SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of l934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Neff Corp.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[x ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials. [ ] Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------
2) Form, Schedule or Registration Statement No:
--------------------------------------
3) Filing Party:
--------------------------------------
4) Date Filed:
--------------------------------------
<PAGE>
[this page intentionally left blank]
<PAGE>
Neff Corp.
April 16, 1999
Dear Stockholder:
Please accept this invitation to attend our Annual Meeting of Stockholders
on Monday, May 24, 1999 at 10:00 a.m. This year's meeting will be held at Hotel
Sofitel, 5800 Blue Lagoon Drive, Miami, Florida.
At the Annual Meeting you will be asked to (1) elect directors, (2) ratify
the selection of Neff's independent auditors for 1999 and (3) approve Neff's
1999 Stock Incentive Plan. Your vote is important. I urge you to complete, sign
and return the enclosed proxy card. This way your shares will be voted as you
direct even if you do not attend the meeting. By returning the proxy card
promptly, you will help Neff avoid additional solicitation costs.
I look forward to seeing you on May 24.
Sincerely,
/s/KEVIN P. FITZGERALD
----------------------
Kevin P. Fitzgerald
President and
Chief Executive Officer
<PAGE>
NEFF CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 1999
To Our Stockholders:
The 1999 Annual Meeting (the "Annual Meeting") of Stockholders of Neff
Corp. ("Neff" or the "Company"') will be held at Hotel Sofitel, 5800 Blue Lagoon
Drive, Miami, Florida, on Monday, May 24, 1999, at 10:00 a.m. eastern daylight
savings time. The purpose of the meeting is to consider and act upon the
following:
1. The election of two Directors to serve for the ensuing three years.
2. The selection of Deloitte & Touche as Neff's independent public
accountants for 1999.
3. The adoption of Neff's 1999 Stock Incentive Plan (the "1999 Stock
Incentive Plan").
4. The transaction of such other business as may properly come before the
meeting or any adjournment.
Stockholders of record at the close of business on April 1, 1999 are
entitled to notice of and to vote at the Annual Meeting.
/S/ KEVIN P. FTIZGERALD
-----------------------
Kevin P. Fitzgerald
President, Chief Executive Officer
and Secretary
PLEASE FILL OUT, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE PAID ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE MEETING. YOU
MAY REVOKE YOUR PROXY IN WRITING, OR AT THE ANNUAL MEETING IF YOU WISH TO VOTE
IN PERSON.
<PAGE>
NEFF CORP.
3750 N.W. 87th Avenue, Miami, Florida 33178
PROXY STATEMENT
April 16, 1999
The Board of Directors is soliciting proxies to be used at the 1999 Annual
Meeting to be held at 10:00 a.m., Monday, May 24, 1999, at Hotel Sofitel, 5800
Blue Lagoon Drive, Miami, Florida.
This Proxy Statement and an accompanying proxy are being mailed to
stockholders on or about April 16, 1999, together with Neff's 1998 Annual
Report, which includes audited financial statements for the year ended December
31, 1998. The Consolidated Balance Sheets as of December 31, 1998 and 1997 and
the Consolidated Statements of Operations, the Consolidated Statements of
Stockholders' Equity, the Consolidated Statements of Cash Flows, and the Notes
to Consolidated Financial Statements (each of such Statements being for the
years ended December 31, 1998, 1997 and 1996), audited and contained in Neff's
1998 Annual Report, are incorporated herein by reference to that Report.
Who Can Vote
Record holders of Class A Common Stock at the close of business on April 1,
1999 are entitled to notice of and to vote at the meeting. On that date, there
were 16,065,350 shares of Class A Common Stock and 5,100,000 shares of Class B
Special Common Stock outstanding. Each Stockholder has one vote for each share
of Class A Common Stock and one vote for each share of Class B Special Common
Stock. Holders of Class A Common Stock and Class B Special Common Stock will
vote together, without regard to class, on the matters to be voted upon at the
meeting. Holders of Class A Common Stock have 75.9% of the general voting power;
holders of Class B Special Common Stock have the remaining 24.1% of the general
voting power.
How You Can Vote
If you sign and return the proxy before the Annual Meeting, we will vote
your shares as specified in the proxy. You may specify on your proxy whether
your shares should be voted for both, one or none of the nominees for director.
If you do not indicate any specific voting instructions, the proxy will be voted
in favor of the two Directors nominated and in the named proxies' discretion as
to other matters at the Annual Meeting.
How You Can Revoke Your Proxy
You can revoke your proxy at any time before it is exercised by:
* submitting written notice of revocation to the Secretary of the
Company;
* submitting another proxy that is properly signed and later dated; or
* voting in person at the Annual Meeting.
Required Votes
A majority of the votes that could be cast in the election or on a proposal
by stockholders who are either present in person or represented by proxy at the
Annual Meeting is required to elect the nominees for director and to approve (1)
the proposal to select Deloitte & Touche as Neff's independent public
accountants for 1999 and (2) the proposal to adopt Neff's 1999 Stock Incentive
Plan.
<PAGE>
The total number of votes that could be cast at the Annual Meeting is the
number of votes actually cast plus the number of abstentions. Abstentions are
counted as shares present at the Annual Meeting for purposes of determining
whether a quorum exists and have the effect of a vote "against" any matter as to
which they are specified.
Rule 452 of the New York Stock Exchange permits its members to vote shares
held by them as nominees on certain discretionary or routine matters without
instructions from the beneficial owner, provided that the broker has furnished
the beneficial owner with proxy materials and received no voting instructions in
advance of the Annual Meeting. If a matter is not discretionary or routine for
Rule 452 purposes, a broker or bank is not permitted to vote stock held in
street name on such matter in the absence of instructions from the beneficial
owner of the stock. These ''non-voted Shares'' may or may not be considered
present and entitled to vote depending on the nature of the matter upon which a
vote is being taken. If the broker holding your shares in street name indicates
to us on a proxy that you have not voted and it lacks discretionary authority to
vote your shares, we will not consider your shares present or entitled to vote
for any purpose at the Annual Meeting.
Other Matters to be Acted Upon at the Annual Meeting
We do not know of any other matters to be presented or acted upon at the
Annual Meeting. If, however, any other matter is properly presented at the
Annual Meeting, shares represented by proxies will be voted in accordance with
the judgment of the person or persons voting those shares.
2
<PAGE>
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES BY CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 1999, information regarding the
beneficial ownership of Class A Common Stock and Class B Special Common Stock by
(1) each person whom Neff knows beneficially owns 5% or more of any class of
Neff's voting securities; (2) each director, Neff's Chief Executive Officer and
each of Neff's three other most highly compensated executive officers and (3)
all directors and executive officers as a group. Unless otherwise indicated, (1)
each such Stockholder has sole voting and investment power with respect to the
shares beneficially owned by such Stockholder and (2) has the same address as
Neff.
