<PAGE>
As filed with the Securities and Exchange Commission on July 13, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
SONOSITE, INC.
(Exact name of Registrant as specified in its charter)
Washington 91-1405022
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19807 North Creek Parkway, Suite 200
P.O. Box 3020
Bothell, Washington 98011-8214
(Address of principal executive offices, including zip code)
SONOSITE, INC. AMENDED AND RESTATED 1998 OPTION, STOCK APPRECIATION RIGHT,
RESTRICTED STOCK, STOCK GRANT AND PERFORMANCE UNIT PLAN
(Full title of the plan)
KEVIN M. GOODWIN
President and Chief Executive Officer
SONOSITE, INC.
19807 North Creek Parkway, Suite 200
P.O. Box 3020
Bothell, Washington 98011-8214
(425) 951-1200
(Name, address and telephone number, including area code, of agent for service)
______________________
Copy to:
STEPHEN M. GRAHAM
PERKINS COIE LLP
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
Proposed Maximum
Title of Securities Number to Be Proposed Maximum Aggregate Offering Amount of
to Be Registered Registered(1) Offering Price Per Share(2) Price(2) Registration Fee
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per share 500,000 $16.1875 $8,093,750.00 $2,251.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Together with an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance pursuant to
the employee benefit plan as the result of any future stock split, stock
dividend or similar adjustment of the Registrant's outstanding Common
Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The
price per share is estimated to be $16.1875, based on the average of the
high ($16.875) and low ($15.50) sales prices for the Common Stock on July
9, 1999 as reported on the Nasdaq National Market.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference in this
registration statement:
(a) The Registrant's Annual Report on Form 10-K and Form 10-K/A
for the year ended December 31, 1998, which contains audited financial
statements for the most recent fiscal year for which such statements have been
filed;
(b) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the fiscal year covered by the Annual Report
on Form 10-K and Form 10-K/A referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained
in the registration statement on Form 10 and two amendments to such Form 10,
filed on February 13, 1998, March 19, 1998 and March 31, 1998, respectively,
under Section 12(g) of the Exchange Act.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof, and prior to the
filing of a post-effective amendment which indicates that the securities offered
hereby have been sold or which deregisters the securities covered hereby then
remaining unsold, shall also be deemed to be incorporated by reference into this
registration statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VI of the Registrant's Restated Articles of Incorporation
provides that the Registrant may indemnify and hold harmless to the fullest
extent permitted by the Washington Business Corporation Act (the "WBCA") or
other applicable law each person who was or is made a party to or is threatened
to be made a party to or is involved (including, without limitation, as a
witness) in any actual or threatened action, suit or other proceeding, whether
civil, criminal, derivative, administrative or investigative, by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Registrant or, being or having been such a director, officer, employee or agent,
he or she is or was serving at the request of the Registrant as a director,
officer, employee, agent, trustee, or in any other capacity of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action or omission in an official capacity or in any
other capacity while serving as a director, officer, employee, agent, trustee or
in any other capacity, against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, Employee Retirement
Income Security Act of 1974 excise taxes or penalties and amounts to be paid in
settlement) actually or reasonably incurred or suffered by such person in
connection therewith. Such indemnification may continue as to a person who has
ceased to be a director, officer, employee or agent of the Registrant and shall
inure to the benefit of his or her heirs and personal representatives.
The Registrant may pay the expenses of a director, officer, employee or
agent of the Registrant incurred in defending any such proceeding in advance of
the final disposition of any such proceeding; provided, however, that the
payment of such expenses in advance of the final disposition of a proceeding
shall be made to or on behalf of a director, officer, employee or agent only
upon delivery to the Registrant of an undertaking, by or on behalf of such
director, officer, employee or agent, to repay all amounts so advanced if it
shall ultimately be determined that such director, officer,
II-1
<PAGE>
employee or agent is not entitled to be indemnified under the Registrant's
Restated Articles of Incorporation or otherwise, which undertaking may be
unsecured and may be accepted without reference to financial ability to make
repayment.
No indemnification shall be provided under the Registrant's Restated
Articles of Incorporation to any such person if the Registrant is prohibited by
the provisions of the WBCA or other applicable law as then in effect from paying
such indemnification. The WBCA (Sections 23B.08.500 through 23B.08.600 of the
Revised Code of Washington) authorizes a court to award, or a corporation's
board of directors to grant, indemnity to directors and officers in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act").
The WBCA includes a provision (Section 23B.08.320 of the Revised Code
of Washington) that permits a corporation to limit a director's liability to the
corporation or its shareholders for monetary damages for his or her acts or
omissions as a director, except in certain circumstances involving intentional
misconduct, self-dealing or illegal corporate loans or distributions, or any
transaction from which the director personally benefits. Article V of the
Registrant's Restated Articles of Incorporation contains provisions
implementing, to the fullest extent permitted by Washington law, such
limitations on a director's liability to the Registrant and its shareholders.
In addition, the Registrant maintains an insurance policy insuring its
directors and officers for certain acts or omissions while acting in their
official capacities.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
Exhibit
Number Description
- --------------- -------------------------------------------------------------
5.1 Opinion of Perkins Coie LLP regarding legality of the Common
Stock being registered
23.1 Consent of Independent Auditors
23.2 Consent of Perkins Coie LLP (included in opinion filed as
Exhibit 5.1)
24.1 Power of Attorney (see signature page)
99.1 SonoSite, Inc. Amended and Restated 1998 Option, Stock
Appreciation Right, Restricted Stock, Stock Grant and
Perfomance Unit Plan
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bothell, State of Washington, on the 12th day of
July, 1999.
SONOSITE, INC.
/s/ Kevin M. Goodwin
---------------------------------------------
By: Kevin M. Goodwin
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Kevin M. Goodwin and Donald F. Seaton III, or either of them, as
attorneys-in-fact with full power of substitution, to execute in the name and on
the behalf of each person, individually and in each capacity stated below, and
to file, any and all amendments to this registration statement, including any
and all post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on the 12th day of July, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Kevin M. Goodwin President, Chief Executive Officer and Director (Principal
- ---------------------------------------------------- Executive Officer)
Kevin M. Goodwin
/s/ Donald F. Seaton III Vice President - Business Development, Chief Financial
- ---------------------------------------------------- Officer, Secretary and Treasurer (Principal Financial and
Donald F. Seaton III Accounting Officer)
/s/ Kirby L. Cramer Chairman of the Board
- ----------------------------------------------------
Kirby L. Cramer
/s/ Edward V. Fritzky Director
- ----------------------------------------------------
Edward V. Fritzky
/s/ Steven R. Goldstein, M.D. Director
- ------------------------------------------------------
Steven R. Goldstein, M.D.
/s/ William G. Parzybok, JR. Director
- ------------------------------------------------------
William G. Parzybok, Jr.
/S/ Jeffrey Pfeffer, PH.D. Director
- ------------------------------------------------------
Jeffrey Pfeffer, Ph.D.
/s/ Dennis A. Sarti, M.D. Director
- ------------------------------------------------------
Dennis A. Sarti, M.D.
