of future opportunities for centralization of
international functions such as treasury management,
administration services and marketing.
5. Creation of an organizational framework that helps to
facilitate the tracking of the profitability of various
business units.
<PAGE> 5
DECEMBER 31, 1998
PAGE 5
6. Elimination of the need for the public board of directors to
take numerous actions of the nature required for the
operations of LAI, including its foreign branches, the effect
of which will allow the board of directors of the ultimate
parent to concentrate on high level policy and other
management issues while at the same time facilitating the day
to day operations of LAI through actions of a subsidiary
boards of directors.
7. Providing through Holdingco structural flexibility in planning
for, and structuring or restructuring of, the overall LAI
group of companies to meet business needs in present and
future years.
8. Providing expected improvement in financing alternatives by
facilitating planning of financings best suited to the varying
needs and circumstances of LAI and its subsidiaries.
9. Reduction of state franchise and income taxes on an ongoing
basis, estimated to result in as much as $600,000 annual
savings and provisions of structure more conducive to
opportunities for minimizing worldwide tax liability.
10. Reducing exposure of the stock of the subsidiaries to
liabilities of LAI.
11. Reducing exposure of LAI to liabilities of the subsidiaries.
REPRESENTATIONS
In connection with rendering this opinion, we have relied on the
following representations of LAI (each of which shall also be true as of the
date of the Holding Company Reorganization):
1. Immediately prior to the Holding Company Reorganization, no
indebtedness will exist between any of the subsidiaries and
LAI except for intercompany accounts which arise in the
ordinary course of business, with no such intercorporate
indebtedness having been issued, acquired, or to be settled at
a discount.
2. The Holding Company Reorganization is motivated and carried
out to accomplish real and substantial non-Federal tax
purposes germane to the business of LAI and its subsidiaries.
3. There is no plan or intention to liquidate either LAI or any
of its subsidiaries, except for possible liquidations into
another wholly owned member of the resulting consolidated
group, or to sell or otherwise dispose of the assets of either
LAI or any of its subsidiaries, except in the ordinary course
of business and except among wholly owned members of the
resulting consolidated group.
<PAGE> 6
DECEMBER 31, 1998
PAGE 6
4. Payments made in connection with all continuing transactions
between LAI and any of its subsidiaries will be for fair
market value based on terms and conditions that would be
arrived at by the parties if bargaining at arm's length.
5. To the best of the knowledge of the management of LAI, there
is no plan or intention on the part of any of the shareholders
of LAI to sell, exchange or otherwise dispose of a number of
shares of Holdingco Common Stock, prior to the Effective Time,
to be received in the LAI Merger that would reduce the LAI
shareholders' ownership of Holdingco Common Stock to a number
of shares having a value, as of the Effective Time, of less
than 50 percent of the value of all LAI Common Stock
outstanding immediately prior to the Effective Time.
6. LAI has no plan or intention to issue additional shares of its
stock that would result in Holdingco's owning less than 80
percent of the outstanding stock of LAI.
In addition to the facts and representations set forth above, our
opinion is conditioned upon our understanding that the transactions will be
carried out as described herein and that there are no other agreements,
arrangements, or understandings between any of LAI, MergerSub, LAI's
subsidiaries, or Holdingco other than those described or referenced herein.
LAW AND ANALYSIS
THE HOLDING COMPANY REORGANIZATION UNDER SECTION 368(a)(1)(A)
A. Statutory Requirements
Section 368(a)(1)(A) of the Code provides that the term
"reorganization" means a statutory merger or consolidation.
Section 368(a)(2)(E) of the Code provides that a transaction which
otherwise qualifies under Section 368(a)(1)(A) shall not be disqualified by
reason of the fact that stock of a corporation which before the merger was in
control of the acquired corporation is used in the transaction so long as (1)
after the transaction, the surviving corporation in the merger holds
substantially all of its own properties and substantially all of the properties
of the acquired corporation (other than the stock of the controlling corporation
which is distributed pursuant to the merger) and (2) in the transaction, the
former shareholders of the surviving corporation exchanged, for an amount of
voting stock in the controlling corporation, an amount of stock in the surviving
corporation which constitutes control of such surviving corporation.
Section 368(b) of the Code provides that the term "a party to a
reorganization" includes both corporations, in the case of a reorganization
resulting from the acquisition by one corporation of stock or properties of
another, and that in the case of a reorganization in which the acquisition
<PAGE> 7
DECEMBER 31, 1998
PAGE 7
consideration is the stock of a corporation which controls the acquiring
corporation such as one qualifying under Section 368(a)(2)(E), also includes the
controlling corporation. For purposes of Section 368(a)(2)(E) of the Code, the
term "control" is defined in Section 368(c) as ownership of stock possessing at
least 80 percent of the total combined voting power of all classes of stock
entitled to vote and at least 80 percent of the total number of shares of all
other classes of stock of the corporation. Pursuant to the terms of the Merger
Agreement, prior to the merger of MergerSub with and into LAI, Holdingco will
own all of the issued and outstanding stock of MergerSub. Consequently,
Holdingco will be in control of LAI and, therefore, will be the "controlling
corporation" within the meaning of Section 368(a)(2)(E).
Treas. Reg. Section 1.368-2(j)(3)(iii) of the Income Tax Regulations
("Regulations" or "Treas. Reg.") provides that for purposes of Section
368(a)(2)(E)(i) of the Code, the term "substantially all" has the same meaning
as under Section 368(a)(1)(C). Rev. Proc. 77-37, 1977-2 C.B. 568, provides that,
for advance ruling purposes, the "substantially all" requirement of Section
368(a)(2)(E)(i) is satisfied if there is a retention of assets representing at
least 90 percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets held by the surviving
corporation immediately prior to the transfer. These same percentages of assets
of the merged corporation must also be transferred to and retained by the
surviving corporation. Management of LAI has represented that, after the LAI
Merger, LAI will hold assets representing at least 90 percent of the fair market
value of the net assets and at least 70 percent of the gross assets of both LAI
and MergerSub. Based on this representation, it can be concluded that the
"substantially all" requirement will be met.
Finally, as discussed above, "control" for purposes of Section
368(a)(2)(E) is defined in Section 368(c) as ownership of stock possessing at
least 80 percent of the total combined voting power of all classes of stock
entitled to vote and at least 80 percent of the total number of shares of all
other classes of stock of the corporation. The terms of the Merger Agreement
provide that, the existing shareholders of LAI will exchange LAI stock
possessing more than 80% of the voting power of all classes of LAI voting stock
(which constitutes all of LAI's outstanding stock) solely for voting stock of
Holdingco. Accordingly, the amount of LAI stock that is converted into Holdingco
stock upon the merger of MergerSub with and into LAI will constitute control of
LAI immediately before the LAI Merger within the meaning of Section
368(a)(2)(E)(ii).
The IRS has published a ruling which analyzes the applicability of
Section 368(a)(2)(E) of the Code to a situation similar to the Merger. In Rev.
Rul. 77-428, 1977-2 C.B. 117, corporation P formed a subsidiary corporation, S1,
which in turn formed subsidiary corporation S2. Pursuant to a plan of merger, S2
merged with and into P, with P being the surviving corporation. On the date of
the merger all outstanding shares of P stock not held by S1 were exchanged for
shares of S1 stock. Thus, P became a wholly owned subsidiary of S1 and the
former P shareholders became the shareholders of S1. The IRS held that the above
described merger qualified as a tax-free reorganization under Section
368(a)(2)(E), even though the two subsidiaries were newly organized corporations
and a related corporation was acquired in the transaction. As noted, this is
similar to
<PAGE> 8
DECEMBER 31, 1998
PAGE 8
the plan contemplated by the parties to the LAI Merger, with LAI being the party
comparable to P, Holdingco being the party comparable to S1, and MergerSub being
the party comparable to S2.
B. Nonstatutory Requirements
Treas. Reg. Sections 1.368-1(b) and 1.368-2(g) provide that the
following additional requirements must be met for a transaction to qualify as a
reorganization within the meaning of Section 368:
1. "Continuity of interest" must be present;
2. "Continuity of business enterprise" (as described in Treas. Reg.
Section 1.368-1(d) must exist; and
3. The transaction must be undertaken for reasons pertaining to the
continuance of the business of a corporation which is a party to
the transaction.
Continuity of Interest. As a result of regulations adopted earlier this
year by the Internal Revenue Service, the historic rules relating to satisfying
the continuity of interest requirement were substantially liberalized. In
general, these regulations provide that continuity of interest is satisfied if a
substantial part of the value of the proprietary interests in the acquired
corporation is preserved in the reorganization. Treas. Reg. Section 1.368-1(e).