Number of Shares Number of Shares
of Class A Percent of Class of Class B Special Percent of Class
Common Stock(1) Owned Common Stock(1) Owned
--------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Jorge Mas 3,802,744(2)(3) 17.9% -- --
Juan Carlos Mas 2,381,303(2)(4) 11.3 -- --
Jose Ramon Mas 2,381,303(2)(5) 11.3 -- --
General Electric
Capital Corporation 5,100,000(6) 24.1 5,100,000(6) 100%
Santos Fund I, L.P. 900,000(7) 4.3 -- --
Santos Capital
Advisers, Inc. 1,500,000(8) 7.1 -- --
Kevin P. Fitzgerald 773,220(2) 3.5 -- --
Robert G. Warren 103,316 * -- --
Peter A. Gladis 7,333 * -- --
Bonnie S. Biumi 7,333 * -- --
Arthur B. Laffer 2,000 * -- --
Joel-Tomas Citron 4,000 * -- --
All directors and
executive officers
as a group (9 persons) 9,462,552(2) 41.3 -- --
</TABLE>
* Less than 1 percent.
(1) A person is deemed as of any date to have "beneficial ownership" of any
security that such person has a right to acquire within 60 days after such
date. Shares each identified person has a right to acquire within 60 days
of the date of the table set forth above are deemed to be outstanding in
calculating the percentage ownership of such stockholder, but are not
deemed to be outstanding when calculating the percentage ownership of any
other person.
(2) Excludes shares beneficially owned through Santos Fund I, L.P. ("Santos")
and Santos Capital Advisers, Inc. ("Santos Capital").
(3) Includes shares beneficially owned by Jorge Mas Holding I Limited
Partnership.
(4) Includes shares beneficially owned by Juan Carlos Mas Holding I Limited
Partnership.
(5) Includes shares beneficially owned by Jose Ramon Mas Holding I Limited
Partnership.
(6) Includes shares owned by GECFS, Inc., an affiliate of General Electric
Capital Corporation ("GE Capital"). All of these shares are convertible
into Class A Common Stock. The amount shown includes 1,500,000 shares of
Class B Special Common Stock subject to an option held by Santos Capital.
Santos Capital has agreed to convert these shares to Class A Common Stock
upon exercise. GE Capital's and GECFS, Inc.'s address is 777 Long Ridge
Road, Building B, First Floor, Stamford, CT, 06927.
(7) Santos is beneficially owned by Jorge Mas, Juan Carlos Mas, Jose Ramon Mas
and Kevin P. Fitzgerald.
(8) Includes shares subject to an option currently exercisable by Santos
Capital, an affiliate of Santos, to purchase 1,500,000 shares of Common
Stock from GE Capital. Santos Capital is beneficially owned by Jorge Mas,
Juan Carlos Mas, Jose Ramon Mas and Kevin P. Fitzgerald.
3
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL 1
Election of Directors
Pursuant to Neff's Certificate of Incorporation, the Directors are divided
into three classes serving three year terms. Two Directors, comprising one class
of Directors, are to be elected at the Annual Meeting. Mr. Arthur B. Laffer and
Mr. Joel-Tomas Citron have been nominated for election as Directors to hold
office until the 2002 Annual Meeting and until their successors have been
elected and shall qualify. Proxies may not be voted for more than two Directors.
Principal Occupations Director Term to
Name Age and Other Directorships* Since Expire
- ----- ---- ------------------------ ------- --------
<S> <C> <C> <C>
Arthur B. Laffer 58 Principal occupations: Chief Executive 1998 2002
Officer, Laffer Advisors, Inc., an
investment advisor and broker-dealer,
Chief Executive Officer, Calport Asset
Management, a money management firm.
Other directorships: Chairman of the Board,
Laffer & Associates, an economic research
and consulting firm, director of U.S.
Filter Corporation, Nicholas Applegate
Mutual Funds, Coinmach Laundry Corporation
and MasTec, Inc.
Joel-Tomas Citron 36 Principal occupations: Managing Partner, 1998 2002
Triscope Capital, LLC, a private investment
partnership.
Other directorships: Chairman
of the Board, Proventes AB, a private
investment partnership and director of
MasTec, Inc.
Mr. Citron is also an
Executive Vice President of MasTec, Inc.
</TABLE>
<TABLE>
<CAPTION>
Terms of office of the four directors named below will continue until the
Annual Meeting in the years indicated.
Principal Occupations Director Term to
Name Age and Other Directorships* Since Expire
- ----- --- ------------------------ ------- --------
<S> <C> <C> <C>
Jorge Mas 36 Principal occupations: President and Chief 1995 2001
Executive Officer MasTec, Inc.,
telecommunications engineering and
construction service provider.
Other directorships: Chairman of the Board,
MasTec, Inc., director of Supercanal
Holdings, S.A. and Santos Capital.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations Director Term to
Name Age and Other Directorships* Since Expire
- ----- --- ------------------------ ------- --------
<S> <C> <C> <C>
Kevin P. Fitzgerald 42 Principal occupations: President and 1995 2001
Chief Executive Officer, Neff Corp. since
1995, Senior Vice President, Houlihan Lokey
Howard and Zukin, an investment banking firm,
from 1991 to 1995.
Other directorships: Supercanal Holdings,
S.A., Movilpage Communications, Inc. and
Santos Capital.
Juan Carlos Mas 33 Principal occupations: President, 1995 2000
Construction Division, Church & Tower,
a subsidiary of MasTec, Inc.
Other directorships: Church & Tower.
Jose Ramon Mas 27 Principal occupations: President, 1995 2000
Telecommunications Division, Church &
Tower, a subsidiary of MasTec, Inc.
Other directorships: none.
</TABLE>
* The business histories set forth in these tables cover a five-year period.
Jorge Mas, Juan Carlos Mas and Jose Ramon Mas, all of whom are members of
the Board of Directors, are brothers. There are no other family relationships
among the members of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE TWO NOMINEES.
5
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
In October, 1998, the Company established an Audit Committee. The Audit
Committee has the power and authority to initiate or review the results of all
audits or investigations into the business affairs of the Company and its
subsidiaries, and to conduct pre- and post-audit reviews with the Company's
management, financial employees and independent auditors. The Audit Committee
met once last year. The current members of the Audit Committee are Messrs.
Laffer and Citron.
In October 1998, the Company established a Compensation Committee. The
Compensation Committee will, subject to the final decision of the Board of
Directors, review the proposed compensation of the Company's Chief Executive
officer and all other corporate officers and administer the Neff Corp. 1998
Incentive Stock Plan (the "1998 Plan"). Messrs. Laffer and Citron were initially
appointed to the Compensation Committee at the same time that they were
appointed to the Board of Directors. Before any meetings of the Compensation
Committee were held, Mr. Citron resigned because he had accepted a position as
Executive Vice President of MasTec, Inc., an affiliate of the Company. In order
to receive favorable treatment under the Internal Revenue Code of 1986, all of
the members of our Compensation Committee must be "outside directors." As an
officer of an affiliate of the Company, Mr. Citron is not considered an "outside
director" for purposes of Section 162(m) of the Internal Revenue Code. The
Company intends to appoint an additional member of the Board of Directors to the
Compensation Committee. Until then, the entire Board of Directors will continue
to determine the compensation of the Company's Chief Executive officer and all
other corporate officers and administer the Neff Corp. 1998 Incentive Stock
Plan.