/s/ Jacques Souquet, PH.D. Director
- ------------------------------------------------------
Jacques Souquet, Ph.D.
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------------- -----------------------------------------------------------------
5.1 Opinion of Perkins Coie LLP regarding legality of the Common
Stock being registered
23.1 Consent of Independent Auditors
23.2 Consent of Perkins Coie LLP (included in opinion filed as Exhibit
5.1)
24.1 Power of Attorney (see signature page)
99.1 SonoSite, Inc. Amended and Restated 1998 Option, Stock
Appreciation Right, Restricted Stock, Stock Grant and Performance
Unit Plan
<PAGE>
Exhibit 5.1
PERKINS COIE LLP
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor, Seattle, Washington 98101-3099
Telephone: (206) 583-8888 Facsimile: (206) 583-8500
July 12, 1999
SonoSite, Inc.
19807 North Creek Parkway, Suite 200
P.O. Box 3020
Bothell, WA 98011-8214
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of
a registration statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission with respect to 500,000 shares of Common
Stock, par value $.01 per share, which may be issued under the SonoSite, Inc.
Amended and Restated 1998 Option, Stock Appreciation Right, Restricted Stock,
Stock Grant and Performance Unit Plan (the "Plan").
We have examined the Registration Statement and such documents and
records of the Company and other documents as we have deemed relevant and
necessary for the purpose of this opinion. In giving this opinion, we are
assuming the authenticity of all instruments presented to us as originals, the
conformity with originals of all instruments presented to us as copies and the
genuineness of all signatures.
Based on and subject to the foregoing, we are of the opinion that any
shares that may be issued pursuant to the Plan have been duly authorized and
that, upon the due execution by the Company and the registration by its
registrar of such shares, the sale thereof by the Company in accordance with the
terms of the Plan and the receipt of consideration therefor in accordance with
the terms of the Plan, such shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
____________________________________________________
The Board of Directors
SonoSite, Inc.:
We consent to the use of our report incorporated herein by reference in the
registration statement.
/s/ KPMG LLP
Seattle, Washington
July 12, 1999
<PAGE>
Exhibit 99.1
SONOSITE, INC.
Amended and Restated 1998 Option, Stock Appreciation Right, Restricted
Stock, Stock Grant and Performance Unit Plan
1. Purpose
The purpose of the Plan is to enhance the long-term shareholder value of
the Corporation by offering opportunities to selected persons to participate in
the Corporation's growth and success, and to encourage them to remain in the
service of the Corporation and its subsidiaries and to acquire and maintain
stock ownership in the Corporation.
2. Definitions
The following terms have the corresponding meanings for purposes of the
Plan:
"Award Cycle" means a period of not less than three fiscal years over
which performance units granted during a particular year are to be earned out.
"Change in Control" means
(a) A "Board Change." For purposes of the Plan, a Board Change shall
have occurred if a majority of the seats (other than vacant seats) on the
Corporation's Board of Directors (the "Board") were to be occupied by
individuals who were neither (i) nominated by a majority of the Incumbent
Directors nor (ii) appointed by directors so nominated. An "Incumbent Director"
is a member of the Board who has been either (i) nominated by a majority of the
directors of the Corporation then in office or (ii) appointed by directors so
nominated, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person (as defined in Section 2(b)) other than the Board; or
(b) The acquisition by any individual, entity or group (within the
meaning of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a "Person") of
"Beneficial Ownership" (within the meaning of Rule 13d3 promulgated under the
Exchange Act) of (i) 20% or more of either (A) the then outstanding shares of
common stock (the "Outstanding Corporation Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the "Outstanding
Corporation Voting Securities"), in the case of either (A) or (B) of this clause
(i), which acquisition is not approved in advance by a majority of the Incumbent
Directors or (ii) 33% or more of either (A) the Outstanding Corporation Common
Stock or (B) the Outstanding Corporation Voting Securities, in the case of
either (A) or (B) of this clause (ii), which acquisition is approved in advance
by a majority of the Incumbent Directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (x) any acquisition by
the Corporation, (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and (iii)
of the following subsection (c) are satisfied; or
(c) Approval by the shareholders of the Corporation of a reorganization,
merger or consolidation, in each case, unless, following such reorganization,
merger or consolidation, (i) more than 60% of,
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<PAGE>
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities, as the case may be, (ii) no
Person (excluding the Corporation, any employee benefit plan (or related trust)
of the Corporation or such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 33% or
more of the Outstanding Corporation Common Stock or Outstanding Corporation
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were Incumbent Directors at the time of the execution of the
initial agreement providing for such reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Corporation of (i) a complete
liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation, with respect to which following such sale or other
disposition, (A) more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities, as the
case may be, (B) no Person (excluding the Corporation and any employee benefit
plan (or related trust) of the Corporation or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 33% or more of the Outstanding Corporation Common Stock
or Outstanding Corporation Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of such corporation were approved by a
majority of the Incumbent Directors at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Corporation.
"Committee" means the Committee provided for in Section 6, which shall
administer the Plan.
"Common Stock" means common stock, par value $0.01 per share, of the
Corporation.
"Corporation" means SonoSite, Inc., a Washington corporation.
"Designated Beneficiary" means any person designated in writing by a
Participant as a legal recipient of payments due under an award in the event of
the Participant's death, or in the absence of such designation, the
Participant's estate. Such designation must be on file with the Corporation in
order to be effective but, unless the Participant has made an irrevocable
designation, may be changed from time to time by the Participant.
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<PAGE>
"Disability," unless otherwise defined by the Plan Administrator, means a
mental or physical impairment of the Participant that is expected to result in
death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable, in the opinion of
the Corporation, to perform his or her duties for the Corporation or its
subsidiaries and to be engaged in any substantial gainful activity.
"Early Retirement" means early retirement as that term is defined by
the Plan Administrator from time to time for purposes of the Plan.
"Fair Market Value" of the Common Stock as of any trading day means the
average (rounded to the next highest cent in the case of fractions of a cent) of
the high and low sales prices of the Common Stock as reported on such trading
day by the Nasdaq National Market. If no sales price is reported for the Common
Stock on such trading day, then "Fair Market Value" shall mean the highest bid
price reported for the Common Stock on such trading day by the National
Quotation Bureau Incorporated or any similar nationally recognized organization.
The Committee, in its sole discretion, shall make all determinations required by
this definition.
"Participant" means an employee, director, consultant or independent
contractor who has received an award under the Plan.
"Payment Schedule" means the schedule adopted by the Committee in
accordance with Section 12 with respect to an Award Cycle to govern
determination of the Payment Value of a performance unit at the end of such
Award Cycle in accordance with Section 12.
"Payment Value" means the value, expressed in dollars, of a performance
unit at the conclusion of an Award Cycle, determined in accordance with Section
12.
"Plan" means this SonoSite, Inc. 1998 Option, Stock Appreciation Right,
Restricted Stock, Stock Grant and Performance Unit Plan.
"Restricted Stock" means the shares of Common Stock referred to in Section
10.