Rev. Proc. 77-37, 1977-2 C.B. 568, provides that the "continuity of interest"
requirement of Section 1.368-1(b) of the Regulations is satisfied in a
transaction described in Section 368(a)(1)(A) of the Code by reason of Section
368(a)(2)(E) if there is continuing interest through stock ownership in the
controlling corporation on the part of the former shareholders of the surviving
corporation which is equal in value, as of the effective date of the
reorganization, to at least 50 percent of the value of all of the formerly
outstanding stock of the surviving corporation as of that date. Sales,
redemptions, and other dispositions of stock occurring prior to the exchange
which are part of the plan of reorganization, will be considered in determining
whether there is a 50 percent continuing interest through stock ownership as of
the effective date of the reorganization. Prior to the revised regulations,
there was a further requirement that there not be an intent on behalf of the
holders of the stock of the acquired corporation to dispose of the stock
received from the acquiring corporation. The revised regulations have eliminated
that requirement, at least as to third parties, and permit holders of acquired
company stock to sell the stock received from the acquiring company, other than
for sales to the acquiring company. Management of LAI has represented that the
50 percent continuity of interest test of Rev. Proc. 77-37 will be met in the
LAI Merger. Based on this representation, it can be concluded that the LAI
Merger will satisfy the continuity of interest requirement.
Continuity of Business Enterprise. The regulations concerning
"continuity of business enterprise" were also modified earlier this year. Treas.
Reg. Section 1.368-1(d) provides that continuity of business enterprise requires
that the acquiring corporation either (i) continue the historic business of the
acquired corporation or (ii) use a significant portion of the acquired
corporation's
<PAGE> 9
DECEMBER 31, 1998
PAGE 9
historic business assets in a business, and that the continuity of business
enterprise requirement is satisfied if the acquiring corporation continues the
acquired corporation's historic business. Management of LAI has represented that
LAI will continue to be engaged in the same business following the LAI Merger.
Based on this representation, it can be concluded that the LAI Merger will
satisfy the continuity of business enterprise requirement.
Business Purpose. Treas. Reg. Section 1.368-2(g) provides that a
reorganization must be undertaken for reasons germane to the continuance of the
business of a corporation, a party to the reorganization. Management of LAI has
represented that the LAI Merger will substantially benefit the business of LAI
in various ways (see above). Based upon such representations, it can be
concluded that the LAI Merger will satisfy the business purpose requirements of
Treas. Reg. Section 1.368-2(g) of the Regulations.
C. Additional Statutory and Regulatory Provisions
Section 354(a)(1) of the Code provides that no gain or loss shall be
recognized if stock or securities in a corporation a party to a reorganization
are, in pursuance of the plan of reorganization, exchanged solely for stock or
securities in such corporation or in another corporation a party to the
reorganization.
Section 358(a)(1) of the Code provides that in the case of an exchange
to which section 354 applies, the basis of the property permitted to be received
under such section without the recognition of gain or loss shall be the same as
that of the property exchanged.
Section 1223(1) of the Code provides in part that in determining the
period for which the taxpayer has held property received in an exchange, there
shall be included the period for which he held the property exchanged if the
property has, for the purpose of determining gain or loss from a sale or
exchange, the same basis in whole or in part in his hands as the property
exchanged and the property exchanged at the time of such exchange was a capital
asset as defined in section 1221 of the Code.
Section 1032(a) of the Code generally provides that no gain or loss
shall be recognized to a corporation on the receipt of money or other property
in exchange for stock (including treasury stock) of such corporation. Also,
Section 361(a) of the Code provides that no gain or loss shall be recognized to
a corporation if such corporation is a party to a reorganization and exchanges
property, in pursuance of the plan of reorganization, solely for stock or
securities in another corporation a party to the reorganization.
Section 362 of the Code provides that the acquiring corporation's basis
of property acquired in a reorganization equals the basis of such property in
the hand of the transferor immediately prior to the reorganization. Treas. Reg.
Section 1.1502-31, however, provides that where a corporation acquires stock of
a "common parent" in a reorganization that constitutes a "group structure
change," the acquiring corporation's basis in the stock of the acquired
corporation is determined by reference
<PAGE> 10
DECEMBER 31, 1998
PAGE 10
to the "net asset basis" of the common parent rather than under section 362. A
"group structure change" is defined in Treas. Reg. Section 1.1502-33(f)(1) to
include a transaction such as the LAI Merger where a new corporation succeeds
another corporation as the common parent of a consolidated group.
CONCLUSIONS
Based upon the facts, representations, law and analysis set forth
above, and conditioned upon our understanding that the transactions contemplated
by the Merger Agreement will be carried out strictly in accordance with the
terms of the Merger Agreement, in our opinion:
1. The LAI Merger will constitute a reorganization within the
meaning of sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code(*) so long as the continuity of interest, continuity of
business enterprise, and business purpose requirements are
satisfied, and LAI, MergerSub, and Holdingco will each be a
party to the reorganization within the meaning of section
368(b) of the Code.
2. No gain or loss will be recognized by LAI, MergerSub or
Holdingco for federal income tax purposes by reason of the
Holding Company Reorganization (which includes the LAI
Merger). Section 361(a) of the Code.
3. No gain or loss will be recognized by the holders of LAI
Common Stock upon the receipt of shares of Holdingco Common
Stock pursuant to the Holding Company Reorganization (which
includes the LAI Merger). Section 354(a)(1) of the Code.
4. No gain or loss will be recognized by Holdingco, as the holder
of the stock of MergerSub. upon the receipt of shares of LAI
Common Stock pursuant to the Holding Company Reorganization
(which includes the LAI Merger). Section 354(a)(1) of the
Code.
5. The tax basis of the shares of Holdingco Common Stock treated
as received by a holder of LAI Common Stock, pursuant to the
LAI Merger will be the same as the tax basis of the shares of
LAI Common Stock treated as exchanged therefor. Section
358(a)(1) of the Code.
6. The holding period of the shares of Holdingco Common Stock
received or treated as received by a holder of LAI Common
Stock pursuant to the LAI Merger would
- - ----------------------
(*) In addition to satisfying the requirements of Section 368(a)(2)(E),
(i) there appear to be good arguments that the Merger will constitute a
reorganization described in Section 368(a)(1)(B), and (ii) for reorganization
treatment under Section 351(a).
<PAGE> 11
DECEMBER 31, 1998
PAGE 11
include the holding period of the shares of LAI Common Stock
exchanged therefor or treated as exchanged therefor, provided
the LAI Common Stock is held as a capital asset by such holder
at the time of the Holding Company Reorganization (which
includes the LAI Merger). Section 1223(1) of the Code.
7. The tax basis of the LAI Common Stock in the hands of
Holdingco will be determined by reference to the "net asset
basis" of LAI immediately prior to the Holding Company
Reorganization and the LAI Merger under the principles of
Treas. Reg. Section 1.1502-31.
We express no opinion as to the tax treatment of the transactions
contemplated by the Holding Company Reorganization and the LAI Merger under the
provisions of any other sections of the Code or the regulations under the Code
that also may be applicable thereto that are not specifically addressed in the
foregoing opinion.
This opinion is given to you by us solely for your use and is not to be
quoted or otherwise referred to or furnished to any governmental agency (other
than the Service in connection with an examination of the transactions
contemplated by the Holding Company Reorganization and the LAI Merger) or to
other persons without our prior written consent.
Very truly yours,
TRENAM, KEMKER, SCHARF, BARKIN,
FRYE, O'NEILL & MULLIS
Professional Association
By: /s/ Gary I. Teblum
-------------------
Gary I. Teblum
<PAGE> 1
EXHIBIT 10.1
LAI WORLDWIDE, INC.
1997 OMNIBUS STOCK AND INCENTIVE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<PAGE> 2
TABLE OF CONTENTS
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Item Page
- - ---- ----
<S> <C> <C>
SECTION 1. Establishment; Purpose.......................................................... 1
SECTION 2. Definitions..................................................................... 1
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.................................................................... 6
SECTION 8. Stock Appreciation Rights........................................................10
SECTION 9. Performance Shares and Units.....................................................11
SECTION 10. Restricted Stock, Restricted Stock Units, and Unrestricted Stock.................12
SECTION 11. Adjustment of Number of Shares...................................................14
SECTION 12. Change of Control................................................................15
SECTION 13. Beneficiary Designation..........................................................15
SECTION 14. Tax Withholding..................................................................16
SECTION 15. Indemnification..................................................................16
SECTION 16. Gender and Number................................................................16
SECTION 17. Controlling Law..................................................................16
SECTION 18. No Stockholder Rights............................................................17
SECTION 19. Amendments; Termination or Suspension............................................17
SECTION 20. Miscellaneous....................................................................17
</TABLE>
<PAGE> 3
LAI WORLDWIDE, INC.