The Board of Directors met twice in 1998. Juan Carlos Mas attended fewer
than 75% of the total number of meetings held by the Board of Directors during
1998. No other incumbent member of the Board of Directors attended fewer than
75% of the total number of meetings held by the Board of Directors and the
committees on which such director served during 1998.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MasTec, Inc., an affiliate of the Company controlled by three of the
Company's Directors, Jorge Mas, Juan Carlos Mas and Jose Ramon Mas, purchases
and leases construction equipment from the Company. During 1998, revenues from
MasTec, Inc. amounted to approximately $2.2 million. The Company believes that
these payments were substantially equivalent to the payments that would have
been made between unrelated parties acting at arm's length.
GE Capital, which beneficially owns more than five percent of the Company's
voting securities, and the Company consummated a series of transactions pursuant
to which GE Capital (1) exchanged 800,000 shares of the Company's Series B
Cumulative Convertible Preferred Stock, par value $.01 per share and 800,000
shares of the Company's Series C Cumulative Convertible Preferred Stock, par
value $.01 per share for 6,000,000 shares of the Class B Special Common Stock
and (2) sold 900,000 shares of Class B Special Common Stock to Santos, which
Santos then converted into 900,000 shares of Class A Common Stock. Santos
Capital also purchased an option from GE Capital to acquire an additional
1,500,000 shares of Class B Common Stock. Santos and Santos Capital are
beneficially owned by four of the Company's Directors, Jorge Mas, Juan Carlos
Mas, Jose Ramon Mas and Kevin P. Fitzgerald, who is also the Company's President
and Chief Executive Officer.
In 1998 the Company entered into a registration rights agreements with GE
Capital with respect to the Class B Special Common Stock held by GE Capital.
This agreement gives GE Capital (1) the right, subject to certain limitations,
to make two separate demands that the Company register all or part of the Class
B Common Stock owned by GE Capital and (2) piggyback registration rights with
respect to certain registration statements filed by the Company. GE Capital must
convert its Class B Special Common Stock to Class A Common Stock prior to
registration. In any registration, the Company must pay GE Capital's
registration expenses, excluding GE Capital's legal expenses, underwriting
commissions and discounts. The Company has agreed to indemnify GE Capital with
respect to certain liabilities under the Securities Act of 1933, as amended, in
connection with the registration of GE Capital's Common Stock.
The Company also entered into registration rights agreements with each of
Santos and Santos Capital in 1998. The terms of these agreements are
substantially equivalent to the terms of the registration rights agreement
between GE Capital and the Company described above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Directors and executive officers of Neff are required to file reports
of initial ownership and changes of ownership of Class A Common Stock with the
Securities and Exchange Commission and with the New York Stock Exchange. To the
Company's best knowledge, based solely on review of copies of such reports
furnished to the Company and written representations that no other reports were
required, the required filings of all such Directors and executive officers were
filed timely.
7
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE AND DIRECTOR COMPENSATION
Executive Compensation
The following table sets forth information regarding the compensation for
services in all capacities to the Company and its subsidiaries, of the Chief
Executive Officer and each of the other three other most highly paid executive
officers (''named executive officers'') as to whom the total annual base salary,
bonus and other compensation for 1998 exceeded $100,000.
Summary Compensation Table
Securities
Underlying
Name and Principal Position Year Salary Bonus Options/SARs
- --------------------------- ----- -------- ------ ------------
<S> <C> <C> <C> <C>
Kevin P. Fitzgerald 1998 $250,000 $300,000 407,220(1)
President and Chief Executive 1997 246,000 150,000 --
Officer 1996 150,000 75,000 300,000
Peter A. Gladis 1998 $185,000 $75,000 60,000
Senior Vice President, 1997 150,000 75,000 --
Neff Rental, Inc. 1996 145,000 40,000 --
Bonnie S. Biumi(2) 1998 $175,000 $60,000 35,000
Chief Financial Officer 1997 -- -- --
Robert G. Warren 1998 $160,000 $50,000 45,000
Senior Vice President, 1997 155,000 25,000 --
Neff Machinery, Inc. 1996 126,000 40,000 --
</TABLE>
(1) In 1995, Mr. Fitzgerald and the Company entered into an option agreement
granting him an option to purchase shares of Common Stock representing 3%
of the issued and outstanding Common Stock of the Company for an aggregate
purchase price of approximately $1.6 million. Upon consummation of the
Company's initial public offering in May 1998, the number of shares subject
to this option was increased by 207,220 shares in order to maintain his 3%
ownership interest in the Company. No further options will be granted to
Mr. Fitzgerald pursuant to the 1995 option agreement. Also in 1998, Mr.
Fitzgerald received options to purchase 200,000 shares of Common Stock
pursuant to the 1998 Plan.
(2) Ms. Biumi commenced work for the Company on December 29, 1997.
8
<PAGE>
<TABLE>
<CAPTION>
Stock Option Grants and Exercises
The following table sets forth certain information related to stock options
granted to the named executive officers in 1998.
Potential Realizable Value at
Assumed Annual Rates of
Option Grants in Last Fiscal Year Stock Price Appreciation for
Individual Grants(1) Option Term(2)
---------------------------------------------------------- -----------------------------
Percent of
Total
Number of Options
Securities Granted to
Underlying Employees Exercise or
Options in Fiscal Base Price Expiration
Name Granted (#) Year (%) ($/sh) Date 5% ($) 10% ($)
- ------ ------------- ------------ ------------ ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kevin P. Fitzgerald, 207,220(3) 22.8 $ 2.43 2005(3) 4,222,009 7,021,110
President and 100,000 11.0 $ 14.00 2008 880,452 2,231,239
Chief Executive Officer 100,000 11.0 $ 6.19 2008 389,129 986,128
Peter A. Gladis, 10,000 1.1 $ 14.00 2008 88,045 223,124
Senior Vice President, 50,000 5.5 $ 6.19 2008 194,564 493,064
Neff Rental, Inc.
Bonnie S. Biumi, 10,000 1.1 $ 14.00 2008 88,045 223,124
Chief Financial Officer 25,000 2.8 $ 6.19 2008 97,282 246,532
Robert G. Warren, 20,000 2.2 $ 14.00 2008 176,090 446,248
Senior Vice President, 25,000 2.8 $ 6.19 2008 97,282 246,532
Neff Machinery, Inc.
</TABLE>
- ----------
(1) All of the options, except the option to purchase 207,220 shares granted to
Mr. Fitzgerald, were granted under Neff's 1998 Incentive Stock Plan and
become exercisable in three equal annual installments commencing on the
first anniversary of the date of grant, with the exception of Mr.
Fitzgerald's option to purchase 100,000 shares at $14.00 per share, which
was exercisable on the date of grant. Each option was awarded with an
exercise price equal to the fair market value of a share of Class A Common
Stock on the date of grant. Each option will expire ten years from the date
of grant. All options become exercisable upon a change in control (as
defined). The Company did not grant any stock appreciation rights in 1998.
(2) These assumed annual rates of stock price appreciation are specified by the
Securities and Exchange Commission. No assurance can be given that such
rates will be achieved.
(3) An option granted to Mr. Fitzgerald in 1995 to purchase shares representing
3% of the issued and outstanding Common Stock of the Company was increased
by 207,220 shares to 407.220 shares upon consummation of the Company's
initial public offering to maintain Mr. Fitzgerald's 3% equity interest in
the Company. The option to purchase these shares is currently exercisable.