"Retirement" means retirement as of the Participant's normal retirement
date under the Corporation's 401(k) Plan or other similar successor plan
applicable to salaried employees, unless otherwise defined by the Plan
Administrator from time to time for purposes of the Plan.
"Withholding Tax" means any tax, including any federal, state or local
income tax, required by any governmental entity to be withheld or otherwise
deducted and paid with respect to the transfer of shares of Common Stock as a
result of the exercise of a Nonqualified Stock Option or stock appreciation
right, the payment of performance units or the award of Restricted Stock or
stock grants.
3. Stock Subject to the Plan
There are reserved for issuance upon the exercise of options, for issuance
of Restricted Stock and stock grant awards and for issuance upon the payment of
performance units and stock appreciation rights under the Plan 1,500,000 shares
of Common Stock, of which no more than an aggregate of 333,333 shares may be
issued as Restricted Stock awards and stock grants under the Plan. Such shares
may be authorized and unissued shares of Common Stock or shares now held or
subsequently acquired by the Corporation. If any option or stock appreciation
right granted under the Plan shall expire or terminate for any reason
(including, without limitation, by reason of its surrender, pursuant to the
third paragraph of Section 8(b) or otherwise, or cancellation, in whole or in
part, pursuant to the provisions of Section 8(c) or otherwise or pursuant to
Section 9(f), or the substitution in place thereof of a new option or stock
appreciation right)
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<PAGE>
without having been exercised in full, the shares subject thereto shall again be
available for the purposes of issuance under the Plan. If shares of Restricted
Stock shall be forfeited and returned to the Corporation pursuant to the
provisions of Section 10, such shares shall again be available for the purposes
of issuance under the Plan. In no event shall shares of Common Stock which,
under the Plan, are authorized to be used in payment of performance unit awards
be deemed to be unavailable for purposes of the Plan until such shares have been
issued in payment thereof in accordance with the provisions of Section 12(g).
Stock appreciation rights and performance unit awards providing for payments
only in cash are not subject to the overall limitations referred to above.
4. Limitations
Subject to adjustment from time to time as provided in Section 16, not more
than 250,000 shares of Common Stock may be made subject to awards under the Plan
to any individual in the aggregate in any one fiscal year of the Corporation,
such limitation to be applied in a manner consistent with the requirements of,
and only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Code.
5. Administration
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have plenary authority, in its
discretion, to determine the individuals to whom, and the time or times at
which, performance units or Restricted Stock shall be awarded and stock
appreciation rights or options shall be granted (including, without limitation,
whether such options shall be Incentive Stock Options or Nonqualified Stock
Options or a combination thereof, as such terms are defined in Section 8(a)) and
the number of units and/or shares to be covered by each such award or grant.
Provided, however, that the Chief Executive Officer shall have the limited
authority to grant Incentive Stock Options or Nonqualified Stock Options or a
combination thereof, in an amount not to exceed 25,000 shares per individual per
calendar year, to attract and retain nonofficer employees. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective Participants, their present and potential
contributions to the Corporation's success and such other factors as the
Committee in its discretion may deem relevant. Subject to the express provisions
of the Plan, the Committee shall have plenary authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of Restricted Stock, performance unit, stock
appreciation right and option agreements (which need not be identical) and to
make all other determinations necessary or advisable for the administration of
the Plan. The Committee's determinations of the matters referred to in this
Section 5 shall be conclusive. The Corporation intends that administration of
the Plan comply in all respects with Section 16(b) of the Exchange Act, and the
rules and regulations promulgated thereunder. Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may bifurcate the
Plan so as to restrict, limit or condition the use of any provision of the Plan
to persons who are subject to Section 16 of the Exchange Act without so limiting
or conditioning the Plan with respect to other persons.
6. The Committee
The Board shall designate a Committee of members of the Board which shall
meet the requirements of Section 16(b) of the Exchange Act. Currently, the
Committee shall consist solely of two or more members of the Board who are non-
employee directors. If at any time an insufficient number of non-employee
directors is available to serve on such Committee, other directors may serve on
the Committee; however, during such time, no options, stock appreciation rights
or Restricted Stock shall be granted under the Plan to any person if the
granting of such options, stock appreciation rights or Restricted Stock would
not meet the requirements of Section 16(b) of the Exchange Act.
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<PAGE>
For purposes of this Section 6, a "non-employee" is a person who meets the
definition of "non-employee director" as set forth in the rules and regulations
promulgated under Section 16(b) of the Exchange Act or any successor rule or
regulatory requirement. The Committee shall be appointed by the Board, which may
from time to time appoint members of the Committee in substitution for members
previously appointed and may fill vacancies, however caused, in the Committee.
The Committee shall select one of its members as its Chairman and shall hold its
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee shall be made by
not less than a majority of its members. Any decision or determination reduced
to writing and signed by all the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary, shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall deem
advisable.
7. Eligibility
The Committee may award performance units and Restricted Stock and grant
options and stock appreciation rights only to employees, directors, consultants
or independent contractors (which term as used herein includes officers) of the
Corporation and of its present and future subsidiary corporations
("subsidiaries"). Any person eligible under the Plan may receive one or more
awards of performance units or Restricted Stock or one or more grants of options
or stock appreciation rights, or any combination thereof, as the Committee shall
from time to time determine, and such determinations may be different as to
different Participants and may vary as to different awards and grants.
8. Option Grants
(a) The Committee is authorized under the Plan, in its discretion, to issue
options as "Incentive Stock Options" (as defined in Section 422 of the United
States Internal Revenue Code of 1986, as amended (the "Code")) or as
"Nonqualified Stock Options" (all other options granted hereunder) and the
options shall be designated as Incentive Stock Options or Nonqualified Stock
Options in the applicable option agreement. The purchase price of the Common
Stock under each option granted under the Plan shall be determined by the
Committee but shall be not less than 100% of the Fair Market Value of the Common
Stock at the time such option is granted. Notwithstanding the previous sentence,
any Nonqualified Stock Option may provide that the purchase price be equal to
the average Fair Market Value of the Common Stock over any continuous period of
trading days beginning and ending no more than 30 business days before or after
the date such option is granted.
(b) Committee shall be authorized in its discretion to prescribe in the
option grant the installments, if any, in which an option granted under the Plan
shall become exercisable, provided that no option shall be exercisable prior to
the six months prior to the date of grant thereof except as provided in Sections
8(c), (d), (g), (h) and (i) or except as the Committee otherwise determines. In
no case may an option be exercised as to less than 50 shares at any one time (or
the remaining shares covered by the option if less than 50) during the term of
the option. The Committee shall also be authorized to establish the manner of
the exercise of an option. The term of each option shall be not more than 10
years from the date of grant thereof.