1997 OMNIBUS STOCK AND INCENTIVE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
SECTION 1. ESTABLISHMENT; PURPOSE. LAI Worldwide, Inc. (the "Company")
hereby establishes the 1997 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, 1997;
(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
<PAGE> 4
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, 1997, and, after
his or her election, any individual becoming a director
subsequent to June 1, 1997, 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 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 LAI Worldwide, Inc. and its
successors.
(i) "FAIR MARKET VALUE" of the Common Stock is defined in
Section 7(a).
2.
<PAGE> 5
(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 LAI Worldwide, Inc. 1997 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.
3.
<PAGE> 6
(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.
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
Nine Hundred Fifty Thousand (950,000) 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
4.
<PAGE> 7
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;
(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;
5.
<PAGE> 8
(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;
6.
<PAGE> 9
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 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
7.
<PAGE> 10
(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.
(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
8.
<PAGE> 11
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 under Section 422 of the
Code. Without limitation on the foregoing, and notwithstanding the foregoing
provisions of this Section 7, if any
9.
<PAGE> 12
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
10.
<PAGE> 13
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 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").
11.
<PAGE> 14
(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 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").
12.
<PAGE> 15
(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
13.
<PAGE> 16
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 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.
14.
<PAGE> 17
(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, 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
15.
<PAGE> 18
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.
SECTION 17. CONTROLLING LAW. This document shall be construed under the
laws of the State of Florida.
16.
<PAGE> 19
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
17.
<PAGE> 20
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 satisfaction of all the following conditions, with the
effective date of the Plan being the date that the last such condition is
satisfied:
(i) the adoption of the Plan by the Board of Directors;
(ii) the approval of the Plan by the stockholders of the
Company within twelve (12) months after its adoption
by the Board; and
(iii) the effectiveness of the Company's Registration
Statement on Form S-1 relating to the Company's
initial public offering, as filed with the SEC
(File No. 33-26027).
18.
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EXHIBIT 10.2
LAI WORLDWIDE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
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LAI WORLDWIDE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of the LAI Worldwide, Inc. Non-Employee
Directors' Stock Option Plan is to secure for LAI Worldwide, 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 LAI Worldwide, Inc. and its
successors.
1.3.6 "EFFECTIVE DATE" is defined in Section 3.9.
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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 LAI Worldwide, 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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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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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.
4.
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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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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.
6.
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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.
7.
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EXHIBIT 10.3
LAI WORLDWIDE, INC.
PROFIT SHARING AND SAVINGS PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
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LAI WORLDWIDE, INC.
PROFIT SHARING AND SAVINGS PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
PAGE
ARTICLE TITLE NUMBER
<S> <C> <C>
ARTICLE I Definitions...................................................... 1
ARTICLE II Name of the Plan................................................. 9
ARTICLE III Purpose of the Plan and the Trust................................ 9
ARTICLE IV Plan Administrator............................................... 10
ARTICLE V Eligibility and Participation.................................... 12
ARTICLE VI Contributions to the Trust....................................... 13
ARTICLE VII Participants' Accounts and Allocation
of Contributions............................................... 22
ARTICLE VIII Benefits Under the Plan.......................................... 28
ARTICLE IX Form and Payment of Benefits..................................... 32
ARTICLE X Designated Investments........................................... 34
ARTICLE XI In-Service Withdrawals........................................... 35
ARTICLE XII Loans to Participants............................................ 37
ARTICLE XIII Trust Fund....................................................... 39
ARTICLE XIV Expenses of Administration of the
Plan and the Trust Fund........................................ 39
ARTICLE XV Amendment and Termination........................................ 40
ARTICLE XVI Miscellaneous.................................................... 42
</TABLE>
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LAI WORLDWIDE, INC.
PROFIT SHARING AND SAVINGS PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
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.
(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)
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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
(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 LAI Worldwide, 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
2.
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(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 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.
3.
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(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, Lamalie Associates, Inc., 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.
(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;
4.
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(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 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).
5.
<PAGE> 8
(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.
(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.
6.
<PAGE> 9
(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).
(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
7.
<PAGE> 10
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 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:
8.
<PAGE> 11
(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 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 WORLDWIDE, INC. 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
9.
<PAGE> 12
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 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.
10.
<PAGE> 13
(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.
(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
11.
<PAGE> 14
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 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 rollover contributions pursuant to paragraph (g) of Article VI
and for no other purposes.
12.
<PAGE> 15
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 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
13.
<PAGE> 16
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, at any time, for pay periods
beginning on or after the date such 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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
14.
<PAGE> 17
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.
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 nonelective 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)
15.
<PAGE> 18
(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 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).
16.
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(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.
(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).
17.
<PAGE> 20
(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.
(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.
18.
<PAGE> 21
(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:
(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
19.
<PAGE> 22
(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:
(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:
20.
<PAGE> 23
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
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
21.
<PAGE> 24
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).
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
22.
<PAGE> 25
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 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
23.
<PAGE> 26
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 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 NonElective 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 con tribution; provided, further, that a Participant
shall not be entitled to share in the nonelective 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
24.
<PAGE> 27
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.
(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
25.
<PAGE> 28
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 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
26.
<PAGE> 29
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 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.
27.
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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.
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.
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<PAGE> 31
(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:
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
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, NonElective 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
29.
<PAGE> 32
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 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
30.
<PAGE> 33
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 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
31.
<PAGE> 34
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.
(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.
32.
<PAGE> 35
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.
(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.
33.
<PAGE> 36
(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.
(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;
34.
<PAGE> 37
(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, 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
35.
<PAGE> 38
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,
(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
36.
<PAGE> 39
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.
(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
37.
<PAGE> 40
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.
(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
38.
<PAGE> 41
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
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 Philip R. Albright and Patrick
McDonnell, 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
39.
<PAGE> 42
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.
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
40.
<PAGE> 43
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 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.
41.
<PAGE> 44
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 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.
42.
<PAGE> 45
(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.
43.
<PAGE> 1
EXHIBIT 10.4
LAI WORLDWIDE, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<PAGE> 2
LAI WORLDWIDE, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
ARTICLE 1
PURPOSE
The purpose of the LAI Worldwide, Inc. 1997 Employee Stock Purchase
Plan (the "Plan") is to provide employees of LAI Worldwide, Inc. (the "Company")
and its subsidiaries with an opportunity to acquire a proprietary interest in
the Company through the purchase of authorized but unissued shares of common
stock of the Company or issued shares of such common stock acquired by the
Company or its subsidiaries on the open market or otherwise. It is the intention
of the Company to have the Plan qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
ARTICLE 2
DEFINITIONS
The following words and terms as used herein shall have that meaning
set forth therefor in this Article 2 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.
2.1 "ACCOUNT" shall mean the payroll deduction account maintained
for an electing Eligible Employee as provided in Article 7.
2.2 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company.
2.3 "CODE" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, or any successor statute. References to a
specified section of the Code shall include a reference to any successor
provision.
2.4 "COMMITTEE" is defined in Section 3.1.
2.5 "COMMON STOCK" shall mean the common stock of the Company.
2.6 "COMPANY" shall mean LAI Worldwide, Inc. and its successors.
<PAGE> 3
2.7 "COMPENSATION" shall mean an Eligible Employee's regular
salary and wages, overtime pay, bonuses and commissions (in all cases, before
any reduction for elective contributions to any Code Section 401(k) or Code
Section 125 Plan), but does not include credits or benefits under the Plan, or
any amount contributed by the Company to any pension, profit sharing or employee
stock ownership plan, or any employee welfare, life insurance or health
insurance plan or arrangement, or any deferred compensation plan or arrangement.
2.8 "ELIGIBLE EMPLOYEE" shall mean any individual employed by the
Company or any Subsidiary who meets the eligibility requirements of Article 4.
2.9 "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.
2.10 "OFFERING PERIOD" is defined in Section 5.1.
2.11 "PURCHASE DOCUMENTS" is defined in Section 6.1.
2.12 "PURCHASE PRICE" is defined in Section 5.2.
2.13 "PLAN" shall mean the LAI Worldwide, Inc. 1997 Employee Stock
Purchase Plan, as set forth herein and as amended from time to time.
2.14 "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.
ARTICLE 3
ADMINISTRATION
3.1 COMMITTEE. This Plan shall be administered by a committee
appointed by the Board of Directors (the "Committee"). The Committee shall
consist of not less than two (2) nor more than five (5) persons, each of whom
shall be a member of the Board, and none of whom shall be eligible to
participate under the Plan. The Board of Directors may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors.