The option to purchase one-third of the shares subject to this option will
expire on December 1, 2005; one-third will expire on December 31, 2005 and
the remaining one-third will expire on December 31, 2006. Pursuant to the
terms of this option, Mr. Fitzgerald has certain demand and piggyback
registration rights with respect to the shares he receives when he
exercises this option. No further options will be granted to Mr. Fitzgerald
pursuant to this option.
9
<PAGE>
<TABLE>
<CAPTION>
The following table provides information related to the number and value of
options held by the named executive officers at the end of 1998. The last sales
price of Class A Common Stock as reported by the New York Stock Exchange on
December 31, 1998 was $6.25. No named executive officer exercised any options
during 1998.
Fiscal Year End Option Values
Number of Securities Underlying Value of Unexercised "In-the
Unexercised Options at Fiscal -Money" Options at Fiscal Year
Name Year End End(1)
- ----- ------------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Kevin P. Fitzgerald, 757,220 100,000 $2,510,580 $ 6,250
President and
Chief Executive Officer
Peter A. Gladis, -- 60,000 -- $ 3,125
Senior Vice President,
Neff Rental, Inc.
Bonnie S. Biumi, -- 35,000 -- $ 1,563
Chief Financial Officer
Robert G. Warren, 84,650 45,000 $ 27,088 $ 1,563
Senior Vice President,
Neff Machinery, Inc.
</TABLE>
(1) Options are "in-the-money" at the fiscal year end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option.
Long-Term Incentive Plan Awards
Effective January 1, 1997, the Company adopted a phantom stock plan (the
"Phantom Stock Plan"). The Phantom Stock Plan is designed to reward employees
for improvements in the Company's performance. Pursuant to the terms of the
Phantom Stock Plan, employees are eligible to receive individual units
representing a hypothetical share of Class A Common Stock (a "Phantom Share").
Each Phantom Share is assigned a value on the date granted as determined by the
administrator of the Phantom Stock Plan. The difference between the greater of
either (1) the calculated share value of the Phantom Share on the date redeemed
by the employee as determined pursuant to a formula set forth in the Phantom
Stock Plan or (2) the average closing price of the Class A Common Stock as
quoted on the New York Stock Exchange for the previous 30 trading days, and the
value assigned on the date of grant represents the cash award the employee is
entitled to receive on the redemption date. The Phantom Shares generally vest
over five years and must be redeemed by the Company within one year of vesting.
10
<PAGE>
<TABLE>
<CAPTION>
The following table sets forth awards made in 1998 under the Phantom Stock
Plan to the named executive officers.
Long-Term Incentive Plans - Awards in Last Fiscal Year
Name Number of Phantom Shares Period Until Maturation or Payout
- ---- ------------------------ ---------------------------------
<S> <C> <C>
Kevin P. Fitzgerald, -- --
President and
Chief Executive Officer
Peter A. Gladis, 25,000(1) Phantom Shares vest in equal
Senior Vice President, installments over three years
Neff Rental, Inc.
Bonnie S. Biumi, -- --
Chief Financial Officer
Robert G. Warren, -- --
Senior Vice President,
Neff Machinery, Inc.
</TABLE>
(1) The Phantom Shares have an assigned value of $11.50 per Phantom Share as of
the date of grant.
Director Compensation
Neff's non-employee Directors, Messrs. Citron and Laffer received one-time
grants of (1) options to purchase an aggregate of 70,000 shares of Class A
Common Stock at an exercise price equal to the fair market value (as defined in
the Company's 1998 Stock Incentive Plan) of the Class A Common Stock on the date
of grant, and (2) a grant of options to purchase 5,000 shares of Class A Common
Stock at an exercise price of $14.00 per share, the initial public offering
price. A portion of these options vest in equal installments over a five year
period, the remainder vest in equal installments over a two year period. The
options have a ten year term, unless (a) the Director leaves the Board of
Directors for any reason other than disability, death or cause, in which case
the director will have three months after termination to exercise vested
options, (b) the Director is dismissed from the Board of Directors for cause, in
which case all options terminate immediately, (c) the Director's service
terminates by reason of disability or resignation, in which case the Director
will have one year after termination to exercise vested options or (d) the
Director dies, in which case the Director's estate will have one year to
exercise vested options.
Employment Agreements; Change in Control Arrangements
The Company has entered into an Employment Agreement with Peter G. Gladis,
the Senior Vice President of Neff Rental, Inc., a wholly-owned subsidiary of the
Company. The agreement has an initial term of three years and will be
automatically extended for one year periods unless either party terminates the
agreement on six months advance notice. In the event of termination of Mr.
Gladis' employment due to his Disability (as defined in the agreement) or death,
the Company will pay Mr. Gladis or his estate as severance pay each month for
the two (2) years immediately following the date of termination, the amount
necessary to make up the difference between the amount of payments the executive
will receive during that month under the disability insurance policies
maintained by the Company and Mr. Gladis' base monthly salary on the date of
termination. In the event the Company terminates Mr. Gladis' employment other
than for Cause (as defined in the agreement), death or Disability or he
terminates his employment for Good Reason (as defined in the agreement) or under
certain circumstances following a Change in Control (as defined in the
11
<PAGE>
agreement), then (a) the Company must pay Mr. Gladis a lump sum amount equal to
three times the sum of his base salary and bonus; (b) Mr. Gladis is entitled,
for a period of three years, to continuation of coverage at the Company's
expense of his life insurance, disability, medical and dental benefits and (c)
all restrictions on any outstanding awards granted to Mr. Gladis will lapse and
be immediately vested. Mr. Gladis' is prohibited from competing with the Company
during the term of the agreement and for one year after his employment with the
Company terminates for any reason.
The Company intends to enter into severance agreements with each of Mr.
Warren and Ms. Biumi that provide for the payment of certain amounts and
benefits in the event his or her employment with the Company is terminated under
certain circumstances following a change in control of the Company.
The Company has entered into a stock option agreement, dated as of December
1, 1995, with Kevin P. Fitzgerald, the President and Chief Executive Officer of
the Company and a stock option agreement, dated as of June 28, 1996, with Robert
G. Warren, a Senior Vice President of Neff Rental, Inc. These agreements were
not entered into pursuant to the 1998 Plan. Both of these option agreements
provide that, in the event of a change in control (as defined), within sixty
(60) days after such change in control, the optionee will be permitted to
surrender his unexercised options for cancellation, and the optionee shall
receive a cash payment calculated pursuant to a formula based on the excess, if
any, of the fair market value, on the date preceding the date of the surrender,
of the shares subject to the options surrendered over the aggregate exercise
price for such shares. A change in control is generally defined in the
agreements as (1) the acquisition by any person of more than 50% of the voting
securities of the Company, (2) certain mergers involving the Company or (3) the
sale of all of the assets of the Company.
The 1998 Plan permits the Company to provide that recipients of awards
granted pursuant to the 1998 Plan shall receive certain benefits upon the
occurrence of a change in control. A change in control is generally defined as
(1) the acquisition by any person of more than 30% of the voting securities of
the Company, (2) certain mergers involving the Company or (3) the sale of all of
the assets of the Company.
Report on Executive Compensation
During the fiscal year ended 1998, decisions concerning compensation of
executive officers were made by the entire Board of Directors.