In general, upon exercise, the option price is to be paid in full in cash;
however, the Committee can determine at the time the option is granted for
Incentive Stock Options or at any time prior to exercise for Nonqualified Stock
Options, that additional forms of payment will be permitted. To the extent
permitted by the Committee and applicable laws and regulations (including, but
not limited to, federal tax and securities laws and regulations and state
corporate law), an option may be exercised (i) in Common Stock owned by the
option holder having a Fair Market Value on the date of exercise equal to the
aggregate option price, or in a combination of cash and stock; provided,
however, that payment in stock shall not be made unless such stock shall have
been owned by the option holder for a period of at least six months prior
thereto (or any shorter period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes); or (ii) by
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delivery of a properly executed exercise notice, together with irrevocable
instructions to a broker designated by the Corporation, all in accordance with
the regulations of the Federal Reserve Board, to deliver promptly to the
Corporation the amount of sale or loan proceeds to pay the exercise price and
any federal, state or local withholding tax obligations that may arise in
connection with the exercise.
In lieu of requiring an option holder to pay cash or stock and to receive
in turn certificates for shares of Common Stock upon the exercise of a
Nonqualified Stock Option, if the option so provides, the Committee may elect to
require the option holder to surrender the option to the Corporation for
cancellation as to all or any portion of the number of shares covered by the
intended exercise and receive in exchange for such surrender a payment, at the
election of the Committee, in cash, in shares of Common Stock or in a
combination of cash and shares of Common Stock, equivalent to the appreciated
value of the shares covered by the option surrendered for cancellation. Such
appreciated value shall be the difference between the option price of such
shares (as adjusted pursuant to Section 16) and the Fair Market Value of such
shares, which shall for this purpose be determined by the Committee taking into
consideration all relevant factors, but which shall not be less than the Fair
Market Value of such shares on the date on which the option holder's notice of
exercise is received by the Corporation. Upon delivery to the Corporation of a
notice of exercise of option, the Committee may avail itself of its right to
require the option holder to surrender the option to the Corporation for
cancellation as to shares covered by such intended exercise. The Committee's
right of election shall expire, if not exercised, at the close of business on
the fifth business day following the delivery to the Corporation of such notice.
Should the Committee not exercise such right of election, the delivery of the
aforesaid notice of exercise shall constitute an exercise by the option holder
of the option to the extent therein set forth, and payment for the shares
covered by such exercise shall become due immediately.
(c) In the event that a Participant's services for the Corporation or one
of its subsidiaries shall cease and the termination of such individual's service
is for cause, the option shall automatically terminate upon first notification
to the option holder of such termination of services, unless the Committee
determines otherwise, and such option shall automatically terminate upon the
date of such termination of services for all shares which were not purchasable
upon such date. For purposes of this Section 8(c), "cause" is defined as a
determination by the Committee that the option holder (i) has committed a
felony, (ii) has engaged in an act or acts of deliberate and intentional
dishonesty resulting or intended to result directly or indirectly in improper
material gain to or personal enrichment of the individual at the Corporation's
expense, or (iii) has willfully disobeyed the Corporation's appropriate rules,
instructions or orders, and such willful disobeyance has continued for a period
of 10 days following notice thereof from the Corporation.
In the event of the termination of the services of the holder of an
option because of Retirement, Early Retirement at the Corporation's request or
Disability, he may (unless such option shall have been previously terminated
pursuant to the provisions of the preceding paragraph or unless otherwise
provided in his option grant) exercise such option at any time prior to the
expiration of the option, (i) in the event of Disability or Retirement, to the
extent of the number of shares covered by such option, whether or not such
shares had become purchasable by him at the date of the termination of his
services and (ii) in the event of Early Retirement at the Corporation's request,
to the extent of the number of shares covered by such option at such time or
times as such option becomes purchasable by him in accordance with its terms.
(Although the option may be exercised after Retirement, Early Retirement at the
Corporation's request or Disability, under Section 422 of the Code, if the
option has been designated as an Incentive Stock Option, it must be exercised
within three months after the date of Retirement or Early Retirement or one year
after the termination of employment due to Disability in order to qualify for
incentive stock option tax treatment. For purposes of the preceding sentence,
Disability shall mean "disability" as that term is defined for purposes of
Section 422 of the Code.)
In the event of the death of an individual to whom an option has been
granted under the Plan, while he is performing services for the Corporation or a
subsidiary, the option theretofore granted to him (unless his option shall have
been previously terminated pursuant to the provisions of this Section 8(c) or
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unless otherwise provided in his option grant) may, subject to the limitations
described in Section 8(f), be exercised by his Designated Beneficiary, by his
legatee or legatees of the option under his last will, or by his personal
representatives or distributees, at any time within a period of one year after
his death, but not after the expiration of the option, to the extent of the
remaining shares covered by his option whether or not such shares had become
purchasable by such an individual at the date of his death. In the event of the
death of an individual (i) during the 30-day period following termination of his
services or (ii) following termination of his services by reason of Retirement,
Early Retirement at the Corporation's request or Disability, then the option (if
not previously terminated pursuant to the provisions of this Section 8(c)) may
be exercised during the one-year period following termination of his services or
during the remaining term of the option, respectively, but not after the
expiration of the option, by his Designated Beneficiary, by his legatee under
his last will, or by his personal representative or distributee, but only to the
extent of the number of shares purchasable by such Participant pursuant to the
provisions of Section 8(d) at the date of termination of his services.
In the event of the termination of the services of the holder of an
option, other than by reason of Retirement, Early Retirement at the
Corporation's request, Disability or death, he may (unless his option shall have
been previously terminated pursuant to the provisions of this Section 8(c) or
unless otherwise provided in his option grant) exercise his option at any time
within 30 days after such termination or such longer period as determined by the
Committee, but not after the expiration of the option, to the extent of the
number of shares covered by his option which were purchasable by him at the date
of the termination of his services, and such option shall automatically
terminate upon the date of such termination of services for all shares which
were not purchasable upon such date.
(d) Notwithstanding the foregoing provisions, the Committee may determine,
in its sole discretion, in the case of any termination of services, that the
holder of an option may exercise such option to the extent of some or all of the
remaining shares covered thereby whether or not such shares had become
purchasable by such an individual at the date of the termination of his services
and may exercise such option at any time prior to the expiration of the original
term of the option, except that such extension shall not cause any Incentive
Stock Option to fail to continue to qualify as an Incentive Stock Option without
the consent of the option holder. Options granted under the Plan shall not be
affected by any change of relationship with the Corporation so long as the
holder continues to be an employee, consultant or independent contractor of the
Corporation or of a subsidiary; however, a change in a participant's status from
an employee to a nonemployee (e.g., consultant or independent contractor) shall
result in the termination of an outstanding Incentive Stock Option held by such
participant in accordance with Section 8(c). The Committee, in its absolute
discretion, may determine all questions of whether particular leaves of absence
constitute a termination of services; provided, however, that with respect to
Incentive Stock Options, such determination shall be subject to any requirements
contained in the Code. Nothing in the Plan or in any option granted pursuant to
the Plan shall confer on any individual any right to continue in the employ or
other service of the Corporation or any other person or interfere in any way
with the right of the Corporation or any other person to terminate his
employment or other services at any time.
(e) The date of grant of an option pursuant to the Plan shall be the date
specified by the Committee at the time it grants such option, provided that such
date shall not be prior to the date of such action by the Committee and that the
price shall be determined in accordance with Section 8(a) on such date. The
Committee shall promptly notify a grantee of an award and a written option grant
shall promptly be duly executed and delivered by or on behalf of the
Corporation.