3.2 ORGANIZATION. The Committee shall select one of its members as
chairman, and shall hold meetings at such time and places as it may determine.
The acts of a majority of the Committee
2.
<PAGE> 4
at which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be valid acts of the Committee.
3.3 POWER AND AUTHORITY. Subject to the provisions of the Plan,
the Committee shall have full authority, in its discretion: (a) to determine the
employees of the Company and its Subsidiaries who are eligible to participate in
the Plan; (b) to determine the purchase price of the shares of Common Stock
being offered; and (c) to interpret the Plan, and to prescribe, amend and
rescind rules and regulations with respect thereto. The interpretation and
construction by the Committee of any provision of the Plan over which it has
discretionary authority shall be final and conclusive. All actions and policies
of the Committee shall be consistent with the qualification of the Plan at all
times as an employee stock purchase plan under Section 423 of the Code.
3.4 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.
ARTICLE 4
EMPLOYEES ELIGIBLE TO PARTICIPATE
4.1 GENERAL RULE. Any person, including any officer but not a
person who is solely a director, who is in the employment of the Company or any
Subsidiary on the first day of an Offering Period is eligible to participate in
the Plan with respect to that Offering Period, except: (a) a person who has been
employed less than one year; (b) a person whose customary employment is 20 hours
or less per week; and (c) a person whose customary employment is for not more
than five months in any calendar year. The Committee shall have the sole power
to determine who is and who is not an Eligible Employee.
4.2 SPECIAL RULES. Notwithstanding any provision of the Plan to
the contrary, no employee shall be eligible to subscribe for any shares of
Common Stock under the Plan if:
4.2.1 immediately after the subscription, the employee
would own stock and/or hold outstanding options to purchase stock possessing 5%
or more of the total combined voting power or value of all classes of stock of
the Company or of any Subsidiary (as determined in accordance with the
provisions of Section 423(b)(3) of the Code);
3.
<PAGE> 5
4.2.2 the subscription would permit the employee's rights
to purchase shares under all stock purchase plans of the Company and its parent
and subsidiary corporations to accrue at a rate that exceeds $25,000 of fair
market value of such shares (determined at the time such right to subscribe
accrues) for each calendar year in which such right to subscribe is outstanding
at any time;
4.2.3 the subscription is otherwise prohibited by law; or
4.2.4 except with respect to the first Offering Period, the
employee's employment is terminated for any reason prior to the time revocation
or cancellation of participation in an offering is prohibited under Section 6.2,
and with respect to the first Offering Period, his or her employment is
terminated for any reason prior to the time he elects to participate in such
offering by satisfying the conditions of Section 6.1.
ARTICLE 5
OFFERS
5.1 OFFERING PERIODS. There shall be twenty-one (21) offering
periods under the Plan: the first offering period shall commence on the closing
of the initial public offering for the Common Stock and shall conclude 45 days
after such closing; thereafter, separate offering periods shall commence on the
fifteenth day of January and July and conclude on the fourteenth day of February
and August, respectively, in each of the years 1998 to 2007, inclusive (each an
"Offering Period"). Except for the maximum number of shares of Common Stock to
be offered under the Plan, except for a lack of available shares of Common
Stock, and except for the limitation on the number of shares of Common Stock for
which each Eligible Employee may subscribe, there shall be no limit on the
aggregate number of shares of Common Stock for which subscriptions may be made
with respect to any particular Offering Period. The right of an Eligible
Employee to subscribe for shares of Common Stock in an Offering Period shall not
be deemed to accrue until the first day of that Offering Period.
5.2 PRICE. The purchase price per share of Common Stock for an
Offering Period shall be 85% of the Fair Market Value of the Common Stock
immediately prior to the beginning of the Offering Period (the "Purchase
Price"); provided, however, that with respect to the first Offering Period, the
Purchase Price per share shall be 85% of the lesser of (a) the Fair Market Value
of the Common Stock immediately prior to the beginning of the Offering Period or
(b) the Fair Market Value of the Common Stock immediately prior to the last day
of the Offering Period.
5.3 NUMBER OF SHARES TO BE OFFERED.
5.3.1 The maximum number of shares of Common Stock that may
be offered under the Plan is 200,000, subject to adjustment as provided in
Section 8.1.
5.3.2 During each Offering Period, an Eligible Employee
shall be entitled to subscribe for a total number of shares of Common Stock not
to exceed the number determined by dividing 3% of the Eligible Employee's
Compensation for the preceding calendar year by the Purchase Price. For example,
if the Purchase Price of the shares is $10, an Eligible Employee who
4.
<PAGE> 6
receives Compensation of $30,000 for the preceding calendar year would be able
to subscribe for a maximum of 90 shares ($30,000 x 3% = $900/$10 = 90). For
those Eligible Employees who are entitled to purchase at least ten (10) shares
during an Offering Period, no subscriptions shall be made for fewer than ten
(10) shares.
5.3.3 Subscriptions shall be allowed for full shares only.
Any rights to subscribe for fractional shares shall be void; and any computation
relating to fractional shares shall be rounded down to the next lowest whole
number of shares.
5.3.4 If with respect to an Offering Period the available
shares are oversubscribed, the aggregate of the subscriptions allowable under
Section 5.3.2 shall be reduced to such lower figure as may be necessary to
eliminate the oversubscription. Such reduction shall be effected on a
proportionate basis as equitably as possible; but in no event shall such
reduction result in a subscription for fractional shares. In the event of an
oversubscription and cutback as provided in this Section 5.3.4, the Company will
refund to the participating Eligible Employees any excess payment for subscribed
Shares as soon as practicable after the end of the Offering Period.
ARTICLE 6
PARTICIPATION AND PAYMENT
6.1 ELECTION TO PARTICIPATE. An Eligible Employee may become a
participant in an offering: (a) by completing a subscription agreement,
indicating the number of shares of Common Stock to be purchased, and such other
documents as the Company may require (the "Purchase Documents"); and (b) by
tendering the Purchase Documents and cash or a check (payable in U.S. funds) for
the full subscription price (less the amount to be withdrawn from such Eligible
Employee's Account pursuant to Section 7.3) to the Secretary of the Company (or
such other person as may be designated by the Committee) at any time during the
offering. With respect to the first Offering Period, the Eligible Employee shall
tender an amount equal to the purchase price based on the Fair Market Value of
the Common Stock immediately prior to the beginning of the Offering Period. If
the final purchase price is less, the Company shall refund the excess amount to
the Eligible Employee as soon as practicable after the close of the Offering
Period. Purchase Documents and cash or check received by the Secretary of the
Company (or other designated person) before or after the offering shall be void
and shall be given no effect with respect to the offering; and the Secretary
shall return such documents and cash or check to the involved employee as soon
as practicable after receipt.
6.2 NO REVOCATION OF ELECTION. No election to participate in an
offering may be revoked or canceled by an Eligible Employee once the Purchase
Documents and full payment have been tendered to the Company; provided, however,
that with respect to the first Offering Period, an Eligible Employee may revoke
his election to participate in the offering by providing written notice thereof
to the Secretary of the Company (or other designated person) on or before the
last day of such Offering Period. Such revocation may be with respect to all or
less than all of the shares of Common Stock originally elected to be purchased.
In the event of any such revocation, the Company shall refund to such Eligible
Employee, as soon as practicable after such revocation, the amount previously
tendered for the shares to which the revocation relates.
5.
<PAGE> 7
6.3 NO INTEREST. No interest shall be payable on the purchase
price of the shares of Common Stock subscribed for or on the funds returned to
employees as a result of an oversubscription or an overpayment, pursuant to
Section 6.1 for early or late delivery, or pursuant to Section 6.2 after a
revocation, or otherwise.
6.4 DELIVERY OF CERTIFICATES REPRESENTING SHARES.
6.4.1 As soon as practicable after the completion of each
offering, the Company shall deliver or cause to be delivered to each
participating employee a certificate or certificates representing the shares of
Common Stock purchased in the offering.
6.4.2 Certificates representing shares of Common Stock to
be delivered to a participating employee under the Plan will be registered in
the name of the participating employee, or if the participating employee so
directs, by written notice to the Company prior to the termination date of the
offering, and to the extent permitted by applicable law, in the names of the
participating employee and one such other person as may be designated by the
participating employee, as joint tenants with rights of survivorship.
6.5 RIGHTS AS STOCKHOLDER. No participating employee shall have
any right as a stockholder of the Company until after the completion of the
offering in which the employee participated and the date on which the employee
becomes a record owner of the shares purchased under the 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.
6.6 TERMINATION OF EMPLOYMENT. An employee whose employment is
terminated for any reason shall have no right to participate in the Plan after
termination. However, the termination shall not affect any election to
participate in the Plan that is made prior to termination in accordance with the
provisions of Section 6.1.