The Board of Directors is responsible for setting and administering
executive officer compensation policies and programs. The Board of Directors is
also responsible for determining the recipients and terms of options and other
awards under the 1998 Plan. The Board of Directors considers the recommendations
of management when making determinations regarding executive compensation and
awards under the 1998 Plan.
Philosophy
The members of the Board of Directors (the "Board") believe that the
Company's success is largely due to the efforts of its employees and, in
particular, the leadership exercised by its executive officers. Therefore, the
Board believes that it is important to:
* Adopt compensation programs that stress stock ownership and, thereby,
tie long-term compensation to increases in Stockholder value as
evidenced by price appreciation in the Class A Common Stock.
* Adopt compensation programs that enhance the Company's ability to
attract and retain qualified executive officers while providing the
financial motivation necessary to achieve continued high levels of
performance.
12
<PAGE>
* Provide a level of compensation that is competitive with a select
group of successful national and regional construction equipment
rental companies and dealerships that the Company believes are
comparable to Neff.
* Select compensation programs that emphasize teamwork, corporate
efficiency and overall corporate results.
The members of the Board believe, however, that fixed compensation formulas
may not adequately reflect all aspects of the Company's and an individual
executive officer's performance. Therefore, the Board has retained a high degree
of flexibility in structuring Neff's executive compensation. This approach
allows the Board annually to evaluate subjectively and reward each executive
officer's individual performance and contribution to the Company's overall
financial and operational success.
The components of the Company's executive compensation program for fiscal
year 1998 were (1) annual compensation consisting of base salaries, (2)
long-term incentives, (3) performance bonuses, and (4) other benefits. Executive
compensation is determined on the basis of total compensation rather than as
separate free-standing components.
Base Salary and Bonus
The Board reviews each executive officer's base salary on an annual basis.
In determining base salary compensation for fiscal year 1998, the Board
considered financial and operational results of the previous fiscal year and the
contributions made by the executive officers to the achievement of those
results, and the compensation packages for executives of comparable position and
responsibility in the industry. Mr. Fitzgerald assists the other members of the
Board by making recommendations concerning salaries and bonuses to be paid to
executive officers, other than himself.
To provide additional incentive to achieve outstanding performance, the
Company awards cash bonuses to executive officers based on the Board's
subjective evaluation of corporate and individual performance. The Company's
increasing rate of growth and the competitive nature of the Company's business
placed greater demands than ever on the executive officers in 1998. The bonuses
awarded by the Company for 1998 and the salaries determined each year reflect
this fact, as well as the attainment of certain performance goals in 1998 such
as the Company's strong revenue and earnings growth, the acquisition of nine
businesses with 32 locations in 1998, and the Company's expansion into South
America with its investment in Sullair Argentina, S.A.
Long-Term and Other Incentive Compensation
The Board believes that the financial interests of executive officers
should be aligned closely with those of stockholders through stock ownership.
Pursuant to the 1998 Plan, the Board approves the grant of stock options, stock
appreciation and dividend equivalent rights, restricted stock, performance units
and performance shares to its employees, officers, employee directors,
consultants and advisors of the Company. The Company's Phantom Stock Plan
(together with the 1998 Plan, the "Plans") is administered by Mr. Fitzgerald,
the President and Chief Executive Officer of the Company. Awards under the Plans
are based upon an evaluation of the contribution of eligible individuals to the
Company's long-term performance and the importance of their responsibilities
within the Company.
Stock options granted under the 1998 Plan generally have a term of ten
years, vest over three years and have an exercise price equal to the fair market
value of the Class A Common Stock on the grant date. In 1998, the Company
granted options to purchase an aggregate of 950,575 shares of Class A Common
Stock at exercise prices ranging from $6.1875 to $14.00 to directors, executive
officers and other eligible employees. Phantom Shares granted under the Phantom
Stock Plan generally vest over five years and must be redeemed by the Company
within one year of vesting. In 1998, the Company granted an aggregate of 39,000
Phantom Shares at assigned values of $11.25 per share to executive officers and
other eligible employees.
13
<PAGE>
Chief Executive Officer. Mr. Fitzgerald's compensation package consists of
base salary, bonus and stock option awards. In approving Mr. Fitzgerald's
compensation arrangements, the Board took into account the Company and Mr.
Fitzgerald's accomplishments since 1995 when he became President and Chief
Executive Officer of Neff, including successfully expanding the number of the
Company's locations from 8 in July, 1995 to 86 in December 1998 and increasing
revenues from $67.2 million for the year ended December 31, 1995 to $324.1
million for the year ended December 31, 1998 or 382.3%. In addition, the Board
also considered the overall compensation packages of other chief executive
officers of companies in the construction equipment rental and dealership
industries.
To better link Mr. Fitzgerald's compensation package with increases in
stockholder value, the Company awarded Mr. Fitzgerald stock options to purchase
200,000 shares of Class A Common Stock in 1998 pursuant to the Neff 1998
Incentive Stock Plan. The exercise price of such options was the fair market
value at the date of grant. Increasing Mr. Fitzgerald's equity ownership in the
Company will align his interests with stockholders' long-term interests because
the value of Mr. Fitzgerald's options over time will increase only as the value
of the Class A Common Stock increases.
Deductibility of Executive Compensation in Excess of $1.0 Million. Section
162(m) of the Internal Revenue Code of 1986 generally disallows a federal income
tax deduction to any publicly held corporation for compensation paid in excess
of $1 million in any taxable year to a named executive officer. Exceptions are
made for qualified performance-based compensation, among other things. The Board
intends generally to structure its executive awards under the Company's stock
incentive plans to take advantage of this Section 162(m) exception. However, the
Board does not believe that it is necessarily in the best interest of the
Company and its stockholders that all compensation meet the requirements of
Section 162(m) for deductibility and the Committee may determine to award
non-deductible compensation in such circumstances as it deems appropriate.
Moreover, in light of the ambiguities and uncertainties under Section 162(m), no
assurance can be given that compensation intended by the Company to satisfy the
requirements for deductibility under Section 162(m) does in fact do so.
Jorge Mas
Jose Ramon Mas
Juan Carlos Mas
Kevin P. Fitzgerald
Arthur B. Laffer
Joel-Tomas Citron
14
<PAGE>
Compensation Committee Interlocks and Insider Participation
During 1998, the Compensation Committee of the Board of Directors consisted
of Messrs. Laffer and Citron. They were appointed in October 1998, at the same
time that they were appointed to the Board of Directors. Neither of these
individuals are or have been an officer or employee of the Company. Prior to the
appointment of Messrs. Laffer and Citron to the Compensation Committee in
October 1998, the Company had no Compensation Committee or other committee of
the Board of Directors performing similar functions. Before any meetings of the
Compensation Committee were held, Mr. Citron resigned because he had accepted a
position as Executive Vice President of MasTec, Inc., an affiliate of the
Company. Accordingly, decisions concerning executive compensation were made by
the entire Board of Directors. After Mr. Citron resigned, the entire Board of
Directors resumed responsibility for decisions concerning compensation. Other
than Kevin P. Fitzgerald, there were no officers or employees of the Company who
participated in deliberations concerning such compensation matters.