(f) In the event an optionee is granted Incentive Stock Options that in
the aggregate entitle the optionee to purchase, in the first year such options
become exercisable (whether under their original terms or as a result of the
occurrence of an Acceleration Event, as defined below), Common Stock of the
Corporation, any parent corporation or any subsidiary of the Corporation having
a Fair Market Value (determined as of the time such options are granted) in
excess of $100,000, such portion in excess of $100,000 shall be treated as a
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Nonqualified Stock Option. Such limitation shall not apply if the Internal
Revenue Service publicly rules, issues a private ruling to the Corporation, any
optionee of the Corporation or any legatee, personal representative or
distributee of an optionee or states in proposed, temporary or final regulations
that provisions which allow the full exercise of an optionee's Incentive Stock
Options upon the occurrence of the relevant Acceleration Event do not violate
Section 422(d) of the Code. An "Acceleration Event" means (i) a determination of
the Committee to allow an optionee to exercise his options in full upon
termination of his employment or other service as provided in Section 8(c) or
(d), (ii) the death of an optionee while he is employed by the Corporation or a
subsidiary, (iii) any Change in Control, or (iv) the optionee's termination of
employment or other service under circumstances that will allow him to exercise
options not otherwise exercisable pursuant to Section 8(i).
(g) Notwithstanding any contrary waiting period, installment period or
other limitation or restriction in any option agreement or in the Plan, in the
event of a Change in Control, each option outstanding under the Plan shall
thereupon become exercisable at any time during the remaining term of the
option, but not after the term of the option, to the extent of the number of
shares covered by the option, whether or not such shares had become purchasable
by the Participant thereunder immediately prior to such Change in Control.
(h) Anything in the Plan to the contrary notwithstanding, during the 90-day
period from and after a Change in Control (x) an optionee (other than an
optionee who initiated a Change in Control in a capacity other than as an
officer or a director of the Corporation) who is an officer or a director of the
Corporation (within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder) with respect to an option that was
granted at least six months prior to the date of exercise pursuant to this
sentence and is unaccompanied by a stock appreciation right and (y) any other
optionee who is not an officer or a director with respect to an option that is
unaccompanied by a stock appreciation right shall, unless the Committee shall
determine otherwise at the time of grant, have the right, in lieu of the payment
of the full purchase price of the shares of Common Stock being purchased under
the option and by giving written notice to the Corporation, to elect (within
such 90-day period) to surrender all or part of the option to the Corporation
and to receive in cash an amount equal to the amount by which the amount
determined pursuant to Section 9(d) hereof on the date of exercise (determined
as if the optionee had exercised a limited stock appreciation right on such
date) shall exceed the purchase price per share under the option multiplied by
the number of shares of Common Stock granted under the stock option as to which
the right granted by this sentence shall have been exercised. Such written
notice shall specify the optionee's election to purchase shares granted under
the option or to receive the cash payment referred to in the immediately
preceding sentence.
(i) Notwithstanding the foregoing provisions, the optionee's employment or
other contract with the Corporation may provide that upon termination of his
employment or other services for other than cause or for "good reason" (as
defined in his contract), all stock options shall become immediately
exercisable.
9. Stock Appreciation Rights
(a) Stock appreciation rights may be paid upon exercise in cash, Common
Stock or any combination thereof, as the Committee in its sole discretion may
determine. A stock appreciation right is an incentive award that permits the
holder to receive (per share covered thereby) an amount equal to the amount by
which the Fair Market Value of a share of Common Stock on the date of exercise
exceeds the Fair Market Value of such share on the date the stock appreciation
right was granted.
(b) The Committee may grant a stock appreciation right separately or in
tandem with a related option and may grant both "general" and "limited" stock
appreciation rights. A general stock appreciation right granted in tandem with a
related option will generally have the same terms and provisions as the related
option with respect to exercisability, and the base price of such a stock
appreciation right will generally be
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equal to the option price under the related option. Upon the exercise of a
tandem stock appreciation right, the related option will be deemed to be
exercised for all purposes of the Plan and vice versa.
(c) A general stock appreciation right granted separately and not in
tandem with any option will have such terms as the Committee may determine. The
base price of a stand-alone stock appreciation right may not be less than the
Fair Market Value of the Common Stock, determined as in Section 8(a) in the case
of a Nonqualified Stock Option; the term of a stand-alone stock appreciation
right may not be greater than 10 years from the date it was granted.
(d) A limited stock appreciation right may be exercised only during the 90
calendar days immediately following the date of a Change in Control. For the
purpose of determining the amount payable upon exercise of a limited stock
appreciation right, the fair market value of the Common Stock will be equal to
the higher of (x) the highest Fair Market Value of the Common Stock during the
90-day period ending on the date the limited stock appreciation right is
exercised and (y) whichever of the following is applicable:
(i) the highest per share price paid in any tender or exchange
offer which is in effect at any time during the 90 calendar days preceding the
exercise of the limited right;
(ii) the fixed or formula price for the acquisition of shares
of Common Stock in a merger or similar agreement approved by the Corporation's
shareholders or Board, if such price is determinable on the date of exercise;
and
(iii) the highest price per share paid to any shareholder of the
Corporation in a transaction or group of transactions giving rise to the
exercisability of the limited right. In no event, however, may the holder of a
limited stock appreciation right granted in tandem with a related Incentive
Stock Option receive an amount in excess of the maximum amount which will enable
the option to continue to qualify as an Incentive Stock Option without the
consent of the Participant.
(e) Limited stock appreciation rights are payable only in cash. General
stand-alone stock appreciation rights are payable only in cash, unless the
Committee provides otherwise at the time of grant. General stock appreciation
rights granted in tandem with a related option are payable in cash, Common Stock
or any combination thereof, as determined in the sole discretion of the
Committee. Notwithstanding the foregoing, and to the extent required by Rule
16b-3 promulgated under Section 16(b) of the Exchange Act, a payment, in whole
or in part, of cash upon exercise of a stock appreciation right may be made to
an optionee who is an officer or director of the Corporation (within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder) only if (i) the right was granted at least six months prior to the
date of exercise (except that in the event of the death or Disability of the
optionee prior to the expiration of the six-month period, this limitation shall
not apply) and (ii) the optionee's election to receive cash in settlement of the
right and the exercise of the right are made (a) during the period beginning on
the third business day following the date of release for publication of the
quarterly or annual summary statements of sales and earnings of the Corporation
and ending on the twelfth business day following such date, (b) six months prior
to the date the stock appreciation right becomes taxable or (c) during the 90-
day period from and after a Change in Control.
(f) Unless otherwise provided by the Committee at the time of grant, the
provisions of Section 8 relating to the termination of the service of a holder
of an option shall apply equally, to the extent applicable, to the holder of a
stock appreciation right.