6.7 RIGHTS NOT TRANSFERABLE. The right of an Eligible Employee to
participate in the Plan shall not be transferable by the employee, and no right
of an Eligible Employee under this Plan may be exercised after his death, by his
Personal Representative or anyone else, or during his lifetime by any person
other than the Eligible Employee.
ARTICLE 7
PAYROLL DEDUCTION
7.1 ELECTION OF PAYROLL DEDUCTION. As permitted in the discretion
of the Committee from time to time, each Eligible Employee may elect (on such
form as may be provided from time to time by the Company) to have a portion of
the employee's Compensation deducted from each paycheck (or, if the Company so
permits, from only the first paycheck in each month), which amounts shall not
exceed in the aggregate such amount as determined by the Committee from time to
time. An Eligible Employee may change the amount to be withheld from time to
time in accordance with rules
6.
<PAGE> 8
established by the Committee, which rules may include, among other things,
limitations on the number of times changes are permitted and when changes are
permitted. A change shall be effective no earlier than the first full payroll
period following receipt of the new form by the Committee. The Committee may,
however, on a uniform and non-discriminatory basis delay the effective date of a
change if it determines that such a delay is either necessary or appropriate for
the proper administration of the Plan.
7.2 MAINTENANCE OF ACCOUNTS. A separate Account shall be
maintained for each Eligible Employee who has amounts withheld from the
employee's Compensation under this Article 7. The maintenance of separate
Accounts shall not require the segregation of any assets from any other assets
held under this Article 7. The Accounts shall not bear interest. Each Account
shall be adjusted from time to time to reflect the amounts withheld from the
Compensation of the Eligible Employee to whom the Account relates, the amounts
withdrawn by such Eligible Employee for purchases of shares of Common Stock
under the Plan, and for other amounts withdrawn by such Eligible Employee from
the Account.
7.3 USE OF ACCOUNTS TO PURCHASE COMMON STOCK. At the time that an
Eligible Employee elects to participate in an offering under Section 6.1, the
Eligible Employee may elect to have a specified amount from his or her Account
(up to the whole amount thereof) used to pay all or a portion of the Purchase
Price for the shares of Common Stock purchased.
7.4 OTHER USE OF ACCOUNTS. At any time that a person is no longer
an employee (including by reason of death) or an Eligible Employee, the balance
in such person's Account shall be paid to such person or his legal
representative. In addition, the Committee may also permit the complete
withdrawal of the amounts in an Account under such uniform and
non-discriminatory conditions as it may impose from to time to time (including,
without limitation, not permitting the Eligible Employee making such withdrawal
from again electing payroll deductions for a specified period of time). Except
as otherwise provided in Section 7.3 and this Section 7.4, an Eligible Employee
shall not withdraw any amount from his Account, in whole or in part.
ARTICLE 8
MISCELLANEOUS
8.1 STOCK ADJUSTMENTS.
8.1.1 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, and the number of shares of Common Stock and the purchase price per share
of Common Stock then subject to subscription by Eligible Employees, shall be
proportionately and appropriately adjusted for any such increase or decrease.
7.
<PAGE> 9
8.1.2 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 then subject to subscription by Eligible
Employees, and the purchase price thereof, shall be proportionately and
appropriately adjusted for any such change.
8.1.3 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
Common Stock within the meaning of the Plan.
8.1.4 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.
8.1.5 Except as hereinabove expressly provided in this
Section 8.1, an Eligible Employee 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 any subscription.
8.1.6 The existence of the Plan, and any subscription for
shares of Common Stock hereunder, 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.
8.2 LISTING AND REGISTRATION OF COMMON STOCK. If at any time the
Board of Directors shall determine, in its discretion, that the listing,
registration or qualification of the Common Stock covered by the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Plan or the offering, issue or purchase
of shares thereunder, the Plan shall not be effective as to later offerings
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 8.2 become operative and if, as a result thereof,
an offering is missed in whole or in part, then and in that event, the missed
portion of the offering shall be passed and the term of the Plan 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.
8.3 TERM OF PLAN. The Plan, unless sooner terminated as provided
in Section 8.4, shall commence upon the satisfaction of the conditions of
Section 8.9 and shall terminate on the conclusion of the last Offering Period on
August 14, 2007.
8.
<PAGE> 10
8.4 AMENDMENT OF THE PLAN; TERMINATION. The Board shall have the
right to revise, amend or terminate the Plan at any time without notice,
provided that no Eligible Employee's existing rights are adversely affected
thereby without the consent of the Eligible Employee, and provided further that,
without approval of the stockholders of the Company, no such revision or
amendment shall: (a) increase the total number of shares of Common Stock to be
offered; or (b) materially modify the requirements as to eligibility for
participation in the Plan. The foregoing prohibitions of this Section 8.4 shall
not be affected by adjustments in shares and purchase price made in accordance
with the provisions of Section 8.1.
8.5 APPLICATION OF FUNDS. The proceeds received by the Company
from the sale of shares of Common Stock pursuant to the Plan will be used for
general corporate purposes.
8.6 NO OBLIGATION TO PARTICIPATE. The offering of any shares of
Common Stock under the Plan shall impose no obligation upon any Eligible
Employee to subscribe to purchase any such shares.
8.7 NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the Plan, and
the offering of shares of Common Stock under the Plan, shall in no way give any
employee the right to continued employment, give any employee the right to
receive any Common Stock or any additional Common Stock under the Plan, or
otherwise provide any employee any rights not specifically set forth in the
Plan.
8.8 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 a participating employee 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.
8.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become
effective upon the satisfaction of all the following conditions, with the
effective date of the Plan being the date that the last such condition is
satisfied:
8.9.1 the adoption of the Plan by the Board of Directors;
8.9.2 the approval of the Plan by the stockholders of the
Company within twelve (12) months after its adoption by the Board; and
8.9.3 the closing of the initial public offering of the
Common Stock.
9.
<PAGE> 1
EXHIBIT 10.9
LAI WORLDWIDE, INC.
1998 OMNIBUS STOCK AND INCENTIVE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<PAGE> 2
TABLE OF CONTENTS
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Item Page
- - ---- ----
<S> <C> <C>
SECTION 1. Establishment; Purpose........................................... 1
SECTION 2. Definitions...................................................... 1
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.................................................... 6
SECTION 8. Stock Appreciation Rights........................................ 10
SECTION 9. Performance Shares and Units..................................... 11
SECTION 10. Restricted Stock, Restricted Stock Units, and Unrestricted Stock. 12
SECTION 11. Adjustment of Number of Shares................................... 14
SECTION 12. Change of Control................................................ 15
SECTION 13. Beneficiary Designation.......................................... 15
SECTION 14. Tax Withholding.................................................. 16
SECTION 15. Indemnification.................................................. 16
SECTION 16. Gender and Number................................................ 16
SECTION 17. Controlling Law.................................................. 16
SECTION 18. No Stockholder Rights............................................ 17
SECTION 19. Amendments; Termination or Suspension............................ 17
SECTION 20. Miscellaneous.................................................... 17
</TABLE>
<PAGE> 3
LAI WORLDWIDE, INC.
1998 OMNIBUS STOCK AND INCENTIVE PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
SECTION 1. ESTABLISHMENT; PURPOSE. LAI Worldwide, 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
<PAGE> 4
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 June 1, 1997 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 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 LAI Worldwide, Inc. and its
successors.
(i) "FAIR MARKET VALUE" of the Common Stock is defined in
Section 7(a).
2
<PAGE> 5
(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 LAI Worldwide, 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.
3
<PAGE> 6
(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.
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
4
<PAGE> 7
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;
(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;
5
<PAGE> 8
(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;
6
<PAGE> 9
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 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
7
<PAGE> 10
(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.
(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
8
<PAGE> 11
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 under Section 422 of the
Code. Without limitation on the foregoing, and notwithstanding the foregoing
provisions of this Section 7, if any
9
<PAGE> 12
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
10
<PAGE> 13
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 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").
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<PAGE> 14
(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 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").
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<PAGE> 15
(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
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<PAGE> 16
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 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.
14
<PAGE> 17
(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, 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
15
<PAGE> 18
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.
SECTION 17. CONTROLLING LAW. This document shall be construed
under the laws of the State of Florida.
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<PAGE> 19
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
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<PAGE> 20
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.
18
<PAGE> 1
EXHIBIT 10.12
LAI WORLDWIDE, INC.
DIRECTORS' DEFERRAL PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
<PAGE> 2
LAI WORLDWIDE, INC.