Stock Price Performance
The following stock price performance chart compares cumulative total
stockholder return, assuming reinvestment of dividends, for (1) the Class A
Common Stock, (2) Standard & Poor's 500 Stock Index and (3) a Competitor Group
Index for the period indicated. The chart assumes that $100 was invested at May
22, 1998, the date Neff began trading on the New York Stock Exchange, at the
initial public offering price of $14.00 per share. Past stock price performance
is not necessarily indicative of
future results.
[Performance Graph to be inserted here]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Neff Stanard & Poor's 500 Competitor Group Index(a)
- --------------------- ------- --------------------- -------------------------
<S> <C> <C> <C>
May 22, 1998 $100.00 $100.00 $100.00
December 31, 1998 $ 44.64 $111.71 $ 83.17
</TABLE>
- ----------
(a) In accordance with the SEC's rules, the Company has elected to select a
group of peer companies on an industry basis for comparison purposes. The
competitor group is composed of four participants: National Equipment
Services, Inc., NationsRent, Inc., Rental Service Corporation, and United
Rentals, Inc. Total return calculations were weighted according to the
respective company's market capitalization.
15
<PAGE>
PROPOSAL 2
Ratification of Selection of Independent Public Accountants
Based on the recommendation of the Audit Committee, the Board of Directors
has appointed Deloitte & Touche as independent auditors for the Company for
1999. As the Company's independent auditors, Deloitte & Touche audits Neff's
books of account and other corporate records. The Company's stockholders are
being asked to ratify the selection of Deloitte & Touche as Neff's independent
auditors at the Annual Meeting. Deloitte & Touche has served as the Company's
independent auditors since 1996.
A representative of Deloitte & Touche will be present at the Annual Meeting
and will have the opportunity, if he or she desires, to make a statement and
will be available to answer appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3
Adoption of The Neff Corp. 1999 Stock Incentive Plan
The Board has adopted the Neff Corp. 1999 Stock Incentive Plan (the "1999
Plan"), subject to the approval of the Company's stockholders. The Company's
stockholders are being asked to approve the 1999 Plan.
The following is a summary description of the 1999 Plan. This summary,
however, is not complete and is qualified in its entirety by reference to the
provisions of the 1999 Plan, a copy of which is attached hereto.
General
The purpose of the 1999 Plan is to strengthen the Company and its
subsidiaries by providing an incentive to its directors, employees, officers and
consultants to encourage them to devote their abilities and industry to the
Company.
Administration
The Plan is administered by a committee (the "Committee") of the board of
directors of the Company. The Committee consists of two or more directors and
may include the entire Board. In order to receive favorable treatment of the
Awards under the Internal Revenue Code of 1986, as amended (the "Tax Code") and
the federal securities laws, if the Committee consists of less than the entire
board of directors of the Company, or if the Committee is taking action with
respect to an option or Award intended to qualify as "performance-based
compensation" under the Tax Code, the members must not be employees or officers
of, or have certain business dealings with, the Company. Subject to the terms of
the 1999 Plan, the Committee is authorized to interpret the 1999 Plan, to
prescribe, amend and rescind rules and regulations relating to the 1999 Plan,
and to make all other determinations necessary or advisable for the
administration of the 1999 Plan.
Plan Participants
The Plan provides for the granting of the following types of awards
("Awards"): nonqualified or incentive stock options, stock appreciation rights,
dividend equivalent rights, performance awards share awards and restricted
16
<PAGE>
stock. The Committee selects recipients of Awards under the Plan from among
employees, directors (including directors who are not employees of the Company),
officers and consultants of the Company and its subsidiaries ("Eligible
Individuals").
Shares Subject to the Plan
The Plan provides for the issuance of up to 1,000,000 shares of Common
Stock, subject to adjustment as described below. If any Award granted under the
Plan expires, is canceled, settled in cash or terminated unexercised as to any
shares, or any shares subject to a share award, restricted stock grant or
performance award are reacquired by the Company, such shares will again be
available for issuance under the Plan. Shares to be issued under the Plan will
be either authorized but unissued shares or treasury shares. Subject to
adjustment as described below, no Eligible Individual may be granted Awards
(other than performance units denominated in dollars) in the aggregate in
respect of more than 300,000 Shares in any calendar year and no Eligible
Individual may receive more than $5,000,000 in any calendar year in respect of
performance units denominated in dollars.
In the event of any change in the outstanding shares of Common Stock
(including an exchange of the Common Stock for stock or securities of another
corporation) by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split or reverse stock split,
extraordinary dividend, property dividend, combination or exchange of shares or
otherwise, the Committee will make appropriate adjustments to the maximum number
and class of shares or other securities with respect to which Awards may be
granted (1) under the Plan, (2) to any Eligible Individual and (3) which are
subject to outstanding Awards granted under the Plan and the purchase price
therefor, if applicable. The Committee may also adjust the terms of any
outstanding performance awards granted under the Plan.
Options
General
The Committee will determine the terms and recipients of all options.
The Committee will also determine whether an option is to be an incentive
stock option or nonqualified stock option. The Committee will fix the
exercise price per share of Common Stock which, in the case of incentive
stock options, will not be less than the fair market value of the Common
Stock on the date of grant (and not less than 110% of such fair market
value in the case of incentive stock options granted to an optionee who
owns stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company (a "Ten Percent
Stockholder")). The fair market value of the Common Stock means the average
of the high and low sale prices of the Common Stock on the New York Stock
Exchange for the date in question.
The Committee will determine the expiration date of each option, which
will not be later than the tenth anniversary of the date of grant. In the
case of an incentive stock option granted to a Ten Percent Stockholder, the
expiration date will not be later than the fifth anniversary of the date of
grant. The Committee will determine at what times each option will be
exercisable. Options will be subject to any restrictions that the Committee
deems necessary or advisable.
Assignability of Options
Unless otherwise provided at the time of grant, or at any time
thereafter, an optionee may not assign or transfer options except by will.
The optionee is the only person who may exercise his or her options while
the optionee is alive. If an optionee dies without a will, his or her
options will be transferred according to the laws of descent and
distribution. The Committee will determine whether and on what terms an
optionee may exercise his or her options if his or her employment is
terminated. These terms shall be set forth in the option agreement between
the optionee and the Company.
17
<PAGE>
Payment of Purchase Price
At the time of exercise, the purchase price of options must be paid in
full either (1) in cash, (2) by transferring shares of previously acquired
Common Stock to the Company upon such terms and conditions set by the
Committee or (3) by a combination of cash and previously acquired Common
Stock. In addition, the Committee may allow an optionee to pay the exercise
price for an option by withholding shares of Common Stock with a fair
market value equal to the exercise price that otherwise would be acquired
upon the exercise of the option.
Stock Appreciation Rights
The Committee may grant stock appreciation rights to Eligible Individuals
in such amounts and at such times as the Committee determines in its sole
discretion. A stock appreciation right entitles the grantee to receive from the
Company an amount equal to the product of (1) the positive difference between
the fair market value of a share of Common Stock on the date the right is
exercised and the date of grant and (2) the number of shares as to which the
stock appreciation right is exercised, or such lesser amount as the Committee
determines. This amount is payable, at the Committee's discretion, in cash, in
shares of Common Stock, or a combination of cash and shares. The Committee may
grant stock appreciation rights alone or in connection with any option. Stock
appreciation rights may be granted only at the time of grant of the option if
related to an incentive stock option, or at any time during the term of the
option if related to a nonqualified option.