10. Restricted Stock Awards
(a) The consideration to be received for shares of Restricted Stock issued
hereunder out of authorized but unissued shares or shares subsequently acquired
by the Corporation shall be equal to cash in an
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amount equal to the par value thereof and past services for the Corporation. The
recipient of Restricted Stock shall be recorded as a shareholder of the
Corporation, at which time the Corporation, at its discretion, may either issue
a Restricted Stock Certificate or make a book entry credit in the Corporation's
stock ledger to evidence the award of such Restricted Stock, and the Participant
shall have, subject to the provisions hereof, all the rights of a shareholder
with respect to such shares and receive all dividends or other distributions
made or paid with respect to such shares; provided, that the shares themselves,
and any new, additional or different shares or securities which the recipient
may be entitled to receive with respect to such shares by virtue of a stock
split or stock dividend or any other change in the corporate or capital
structure of the Corporation, shall be subject to the restrictions hereinafter
described.
(b) During a period of years following the date of grant, as determined by
the Committee, which shall in no event be less than six months (the "Restricted
Period"), the Restricted Stock or any rights thereto may not be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered or disposed of by the
recipient, except in the event of death or the transfer thereof to the
Corporation under the provisions of the next succeeding paragraph. In the event
of the death or Retirement of the recipient during the Restricted Period, such
restrictions shall immediately lapse, and the recipient or, in the case of the
recipient's death, his Designated Beneficiary, the legatee under his last will
or his personal representative or distributee shall be free to transfer,
encumber or otherwise dispose of the Restricted Stock. In the event of the Early
Retirement at the Corporation's request of the recipient during the Restricted
Period, such restrictions shall continue until they lapse in accordance with the
terms of the grant.
Except as provided in Section 10(c), in the event that, during the
Restricted Period, the service of the recipient by the Corporation or one of its
subsidiaries is terminated for any reason (including termination with or without
cause by the Corporation or such subsidiary or resignation by the recipient),
other than termination of service due to the Retirement, Early Retirement at the
Corporation's request or death of the recipient, then the shares of Restricted
Stock held by him shall be forfeited to the Corporation and the recipient shall
immediately transfer and return to the Corporation the certificates, if any have
been issued to him, representing all the Restricted Stock and the recipient's
rights as a shareholder with respect to the Restricted Stock shall cease,
effective with such termination of service. Notwithstanding the foregoing, the
recipient's service contract with the Corporation may provide that upon
termination of his service for other than cause or for good reason, all
Restricted Stock shall cease to be subject to such restrictions.
A recipient's rights to Restricted Stock may not be assigned or
transferred except upon death by will, descent or distribution. In the event of
any attempt by the recipient to sell, exchange, transfer, pledge or otherwise
dispose of shares of Restricted Stock in violation of the provisions hereof,
such shares shall be forfeited to the Corporation.
(c) Notwithstanding the Restricted Period contained in the grant of
Restricted Stock, in the event of a Change in Control (as defined in Section 2),
all restrictions on shares of Restricted Stock shall immediately lapse and such
Restricted Shares shall become immediately transferable and nonforfeitable.
(d) Notwithstanding anything contained in the Plan to the contrary, the
Committee may determine, in its sole discretion, in the case of any termination
of a recipient's service, that the restrictions on some or all of the shares of
Restricted Stock awarded to a recipient shall immediately lapse and such
Restricted Shares shall become immediately transferable and nonforfeitable.
11. Stock Grant Awards
(a) Each nonofficer employee of the Corporation is eligible to receive a
grant of Common Stock as a stock bonus (i) at the end of each fiscal year or
(ii) if the employee terminates prior to year-end, at the time of termination.
The number of shares to be granted shall be determined by setting a percentage
of the employee's salary at the fiscal year-end or time of termination and
dividing that amount by the price per share
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of the Common Stock or by any other method determined by the Committee. For this
purpose, the price for the Common Stock shall be the Fair Market Value on the
date of grant and each grant shall be for full shares only; any fractional
shares resulting from this calculation shall be disregarded. The consideration
to be received for shares of Common Stock issued under this Section 11(a) shall
be cash in an amount equal to the par value thereof and past services for the
Corporation.
(b) In addition, each recipient of a stock grant under Section 11(a) may
be granted a cash award at the time the shares are issued in an amount
sufficient to offset the recipient's estimated tax liabilities arising from the
issuance of the Common Stock under Section 11(a).
(c) Determinations regarding eligibility for grants under Section 11(a),
the amount of individual grants of Common Stock, the amount of the cash offset
award, the interpretation of Section 11 and all other matters relating to the
administration of Section 11 are within the sole discretion of the Committee.
12. Performance Unit Awards
(a) Performance units which are awarded to a Participant shall have a
"unit base value," expressed in dollars, determined by the Committee on the day
on which the award is granted and generally determined to be the Fair Market
Value of the Common Stock on such day. The performance units will also have a
Payment Value at the end of the applicable Award Cycle contingent upon the
performance of the Corporation and/or of such Participant's subsidiary, division
or department during the Award Cycle. The performance measures may include, but
shall not be limited to, cumulative growth in earnings per share or pretax
profits, return on shareholders' equity, asset management, cash flow or return
on capital employed. Such measures may be applied on an absolute basis or
relative to industry indices and shall be defined in a manner which the
Committee shall deem appropriate. For each performance unit awarded, the
Committee shall determine the length of the Award Cycle, which shall be a period
of not less than three fiscal years, and shall establish a Payment Schedule
based upon the performance measures determined for such performance unit and the
length of the Award Cycle, setting forth a range of Payment Values corresponding
to performance levels targeted for the Corporation or such subsidiary, division
or department. If during the course of an Award Cycle there should occur, in the
opinion of the Committee, significant changes in economic conditions or in the
nature of the operations of the Corporation or a subsidiary, division or
department which the Committee did not foresee in establishing the performance
measures for such Award Cycle and which, in the Committee's sole judgment have,
or are expected to have, a substantial effect on the performance of the
Corporation or of a Participant's subsidiary, division or department during such
Award Cycle, the Committee may revise the Payment Schedule and performance
measures formerly determined by it in such manner as the Committee, in its sole
judgment, may deem appropriate except as otherwise provided in Section 12(l).
(b) In determining the number of performance units to be awarded, the
Committee shall take into account a person's responsibility level, performance,
potential, cash compensation level and such other considerations as it deems
appropriate.
(c) Except as otherwise provided in Section 12(l), an award of performance
units to a Participant shall terminate for all purposes if the services of the
Participant for the Corporation or one of its subsidiaries ceases during the
Award Cycle, except in the case of death, Disability or Early Retirement at the
request of the Corporation, in which case (and provided that the Participant at
the time of death, Disability or Early Retirement as aforesaid shall have
maintained his employment or other qualifying relationship with the Corporation
or one of its subsidiaries continuously during the period commencing on the date
the award was granted and ending on the first anniversary thereof) the
Participant will be entitled to payment (such payment to be made in accordance
with the provisions of Section 12(d)) of the same portion of the Payment Value
of the award the Participant would otherwise have been paid (such Payment Value,
if any, to be determined at the conclusion of the applicable Award Cycle in
accordance with the provisions of Sections 12(a) and 12(e) unless otherwise
provided in Section 12(l)) as the portion of the Award Cycle during which the
Participant
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maintained such relationship with the Corporation bears to the full Award Cycle.