DIRECTORS' DEFERRAL PLAN
AMENDED EFFECTIVE AS OF DECEMBER 31, 1998
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT. LAI Worldwide, Inc. (the "Company") hereby enters
into this Agreement and establishes a deferred compensation plan for Directors
of the Company, which plan shall be known as the LAI Worldwide, Inc. Directors'
Deferral Plan (the "Plan").
1.2 PURPOSE. The purpose of the Plan is to provide Directors with the
ability to defer some or all of their directors' fees. It is intended that the
Plan will assist in attracting and retaining qualified individuals to serve as
Directors.
ARTICLE 2
DEFINITION OF TERMS
The following words and terms as used herein shall have that meaning
set forth therefor in this Article 2 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.
2.1 "BENEFICIARY" shall mean the person or persons designated or deemed
to be designated by the Participant pursuant to Article 8 to receive benefits
payable under the Plan in the event of the Participant's death.
2.2 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors
of the Company.
2.3 "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.
2.4 "COMMITTEE" is defined in Section 9.1.
2.5 "COMMON STOCK" shall mean the common stock of the Company.
2.6 "COMPANY" shall mean LAI Worldwide, Inc. and its successors.
<PAGE> 3
2.7 "COMPENSATION" shall mean the annual retainers and meeting fees
that are payable to a Director for his or her services as a member of the Board
or any committee thereof.
2.8 "DEFERRAL BENEFIT" shall mean the benefit payable to a Participant
or his or her Beneficiary pursuant to Article 7.
2.9 "DEFERRED ACCOUNT" shall mean the account maintained on the books
of the Company for each Participant pursuant to Article 5.
2.10 "DEFERRED COMPENSATION AGREEMENT" shall mean the agreement filed
by a Participant, in the form prescribed by the Committee, pursuant to Section
3.2.
2.11 "DIRECTOR" shall mean a member of the Board.
2.12 "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 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 Board in good faith and based on all relevant
factors.
2.13 "PARTICIPANT" shall mean any Director who meets the eligibility
requirements of Section 3.1, and who elects to participate by filing a Deferred
Compensation Agreement as provided in Section 3.2.
2.14 "PLAN" shall mean the LAI Worldwide, Inc. Directors' Deferral
Plan, as set forth herein and as amended from time to time.
2.15 "PLAN YEAR" shall mean the 12-month period ending on each December
31.
2.16 "RATE OF RETURN" shall mean the interest rate payable on one-year
United States Treasury Bills issued on the specified date or, if not then
issued, on the next date of issue, or such other rate as may from time to time
be established by the Committee; provided, however, that in no event shall the
Rate of Return be more than five percentage points higher than the rate payable
on such Bills on such date.
2.17 "UNIT" shall mean an accounting unit equal in value to one share
of Common Stock. The number of Units included in any Deferred Account shall be
adjusted as appropriate to reflect any stock dividend, stock split,
recapitalization, merger or other similar event affecting the Common Stock.
2.
<PAGE> 4
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Eligibility to participate in the Plan is limited to
those Directors who are not employees of the Company or any of its subsidiaries.
3.2 PARTICIPATION. Participation in the Plan shall be limited to
eligible Directors who elect to participate in the Plan by filing a Deferred
Compensation Agreement with the Committee. A properly completed and executed
Deferred Compensation Agreement must be filed on or prior to the December 31
immediately preceding the Plan Year for which Compensation is to be deferred,
and the election to participate shall be effective on the first day of the Plan
Year following receipt by the Company of the Deferred Compensation Agreement. In
the event that a Director first becomes eligible to participate during the
course of a Plan Year, such Deferred Compensation Agreement must be filed no
later than 30 days following election or appointment to the Board and such
Deferred Compensation Agreement shall be effective only with regard to
Compensation earned or payable following the filing of the Deferred Compensation
Agreement with the Committee.
3.3 TERMINATION OF PARTICIPATION. A Participant may elect to terminate
participation in the Plan by filing a written notice thereof with the Committee,
which termination shall be effective at any time specified by the Participant in
the notice, but not earlier that the first day of the Plan Year immediately
succeeding the Plan Year in which such notice is filed with the Committee.
Amounts credited to such Participant's Deferred Account with respect to periods
prior to the effective date of such termination shall continue to be payable
pursuant to, and otherwise governed by, the terms of the Plan.
ARTICLE 4
DEFERRAL OF COMPENSATION
4.1 DEFERRAL. A Participant may elect to defer all, or a specified
percentage, of his or her Compensation for the applicable Plan Year, and a
Participant may elect to have his or her deferred Compensation credited to such
Participant's Deferred Account either in dollar amounts or Units. A Participant
may not change the percentage of his or her Compensation to be deferred, or the
form in which Compensation is to be credited, after the beginning of the Plan
Year in question.
4.2 CREDITING OF DEFERRED COMPENSATION. Deferred Compensation that a
Participant elects to have credited in dollar amounts shall be credited to the
Participant's Deferred Account as it becomes payable to the Director. Deferred
Compensation payable to a Director during a Plan Year that a Participant elects
to have credited in Units, plus an additional amount of Units equal in value to
25% of such deferred Compensation for such Plan Year, shall be credited to the
Participant's Deferred Account annually as of the end of such Plan Year on the
basis of the average of the Fair Market Values of the Common Stock on the last
trading day in each calendar month during such Plan Year.
3.
<PAGE> 5
ARTICLE 5
DEFERRED ACCOUNTS
5.1 DETERMINATION OF ACCOUNT. On any particular date, a Participant's
Deferred Account shall consist of the aggregate amount of dollars and Units
credited thereto pursuant to Section 4.2, plus any interest credited pursuant to
Section 5.2, plus any dividend equivalents credited pursuant to Section 5.3,
minus the aggregate amount of distributions, if any, made from such Deferred
Account.
5.2 CREDITING OF INTEREST. As of the last day of each Plan Year, each
Deferred Account to which Compensation has been credited in dollar amounts shall
be increased by the amount of interest earned during the Plan Year. Interest
shall be credited at the Rate of Return as of the last day of the Plan Year
based on the average daily balance of the Participant's Deferred Account since
the beginning of the Plan Year, but after the Deferred Account has been adjusted
for any contributions or distributions to be credited or deducted for such
period. Until a Participant or his or her Beneficiary receives the Participant's
entire Deferred Account, the unpaid balance thereof credited in dollar amounts
shall bear interest as provided in this Section 5.2.
5.3 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Account to which
Compensation has been credited in Units shall be credited annually as of the end
of each Plan Year with additional Units equal in value to the amount of cash
dividends paid by the Company during such Plan Year on shares of Common Stock
equivalent to the average daily balance of Units in such Deferred Account during
such Plan Year. The Units credited for such dividend equivalents shall be valued
on the basis of the average Fair Market Value computed in the same manner as
provided in Section 4.2. Until a Participant or his or her Beneficiary receives
the Participant's entire Deferred Account, the unpaid balance thereof credited
in Units shall earn dividend equivalents as provided in this Section 5.3.
5.4 STATEMENT OF BENEFITS. The Committee shall provide to each
Participant, within 120 days after the close of each Plan Year, a statement
setting forth the balance of such Participant's Deferred Account as of the last
day of the preceding Plan Year and showing all adjustments made thereto with
respect to such Plan Year.
ARTICLE 6
VESTING
A Participant shall be 100% vested in his or her Deferred Account at
all times.
4.
<PAGE> 6
ARTICLE 7
PAYMENT OF BENEFITS
7.1 TERMINATION OF SERVICE AS A DIRECTOR OR DEATH. A Participant may
elect in his or her Deferred Compensation Agreement to receive payment of the
Deferral Benefit in an amount equal to the balance of his or her Deferred
Account, less any amounts previously distributed, upon either:
(a) the Participant's termination of service as a Director
of the Company for any reason, or
(b) the Participant's death.
7.2 FORM OF PAYMENT. Amounts credited to the Deferred Account of a
Participant in dollars and amounts credited in Units shall be paid in cash. The
amount of payment for the Units shall be valued based on the Fair Market Value
of the Common Stock on the last business day of the calendar month immediately
prior to the date of distribution. The Deferral Benefit shall be paid in one of
the following forms, as elected by the Participant in his or her Deferred
Compensation Agreement:
(a) equal annual installments over a period of five years
(together, in the case of deferred Compensation credited in dollar
amounts, with interest on the unpaid balance credited after the payment
commencement date pursuant to Section 5.2 and, in the case of deferred
Compensation credited in Units, with dividend equivalents on the unpaid
balance credited after the payment commencement date pursuant to
Section 5.3);
(b) a lump sum; or
(c) a combination of (a) and (b) above.
The Participant shall designate the percentage payable under each option.