Restricted Stock Awards
The Committee may grant shares of restricted Common Stock to Eligible
Individuals in such amounts and at such times as the Committee determines in its
sole discretion. Shares of restricted Common Stock will be subject to forfeiture
for such period of time (not less than one year) as the Committee determines.
The Committee shall determine the conditions or restrictions of any restricted
Common Stock awards, which may include restrictions on transferability,
requirements of continued employment, individual performance or the Company's
financial performance. Until all restrictions upon shares of restricted Common
Stock have lapsed in the manner determined by the Committee, the restricted
shares shall not be sold, transferred or pledged in any way.
Holders of restricted Common Stock are entitled to exercise the voting
rights of their restricted Common Stock and to receive all dividends and other
distributions declared or paid on their restricted Common Stock. The Committee
may determine, in its sole discretion, that some or all dividends declared or
paid on shares of restricted Common Stock shall be deferred and held by the
Company until the restrictions imposed upon such shares lapse. If dividends are
to be deferred, the Committee shall decide whether such dividends will be
reinvested in shares of Common Stock or held in cash. If any dividends, deferred
or not, are paid in shares of stock, the shares will be subject to the same
restrictions as the shares on which the dividends are paid.
Performance Awards
The Committee in its discretion may grant awards of performance units or
performance shares to Eligible Individuals. Performance shares are shares of
restricted Common Stock which vest, or become unrestricted shares of Common
Stock, if a specified objective is achieved during a specified period of time.
Performance units may be denominated in shares of restricted Common Stock or a
specified dollar amount and vest if a specified objective is achieved during a
specified period of time. All performance objectives and periods of time when
such objectives must be met will be determined by the Committee. Performance
objectives may be expressed in terms of (1) earnings per share, (2) share price,
(3) pre-tax profits, (4) net earnings, (5) return on equity or assets, (6)
revenues, (7) EBITDA, (8) market share or market penetration, (9) dividends or
(10) any combination of the foregoing and may be determined before or after
accounting changes, special charges, foreign currency effects, acquisitions,
divestitures or other extraordinary events. The Committee will also determine
18
<PAGE>
the number of performance shares or units subject to an award and the times when
such shares or units will be issued or paid. Performance shares may not be sold,
transferred or pledged in any way until the specified objectives have been met
and all restrictions on the shares have lapsed.
Holders of performance shares are entitled to exercise the voting rights of
their performance shares and are entitled to receive all dividends and other
distributions declared or paid on their performance shares. The Committee may
determine, in its sole discretion, that some or all dividends declared or paid
on performance shares shall be deferred and held by the Company until the
restrictions imposed upon such shares lapse. If dividends are to be deferred,
the Committee shall decide whether such dividends will be reinvested in Common
Stock or held in cash. If any dividends, deferred or not, are paid in shares of
Common Stock, the shares will be subject to the same restrictions as the
performance shares on which the dividends are paid.
Dividend Equivalent Rights
The Committee may grant dividend equivalent rights to Eligible Individuals
in such amounts and at such times as the Committee determines in its sole
discretion. A dividend equivalent right is a right to receive some or all of the
cash dividends payable with respect to shares of Common Stock. Dividend
equivalent rights may be awarded in tandem with options or other Awards. The
Committee will determine the terms and conditions under which these rights are
awarded. Dividend equivalent rights may be paid in cash or Common Stock or a
combination of cash and Common Stock, in a single installment or multiple
installments. Amounts payable in respect of dividend equivalent rights may be
payable currently or deferred until the restrictions, if any, on such dividend
equivalent rights lapse or until the vesting, exercise, payment, settlement or
other lapse of restrictions on the option or other Award to which the dividend
equivalent rights relate. In the event that the amount payable in respect of
dividend equivalent rights is to be deferred, the Committee shall determine
whether such amounts are to be held in cash or reinvested in Common Stock or
deemed (notionally) to be reinvested in Common Stock.
Other Share-Based Awards
The Committee may grant shares of Common Stock which are not restricted to
Eligible Individuals on such terms and conditions as the Committee may determine
in its sole discretion. Share awards may be made as additional compensation for
services rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company.
Change In Control
A "Change in Control" of the Company occurs when (1) any person or group
(other than any of Jorge Mas, Juan Carlos Mas, Jose Ramon Mas or General
Electric Capital Corporation and certain of its affiliates) acquire beneficial
ownership of 30% or more of the Company's voting securities, (2) the identity of
more than one-third of the board of directors of the Company changes, unless the
elections of the new directors were approved by two-thirds of the directors who
were either directors when the Plan was adopted or whose elections were approved
by such directors or (3) a merger of a prescribed type, the sale of
substantially all of the Company's assets or a complete liquidation or
dissolution of the Company, is consummated.
If a Change in Control occurs, all outstanding options and stock
appreciation rights shall become immediately and fully exercisable. If an
optionee's employment with, or service as a Director of, the Company is
terminated by the Company following a Change in Control, all of the optionee's
options and stock appreciation rights that were exercisable as of the date of
termination of the optionee's employment or service shall remain exercisable for
a period ending on the earlier of (1) the first anniversary of the termination
of the optionee's employment or service or (2) the expiration of the stated term
of the option or stock appreciation right. In addition, the Committee may
provide that certain benefits under the Plan accelerate upon a Change in
Control.
19
<PAGE>
If a Change in Control occurs which is intended to be treated as a pooling
of interests under generally accepted accounting principles, the Committee shall
take such actions, if any, as are specifically recommended by an independent
accounting firm retained by the Company to the extent reasonably necessary in
order to assure that the Change in Control will qualify as a pooling of
interests. Actions the Committee may take include but are not limited to (1)
deferring the vesting, exercise, payment, settlement or lapsing of restrictions
with respect to any Award, (2) providing that the payment or settlement in
respect of any Award be made in the form of cash, Common Stock or securities of
a successor or acquirer of the Company, or a combination of the foregoing, and
(3) providing for the extension of the term of any Award (but not beyond the
maximum term permitted for any Award).
Withholding
When a grantee recognizes taxable income in connection with the receipt of
Common Stock or cash pursuant to an Award (a "Taxable Event"), he or she must
pay the Company an amount equal to the federal, state and local income taxes and
other amounts the Company is required by law to withhold in connection with the
Taxable Event (the "Withholding Taxes") before the issuance, or release from
escrow, of such Common Stock or the payment of such cash. The Company has the
right to deduct from any payment of cash to a grantee an amount equal to the
Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, a
grantee may make a written election, which the Committee may accept or reject,
to have the Company withhold a portion of the Common Stock then issuable to him
or her having an aggregate fair market value equal to the Withholding Taxes.
Amendment and Termination
The board of directors of the Company may amend, modify or terminate the
Plan at any time, provided, however, that amendments required under applicable
law to be approved by the stockholders of the Company shall not be effective
until approved by the stockholders of the Company. Termination, amendment or
modification of the Plan may not adversely affect the rights of a recipient of
any Award previously granted under the Plan without his or her consent.
Certain Federal Income Tax Consequences
The following discussion is a general summary of the principal United
States federal income tax consequences under current federal income tax laws
relating to the grant and exercise of Awards under the Plan. This information is
not intended to be exhaustive and, among other things, does not describe state,
local or foreign income and other tax considerations.