Under particular circumstances, the Committee may make other determinations with
respect to Participants whose services do not meet the foregoing requirements,
including the waiver of any of the requirements of this subsection (c) relating
to periods of continuous service.
(d) Except as otherwise provided in Section 12(l), unless the Committee
otherwise determines, no payment with respect to performance units will be made
to a Participant prior to the end of such Participant's Award Cycle; provided,
however, that if a Participant should die during an Award Cycle and his award
shall not have been terminated hereunder prior to his death, such Participant's
Designated Beneficiary, the legatee under the Participant's last will, his
personal representative or his distributee may elect instead, subject to the
approval of the Committee, to have the pro rata portion of the Participant's
Payment Value determined by the Committee as of the end of the year during which
such Participant's death occurred, based upon application of the Payment
Schedule to the part of the Award Cycle which shall have elapsed (for such
purpose, the cumulative growth rate or improvement achieved in the applicable
performance measures to the end of the fiscal year in which death occurs will be
assumed to continue for the Award Cycle), in which event such pro rata portion
shall be paid in cash or Common Stock, as provided in Section 12(g), as soon as
practicable following such year (or in such number of installments as shall have
been requested by the Participant and approved by the Committee) to such
Participant's Designated Beneficiary or legal representative.
(e) Except as otherwise provided in Section 12(d) in the case of death, or
in Section 12(l) in the case of a Change in Control, a Participant's interest in
any performance units awarded to him shall mature on the last day of the Award
Cycle for such award. The Payment Value of a performance unit shall be the
dollar amount calculated on the basis of the Payment Schedule applicable to such
Award Cycle.
(f) The total amount of Payment Value due a Participant at the conclusion
of an Award Cycle shall be paid on such date following the conclusion of such
Award Cycle as the Committee shall designate, except as specifically otherwise
provided in the Plan; provided, however, that the Committee shall have
authority, if it deems appropriate, to defer payment (in cash or in stock or
both in specified percentages) of the Payment Value due a Participant if the
Participant shall request the Committee to do so at any time prior to the last
year of the Award Cycle for such award. In respect of awards made or to be made
in one or more deferred installments in cash, interest shall be credited
semiannually on each such award at a rate to be determined semiannually by the
Committee, but in no event shall such rate be less than the average rate on 10-
year AAA new industrial corporate bonds during each such semiannual period as
calculated on the basis of the average of such rates for each calendar week
ending during the period January 1 through June 30 and July 1 through December
31; provided that awards made during any such six-month period shall be credited
on the basis of the average rate for that period; and provided further that
installments paid during any six-month period shall be credited with interest on
the basis of the average rate for the next preceding six-month period. in each
case adjusted for the number of days such award was to be credited. Unless paid
to the recipient of such award at the time credited, interest at the foregoing
rate shall be credited on the interest so credited until so paid. The foregoing
minimum interest rate for any award that is payable in one or more deferred
installments under the Plan may not be modified without the prior written
consent of the Participant.
Whenever an award is made in one or more deferred installments in
Common Stock, the Committee may determine that there shall be credited on such
award an amount equivalent to the dividends which would have been paid with
respect to such shares of Common Stock if they had been issued and outstanding.
Such dividend equivalents shall be credited on the dividend record dates until
certificates for such shares shall have been delivered to the recipient of such
award or until such earlier date as the Committee may determine.
Such interest and dividend equivalents shall be paid to the recipient
of any such award in cash (or in property if the related dividend shall have
been in property) at such time or times during the deferred period of such award
or at the same time as the cash or shares of Common Stock to which such interest
and
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dividend equivalents apply, all as the Committee shall determine. The Committee
may also determine that any such dividend equivalents may be used to purchase
additional shares of outstanding Common Stock (such shares to be valued for such
purpose at Fair Market Value on the dividend record date) to be added to the
shares of Common Stock covered by such award and held subject to the same terms
and conditions, including provisions relating to the payment of amounts
equivalent to dividends thereon.
(g) Except as otherwise provided in Section 12(l), the Committee in its
discretion may determine at the time of grant or at the end of the Award Cycle
as to each Participant whether the payment of the Payment Value due a
Participant shall be made (i) in cash, (ii) in shares of Common Stock (valued at
the average Fair Market Value of the Common Stock for the five trading days
immediately preceding the date of payment), or (iii) in a combination of cash
and shares of Common Stock so valued.
(h) If the payment of any award shall be deferred until after the
termination of the services of the recipient by the Corporation or one of its
subsidiaries, the cash or Common Stock covered by such award, together with any
deferred interest or dividend equivalents thereon, shall be delivered in not
more than 20 annual installments, commencing not later than the January 31 after
such termination of services (or such other date as the Committee from time to
time shall determine), all as the Committee may determine. If the payment of an
award under the Plan is deferred, such payment thereafter may be accelerated so
that such payment shall be made immediately or at such earlier time or in such
less number of installments, in each case as the Committee may from time to time
determine, but only with the prior written consent of the Participant.
(i) A Participant to whom any award has been made shall not have any
interest beyond that of a general creditor of the Corporation in the cash or
Common Stock awarded, or in any interest or dividend equivalents credited to him
until the cash has been paid to him or the certificates for the Common Stock
have been delivered to him, as the case may be, in accordance with the
provisions of the Plan.
(j) In the case of the death of the recipient of an award, before or after
the termination of his services, any unpaid installments of such deferred award
shall pass to the Designated Beneficiary, the legatee under the Participant's
last will, his personal representative or his distributee. Unpaid installments
of a deferred award shall be paid either in the same installments as originally
provided or otherwise as the Committee may determine in individual cases.
(k) Subject to the provisions of Section 12(l), in any case in which
payment of an award is to be made in Common Stock, the Corporation shall have
the right, in lieu of delivering the certificate or certificates for any or all
of the stock which would otherwise be deliverable to the Participant pursuant to
the Plan, to pay to such Participant on the date on which such certificate or
certificates would otherwise be deliverable an amount in cash equal to the Fair
Market Value of such Common Stock on such date or dates as may be determined by
the Committee, but not more than five trading days prior to such date, all as
the Committee may determine in individual cases.