7.3 TIME OF PAYMENT. Commencement of payments under Section 7.1 shall
begin within 60 days following receipt of notice by the Committee of an event
that entitles a Participant (or a Beneficiary) to payments under the Plan, or at
such earlier date as may be determined by the Committee.
7.4 PAYMENTS TO MINORS AND INCOMPETENTS. If a Participant or
Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged
to be legally incapable of giving valid receipt and discharge for such benefits,
or is deemed so by the Committee, benefits will be paid to such person as the
Committee may designate for the benefit of such Participant or Beneficiary. Such
payments shall be considered a payment to such Participant or Beneficiary and
shall, to the extent made, be deemed a complete discharge of any liability for
such payments under the Plan.
5.
<PAGE> 7
7.5 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED. The
Committee shall make all reasonable attempts to determine the identity and/or
whereabouts of a Participant or a Participant's Beneficiary entitled to benefits
under the Plan, including the mailing by certified mail of a notice to the last
known address shown on the Company's or the Committee's records. If the
Committee is unable to locate such a person entitled to benefits hereunder, or
if there has been no claim made for such benefits, the Company shall continue to
hold the benefit due such person, subject to any applicable statute of escheats.
ARTICLE 8
BENEFICIARY DESIGNATION
8.1 BENEFICIARY DESIGNATION. Each Participant shall have the right, at
any time, to designate any person or persons as his or her Beneficiary to whom
payment under the Plan shall be made in the event of the Participant's death
prior to complete distribution to the Participant of his or her Deferral
Benefit. Any Beneficiary designation shall be made in written instrument filed
with the Committee and shall be effective only when received in writing by the
Committee.
8.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
8.3 NO DESIGNATION. If a Participant fails to designate a Beneficiary
as provided above, or if all designated Beneficiaries predecease the
Participant, then the Participant's designated Beneficiary shall be deemed to be
the Participant's estate.
8.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary (or, upon
the death of a Beneficiary, to his or her estate) shall completely discharge the
Company's obligations under the Plan.
ARTICLE 9
ADMINISTRATION
9.1 COMMITTEE. The Administrative Committee for the Plan (the
"Committee") shall consist of the Chairman of the Board (provided he or she is
not a non-employee Director) and two Company officers or Directors who are not
non-employee Directors who shall be appointed by the Chairman of the Board.
9.2 DUTIES AND RESPONSIBILITIES. The Committee shall have the following
duties and responsibilities:
(a) The Committee shall be responsible for the fulfillment of
all relevant reporting and disclosure requirements set forth in the
Plan and the Code, the distribution thereof to
6.
<PAGE> 8
Participants and their Beneficiaries, and the filing thereof with the
appropriate governmental officials and agencies.
(b) The Committee shall maintain and retain necessary records
regarding its administration of the Plan and matters upon which
disclosure is required under the Plan and the Code.
(c) The Committee shall make any elections for the Plan
required to be made by it under the Plan and the Code.
(d) The Committee is empowered to settle claims against the
Plan and to make such equitable adjustments in a Participant's or
Beneficiary's rights or entitlements under the Plan as it deems
appropriate in the event an error or omission is discovered or claimed
in the operation or administration of the Plan.
(e) The Committee may construe the Plan, correct defects,
supply omissions or reconcile inconsistencies to the extent necessary
to effectuate the Plan, and such action shall be conclusive.
9.3 POWER AND AUTHORITY. The Committee is hereby vested with all the
power and authority necessary in order to carry out its duties and
responsibilities imposed hereunder in connection with the administration of the
Plan. For such purpose, the Committee shall have the power to adopt rules and
regulations consistent with the terms of the Plan.
9.4 DELEGATION OF AUTHORITY. The Committee may appoint an individual,
who may be an employee of the Company, to be the Committee's agent with respect
to the day-to-day administration of the Plan. In addition, the Committee may,
from time to time, employ other agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with counsel who may be
counsel to the Company.
9.5 BINDING EFFECT OF DECISIONS. Any decision or action of the
Committee with respect to any questions arising out of or in connection with the
administration, interpretation and application of the Plan shall be final and
binding upon all persons having any interest in the Plan.
9.6 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
7.
<PAGE> 9
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.
ARTICLE 10
AMENDMENT OR TERMINATION OF THE PLAN
The Board may at any time amend, suspend, terminate or reinstate any or
all of the provisions of the Plan, provided that no such amendment, suspension
or termination may adversely affect any Participant's Deferred Account as it
existed as of the effective date of such amendment, suspension or termination
without such Participant's consent.
ARTICLE XI
MISCELLANEOUS
11.1 FUNDING. Neither Participants, nor their Beneficiaries, nor their
heirs, successors or assigns, shall have any secured interest or claim in any
property or assets of the Company. The Company's obligation under the Plan shall
be merely that of an unfunded and unsecured promise of the Company to pay money
in the future. It is the intention of the Company that the Plan be unfunded for
tax purposes and for purposes of Title I of ERISA. The Company may create a
Rabbi Trust or similar trust to hold funds to be used in payment of its
obligation under the Plan; provided, however, that any funds contained therein
shall remain liable for the claims of the Company's general creditors.
11.2 NONTRANSFERABILITY.
(a) No right or interest under the Plan of a Participant or
his or her Beneficiary (or any person claiming through or under any of
them), shall be (i) assignable or transferable in any manner, (ii)
subject to alienation, anticipation, sale, pledge, encumbrance,
attachment, garnishment or other legal powers or (iii) in any manner
liable for or subject to the debts or liabilities of the Participant or
Beneficiary. If any Participant or Beneficiary (other than the
surviving spouse of any deceased Participant) shall attempt to or shall
transfer, assign, alienate, anticipate, sell, pledge or otherwise
encumber his or her benefits hereunder or any part thereof, or if by
reason of his or her bankruptcy or other event happening at any time
such benefits would devolve upon anyone else or would not be enjoyed by
him or her, then the Committee, in its discretion, may terminate his or
her interest in any such benefit to the extent the Committee considers
necessary or advisable to prevent or limit the effects of such
occurrence. Termination shall be effected by filing a written
"termination declaration" with the Secretary of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary
whose interest is adversely affected (the "Terminated Participant").
8.
<PAGE> 10
(b) As long as the Terminated Participant is alive, any
benefits affected by the termination shall be retained by the Company
and, in the Committee's sole and absolute judgment, may be paid to or
expended for the benefit of the Terminated Participant, his or her
spouse, his or her children or any other person or persons in fact
dependent upon him or her in such a manner as the Committee shall deem
proper. Upon the death of the Terminated Participant, all benefits
withheld from him or her and not paid to others in accordance with the
preceding sentence shall be disposed of according to the provisions of
the Plan that would apply if he or she died prior to the time that all
benefits to which he or she was entitled were paid to him or her.
11.3 HEADINGS FOR CONVENIENCE. The headings contained herein are for
convenience only and shall not control or affect the meaning or construction
hereof.
11.4 GOVERNING LAW. The provisions of the Plan shall be administered,
construed, interpreted and enforced in accordance with the laws of the State of
Florida, except to the extent such laws have been expressly preempted by federal
law.
11.5 COMPANY SUCCESSORS. The provision of the Plan shall bind and inure
to the benefit of the Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.
11.6 GENDER; SINGULAR AND PLURAL REFERENCES. Throughout this Plan, and
wherever appropriate, the masculine gender shall be deemed to include the
feminine and neuter; the singular, the plural; and visa versa.
11.7 NO IMPLIED RIGHTS TO DIRECTORS. Nothing contained herein shall be
construed to confer upon any Director the right to be retained as a Director of
the Company or in any other capacity.
11.8 WITHHOLDING. Payments under the Plan shall be made net of an
amount sufficient to satisfy any federal, state or local withholding tax
liability.
11.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become
effective upon the satisfaction of all the following conditions, with the
effective date of the Plan being the date that the last such condition is
satisfied:
(a) the adoption of the Plan by the Board of Directors; and
(b) the closing of the initial public offering of the Common Stock.
9.
<PAGE> 1
EXHIBIT 99.1
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made and entered into effective for all
purposes as of the 31st day of December, 1998, by and between Lamalie
Associates, Inc., a Florida corporation ("LAI") and LAI Worldwide, Inc., a
Florida corporation ("LAI Worldwide").
WHEREAS, LAI sponsors certain incentive, compensation and benefit plans
for executives, employees and non-employee directors of LAI, and
WHEREAS, LAI is party to certain lockup and other agreements with
respect to the common stock of LAI, and
WHEREAS, LAI Worldwide, LAI and LAI MergerSub, Inc., a Florida
corporation and the wholly-owned subsidiary of LAI Worldwide ("MergerSub"), have
entered into an Agreement and Plan of Merger dated December 23, 1998 (the
"Merger Agreement"), in connection with the formation of a holding company by
LAI under Section 607.11045, Florida Statutes (the "Reorganization"), pursuant
to which LAI will become a wholly-owned subsidiary of LAI Worldwide and LAI
Worldwide will become a company whose stock is traded on The Nasdaq Stock
Market, and the shares of which will be issued or delivered under the incentive,
compensation and benefit plans and subject to the lockup and other agreements on
the terms and subject to the conditions set forth therein, and
WHEREAS, the Merger Agreement provides that LAI Worldwide shall assume
the sponsorship of various LAI incentive, compensation and benefit plans and be
substituted for LAI thereunder, and shall assume the obligations of LAI under
certain lockup and other agreements, all as of the "Effective Time" as defined
in the Merger Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements as set forth herein, the parties hereto agree as
follows:
1. LAI Worldwide assumes and adopts the incentive, compensation and
benefit plans listed on Exhibit A hereto (the "Assumed Plans"),
and is substituted for LAI as the sponsoring "Employer"
thereunder, effective as of the Effective Time. By such
assumption, LAI Worldwide assumes all of the rights, and agrees
to perform all of the obligations, of LAI under the Assumed
Plans, as in effect immediately prior to the Effective Time, and
LAI Worldwide adopts any and all goals established by LAI under
the Assumed Plans. LAI shall have no further obligation under the
Assumed Plans as the sponsor thereof but shall continue as a
participating or adopting Employer, as to its employees, to the
extent permitted or required under each Assumed Plan.
<PAGE> 2
2. LAI Worldwide also hereby assumes and adopts any and all of the
obligations of LAI under certain letter agreements with certain
shareholders of LAI pertaining to sales of the common stock of
LAI (the "Lockup Agreements") and certain other Agreements
pertaining to the common stock of LAI which are listed on Exhibit
B hereto (the "Other Agreements") from and after the Effective
Time, and is substituted for LAI under the Lockup Agreements and
the Other Agreements. LAI Worldwide assumes all of the rights,
and agrees to perform all of the obligations, of LAI under the
Lockup Agreements and the Other Agreements, as in effect
immediately prior to the Effective Time. From and after the
Effective Time, LAI shall have no further obligation under the
Lockup Agreements and the Other Agreements.
3. As of the Effective Time, LAI Worldwide shall assume from LAI all
authority and responsibility for amending, modifying or
terminating each Assumed Plan then in effect and for appointing
and removing all administrative committee or other committee
members, trustees, custodians and agents of the Assumed Plans,
provided, however, that such authority and responsibility for
amending, modifying, terminating and administering each Assumed
Plan (including the appointment or removal of committee members
and others) may be delegated by LAI Worldwide to directors,
officers or employees of LAI Worldwide or LAI or other
subsidiaries of LAI Worldwide that have adopted the Assumed
Plans, which subsidiaries as of the date hereof are set forth in
Exhibit C hereto, and provided further that following the
Effective Time and until further action by LAI Worldwide the
provisions of all Assumed Plans shall remain in effect and all
committee members, trustees, custodians and agents shall hold
office on the same basis as immediately preceding the Effective
Time.
4. As of the Effective Time, each reference to shares of LAI common
stock in the Assumed Plans, Lockup Agreements and Other
Agreements shall be deemed to be amended to refer to shares of
LAI Worldwide common stock.
5. As of the Effective Time, each option or right to purchase one or
more shares of LAI common stock pursuant to an Assumed Plan shall
become an option or right to purchase a corresponding number of
shares of LAI Worldwide common stock on the same terms as an
option or right to purchase shares of LAI common stock existed
under an Assumed Plan immediately prior to the Effective Time.
6. As of the Effective Time, each right to receive or obligation to
distribute one or more shares of LAI common stock or to receive
or to pay an amount based on the value of a share or shares of
LAI common stock under an Assumed Plan shall become a right or
obligation, as the case may be, to receive or distribute shares
of LAI Worldwide common stock or to receive or to pay an amount
based on the value of a share or shares of LAI Worldwide common
stock on the same terms as the right or obligation to receive or
distribute shares of LAI common stock or to receive or to pay an
amount based on the value of a share or shares of LAI common
stock existed under any of the Assumed Plans immediately prior to
the Effective Time.
<PAGE> 3
7. Each Assumed Plan shall be deemed to be further amended as the
appropriate officers of LAI and LAI Worldwide deem necessary or
appropriate, in their discretion, to implement the intent of the
foregoing and the terms of this Assumption Agreement.
8. Neither the assumption of the Assumed Plans, the Lockup
Agreements or the Other Agreements by LAI Worldwide nor the
consummation of the Reorganization by LAI LAI Worldwide and
MergerSub shall be deemed to be a termination of any of the
Assumed Plans, Lockup Agreements or Other Agreements, nor cause
any benefit to vest under an Assumed Plan, nor accelerate the
accrual or payment of any benefit thereunder, nor cause any
acceleration of any of the provisions of any of the Lockup
Agreements or Other Agreements.
9. Except as modified by this Assumption Agreement, Participants in
the Assumed Plans as of the date hereof shall have all of the
rights and benefits thereunder as existed on the day before the
Effective Date and no other changes in the Assumed Plans are
intended hereby.
10. This Assumption Agreement may be executed in any number of
counterparts, all of which, when executed, shall be deemed to be
one and the same instrument.
IN WITNESS WHEREOF, each party hereto has caused these presents to be
executed on its behalf by its duly authorized officer, as of the day and year
first above written.
LAMALIE ASSOCIATES, INC.
By: /s/: Philip R. Albright
--------------------------------------
Philip R. Albright, Chief Financial
Officer and Secretary
LAI WORLDWIDE, INC.
By: /s/: Philip R. Albright
--------------------------------------
Philip R. Albright, Chief Financial
Officer and Secretary
<PAGE> 4
EXHIBIT A
ASSUMED PLANS
1. Lamalie Associates, Inc. 1997 Omnibus Stock and Incentive Plan
2. Lamalie Associates, Inc. 1998 Omnibus Stock and Incentive Plan
3. LAI Ward Howell Profit Sharing and Savings Plan
4. Lamalie Associates, Inc. 1997 Employee Stock Purchase Plan
5. Lamalie Associates, Inc. Non-Employee Directors' Stock Option
Plan
6. Lamalie Associates, Inc. Directors' Deferral Plan
<PAGE> 5
EXHIBIT B
OTHER AGREEMENTS
Indemnification Agreements
<PAGE> 6
EXHIBIT C
LAI SUBSIDIARIES
1. LAI Ward Howell, Inc.
2. LAI Nevada, Inc.
3. LAI International, Limited
4. LAI International Holding, Inc.
5. WHI Subsidiary, Inc.
<PAGE> 1
EXHIBIT 99.2
[LAI WORLDWIDE LETTERHEAD]
January 4, 1998
Dear Lamalie Associates, Inc. Stockholder:
On December 31, 1998, Lamalie Associates, Inc. completed an internal
restructuring for the purpose of forming a holding company, LAI Worldwide, Inc.,
to enable us to better position the Company for future domestic and
international expansion. As a result, your shares of the common stock of Lamalie
Associates, Inc. have been exchanged for shares of the common stock of the newly
formed holding company, LAI Worldwide, Inc. Lamalie Associates, Inc. is now the
wholly-owned subsidiary of LAI Worldwide, Inc. The shares of LAI Worldwide are
listed for trading on the Nasdaq Stock Market.
All of the rights and benefits of stock ownership in Lamalie
Associates, Inc. will still be enjoyed by you as the owner of the common stock
of LAI Worldwide, Inc. Because the restructuring involves a corporation with a
different name, however, a share exchange is required. ChaseMellon Shareholder
Services, L.L.C., the Company's transfer agent, has been appointed to act as the
Exchange Agent for this restructuring. Please take a moment to locate your
Lamalie Associates, Inc. common stock certificate and return it in the enclosed
envelope to the Exchange Agent, together with the enclosed transmittal
instructions, properly completed and signed. A new certificate representing
shares of the common stock of LAI Worldwide will be delivered to you as soon as
possible after receipt, acceptance and processing for exchange by ChaseMellon
Shareholder Services, L.L.C. If you have lost your certificate, please indicate
that on the letter of transmittal and return it to the Exchange Agent. A new
certificate will be delivered to you as soon as possible after you have
completed the necessary documents to replace your lost certificate.
We appreciate your investment in LAI Worldwide.
Sincerely,
/s/: Robert L. Pearson
-----------------------------------------
Robert L. Pearson
Chairman and Chief Executive Officer