(l) Anything herein to the contrary notwithstanding, in the event of a
Change in Control, with respect to any unmatured performance unit awards which a
Participant held immediately prior to such Change in Control, the Participant
will be entitled to immediate payment in cash (unless payment of such
performance unit awards shall be deferred in accordance with Section 12(f), in
which event the amount provided to be payable by this Section 12(l) shall also
be so deferred) in an amount equal to the value of such units determined in
accordance with the Payment Schedule applicable to such awards, based on the
cumulative, growth rate in the Corporation's reported earnings per share for all
previously elapsed fiscal years, if any, included in the Award Cycles for such
awards and the actual or presumed cumulative growth rate in the earnings per
share for the balance of each Award Cycle, determined as follows: (i) if such
Change in Control occurs prior to the completion of the first fiscal year of an
Award Cycle, the cumulative growth rate to be utilized for the balance of the
Award Cycle shall be the cumulative growth rate in the Corporation's earnings
per share in the four fiscal years preceding the first year and (ii) if such
Change in Control occurs during any
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subsequent fiscal year of an Award Cycle, the cumulative growth rate to be
utilized for the balance of the Award Cycle shall be the cumulative growth rate
of the preceding fiscal year(s) in that Award Cycle prior to the fiscal year in
which occurs the Change in Control. In the event that a performance measure
other than earnings per share is employed, similar adjustments shall be made for
such holders of unmatured performance units. The Committee may in its discretion
determine that such historical financial data are not appropriate or not
available and may use the latest budgets, projections, forecasts or plans for
the Corporation or its business units or subsidiaries. Except as expressly set
forth in this Section 12(l), upon the occurrence of a Change in Control, no
change(s) shall be made in the terms of any performance unit (including, without
limitation, its unit base value, Payment Value or performance criteria) or in
the underlying accounting assumptions or practices for purposes of determining
the amount due thereunder, which change(s) would lessen the value of any
performance unit to the holder thereof
13. Withholding Taxes
In connection with the transfer of shares of Common Stock as a result of
the exercise of a Nonqualified Stock Option or stock appreciation right, the
payment of performance units or the award of Restricted Stock or stock grants,
the Corporation (a) shall not issue a certificate for such shares until it has
received payment from the Participant of any Withholding Tax in cash or by the
retention or acceptance upon delivery thereof by the Participant of shares of
Common Stock sufficient in Fair Market Value to cover the amount of such
Withholding Tax and (b) shall have the right to retain or sell without notice,
or to demand surrender of, shares of Common Stock in value sufficient to cover
any Withholding Tax. The Corporation shall have the right to withhold from any
cash amounts due from the Corporation to the award recipient pursuant to the
Plan an amount equal to the Withholding Tax. In either case, the Corporation
shall make payment (or reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such Withholding
Tax, remitting any balance to the Participant. For purposes of this Section 13,
the value of shares of Common Stock so retained or surrendered shall be equal to
the Fair Market Value of such shares on the date that the amount of the
Withholding Tax is to be determined (the "Tax Date"), and the value of shares of
Common Stock so sold shall be the actual net sale price per share (after
deduction of commissions) received by the Corporation.
Notwithstanding the foregoing, the Participant may elect, subject to
approval by the Committee, to satisfy the obligation to pay any Withholding Tax,
in whole or in part, by providing the Corporation with funds sufficient to
enable the Corporation to pay such Withholding Tax or by having the Corporation
retain or accept upon delivery thereof by the Participant shares of Common Stock
sufficient in Fair Market Value to cover the amount of such Withholding Tax.
Each election by a Participant to have shares retained or to deliver shares for
this purpose shall be in writing and made on or prior to the Tax Date.
14. Transferability and Ownership Rights of Options, Stock Appreciation Rights
and Performance Units
No option or stock appreciation right granted or performance unit awarded
under the Plan shall be transferable otherwise than pursuant to the designation
of a Designated Beneficiary or by will, descent or distribution, and an option
or stock appreciation right may be exercised, during the lifetime of the holder
thereof, only by him. The holder of an option, stock appreciation right or
performance unit award shall have none of the rights of a shareholder until the
shares subject thereto or awarded thereby shall have been registered in the name
of such holder on the transfer books of the Corporation.
15. Holding Periods
In order to obtain certain tax benefits afforded to incentive stock options
under Section 422 of the Code, an optionee must hold the shares issued upon the
exercise of an incentive stock option for two years after the date of grant of
the option and one year from the date of exercise. An optionee may be subject to
the
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alternative minimum tax at the time of exercise of an incentive stock option.
The Committee may require an optionee to give the Corporation prompt notice of
any disposition in advance of the required holding period of shares of Common
Stock acquired by exercise of an incentive stock option. Tax advice should be
obtained when exercising any option and prior to the disposition of the shares
issued upon the exercise of any option.
16. Adjustments Upon Changes in Capitalization
Except as otherwise provided in Section 8(g) and Section 12(l), in the
event of any changes in the outstanding stock of the Corporation by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, split-ups, split-offs, spin-offs,
liquidations or other similar changes in capitalization, or any distribution to
shareholders other than cash dividends, the Committee shall make such
adjustments, if any, in light of the change or distribution as the Committee in
its sole discretion shall determine to be appropriate, (i) in the number and
class of shares or rights subject to options and stock appreciation rights and
the exercise prices of the options and stock appreciation rights covered
thereby, (ii) in the number of shares of Common Stock covered by a performance
unit award for which certificates have not been delivered, any dividend
equivalents to which deferred awards of Common Stock are entitled, and the
performance measures established by the Committee under Section 12(a), and (iii)
the maximum number and class of shares or rights that may be subject to awards
to any individual as set forth in Section 4. In the event of any such change in
the outstanding Common Stock of the Corporation, the aggregate number and class
of shares available under the Plan and the maximum number of shares as to which
options may be granted and stock appreciation rights or performance units
awarded and the maximum number of shares of Restricted Stock which may be
awarded shall be appropriately adjusted by the Committee.
17. Amendment and Termination
Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of performance units, stock
appreciation rights, or Restricted Stock or options shall be made after, April
5, 2008; provided, however, that such termination shall have no effect on awards
of performance units, stock appreciation rights, Restricted Stock or options
made prior thereto. The Plan may be terminated, modified or amended by the
shareholders of the Corporation. The Board of Directors of the Corporation may
also terminate the Plan, or modify or amend the Plan in such respects as it
shall deem advisable in order to conform to any change in any law or regulation
applicable thereto, or in other respects; however, to the extent required by
applicable law or regulation, shareholder approval will be required for any
amendment which will (a) materially increase the total number of shares as to
which options may be granted or which may be used in payment of performance unit
awards or stock appreciation right awards under the Plan or which may be issued
as Restricted Stock, (b) materially change the class of persons eligible to
receive awards of performance units or Restricted Stock and grants of stock
appreciation rights or options, or (c) otherwise require shareholder approval
under any applicable law or regulation. The amendment or termination of the Plan
shall not, without the consent of the recipient of any award under the Plan,
alter or impair any rights or obligations under any award theretofore granted
under the Plan.
18. Effectiveness of the Plan
The Plan shall become effective on April 6, 1998. The Committee may in its
discretion authorize the awarding of performance units and Restricted Stock and
the granting of options and stock appreciation rights, the payments, issuance or
exercise of which, respectively, shall be expressly subject to the conditions
that (a) the shares of Common Stock reserved for issuance under the Plan shall
have been duly listed, upon official notice of issuance, upon each stock
exchange in the United States upon which the Common Stock is traded and (b) a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares shall have become effective.
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Adopted by the Board on April 3, 1998, and approved by the Company's
shareholders on April 3, 1998. The Board amended Section 3 (currently Section 5)
of the Plan on June 8, 1998 to permit the Chief Executive Officer to grant
options. Plan Amended and Restated on February 24, 1999. Shareholder approval of
Sections 3 and 4 obtained on May 6, 1999.
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