Options
Generally, an optionee will not recognize taxable income at the time
of grant of a nonqualified option. Upon exercise of the option, the
difference between the fair market value of the shares on the date of
exercise and the exercise price will be taxable as ordinary income to the
optionee. The Company will receive a commensurate tax deduction at the time
of exercise, subject to the deduction limitation under Section 162(m) of
the Tax Code (which is discussed below).
Subject to the discussion below, an optionee will not recognize
taxable income at the time of grant or exercise of an incentive stock
option, and the Company will not be entitled to a tax deduction with
respect to such grant or exercise. However, upon exercise, the difference
between the fair market value of the shares and the exercise price may be
subject to the alternative minimum tax.
Generally, if an optionee holds shares acquired upon the exercise of
an incentive stock option for at least one year after the date of exercise
and for at least two years after the date of grant of the incentive stock
20
<PAGE>
option, upon disposition of such shares by the optionee, the difference, if
any, between the sales price of the shares and the exercise price will be
treated as long-term capital gain or loss to the optionee. If an optionee
sells or disposes of shares acquired upon the exercise of an incentive
stock option within one year after the date of exercise or within two years
after the date of grant of the incentive stock option (a "disqualifying
disposition"), then (1) any excess of the fair market value of such shares
at the time of exercise of the option over the exercise price of such
option will constitute ordinary income to the optionee, (2) any excess of
the amount realized by the optionee on the disqualifying disposition over
the fair market value of the shares on the date of exercise will generally
be capital gain, and (3) the Company will be entitled to a deduction equal
to the amount of such ordinary income recognized by the optionee, subject
to the deduction limitation under Section 162(m) of the Tax Code.
Special rules may apply with respect to optionees who may be subject
to Section 16(b) of the Exchange Act (which rules may have the effect of
deferring the time at which a taxable event will be considered to have
occurred in connection with the exercise of an option).
If an option is exercised through the use of shares previously owned
by the optionee, such exercise generally will not be considered a taxable
disposition of the previously owned shares and thus no gain or loss will be
recognized with respect to such shares upon such exercise. However, if an
incentive stock option is exercised through the use of previously owned
shares that were acquired on the exercise of an incentive stock option, and
the holding period requirement for those shares is not satisfied at the
time they are used to exercise the option, such use will constitute a
disqualifying disposition of the previously owned shares resulting in the
recognition of ordinary income in the amount described above with respect
to disqualifying dispositions.
Stock Appreciation Rights
No income will be recognized by a grantee in connection with the grant
of any stock appreciation right. The grantee must include in ordinary
income the amount of cash received and the fair market value on the
exercise date of any shares received upon exercise of a stock appreciation
right. The Company will be entitled to a deduction, subject to the
deduction limitation under Section 162(m) of the Tax Code, equal to the
amount included in such grantee's income by reason of the exercise of any
stock appreciation right.
Dividend Equivalent Rights
A grantee realizes ordinary income upon the payment under dividend
equivalent rights in an amount equal to any cash received and the fair
market value of any shares received. The Company will be entitled to a
deduction of the same amount, subject to the deduction limitation under
Section 162(m) of the Tax Code.
Restricted Shares, Performance Shares
A grant of shares of restricted Common Stock or performance shares
generally does not constitute a taxable event for a grantee. However, the
grantee will be subject to tax, at ordinary income rates, when any
restrictions on ownership of the restricted shares or performance shares
lapse. The Company will be entitled to take a commensurate deduction at
that time, subject to the deduction limitation under Section 162(m) of the
Tax Code. A grantee may elect to be taxed at the time of grant of
restricted stock or performance shares and, if this election is made, the
grantee will recognize ordinary income equal to the excess of the fair
market value of the restricted stock or performance shares at the time of
grant without regard to any of the restrictions thereon.
Share Awards
A grantee will recognize income at the time of grant of a Share Award
and will be subject to tax, at ordinary income rates, on such income. The
Company will be entitled to take a commensurate deduction at that time,
subject to the deduction limitation under Section 162(m) of the Tax Code.
21
<PAGE>
Performance Units
Generally, a grantee will not recognize any taxable income and the
Company will not be entitled to a deduction upon the award of performance
units. At the time the grantee receives a payment in respect of performance
units, the fair market value of any shares or the amount of any cash
received in payment for such performance units generally is taxable to the
grantee as ordinary income and the Company will be entitled to a deduction,
subject to the deduction limitation under Section 162(m) of the Tax Code.
Phantom Stock
Generally, a grantee will not recognize any taxable income and the
Company will not be entitled to a deduction upon the award of phantom
stock. At the time the grantee receives a payment in respect of phantom
stock, the fair market value of any shares or the amount of any cash
received in payment is taxable to the grantee as ordinary income and the
Company will be entitled to a deduction, subject to the deduction
limitation under Section 162(m) of the Tax Code.
Deductibility of Executive Compensation
Section 162(m) of the Tax Code generally disallows a federal income tax
deduction to any publicly held company for compensation paid in excess of $1
million in any taxable year to the chief executive officer or any of the other
four most highly compensated executive officers employed by the company on the
last day of the taxable year. Exceptions are made for, among other things,
qualified performance-based compensation. Qualified performance-based
compensation means compensation paid solely on account of the attainment of
objective performance goals, provided that (1) the performance goals are
established by a compensation committee consisting solely of two or more outside
directors, (2) the material terms of the performance-based compensation are
disclosed to and approved by stockholders in a separate stockholder vote prior
to payment and (iii) prior to payment, the compensation committee certifies that
the performance goals were attained and other material terms were satisfied. The
Company has structured the 1999 Plan so that Awards of options (except with
respect to options with an exercise price less than the fair market value of the
underlying shares on the date of grant), stock appreciation rights and
performance awards under the 1999 Planwill qualify as performance-based
compensation.
Excise Tax
Under certain circumstances, the accelerated vesting or exercise of options
or stock appreciation rights, or the accelerated lapse of restrictions on other
Awards, in connection with a Change of Control of the Company might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of section 280G of the Tax Code. To the extent it is so considered, the grantee
may be subject to a 20% excise tax and the Company may be denied a tax
deduction.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3.
22
<PAGE>
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
MAILED WITHOUT CHARGE TO STOCKHOLDERS UPON REQUEST. REQUESTS SHOULD BE ADDRESSED
TO THE COMPANY, 3750 NW 87th AVENUE, MIAMI, FLORIDA, 33178, ATTENTION: MS. PAT
MARTINEZ, INVESTOR RELATIONS. THE FORM 10-K INCLUDES CERTAIN EXHIBITS, WHICH
WILL BE PROVIDED ONLY UPON PAYMENT OF A FEE COVERING THE COMPANY'S REASONABLE
EXPENSES.
SOLICITATION OF PROXIES, STOCKHOLDER PROPOSALS AND OTHER MATTERS
The cost of this solicitation of proxies will be borne by Neff. In addition
to the use of the mails, Company officials may solicit proxies in person and by
telephone or telegraph, and may request brokerage houses and other custodians,
nominees and fiduciaries to forward soliciting materials to the beneficial
owners of Class A Common Stock.
Proposals of stockholders intended to be presented at the Annual Meeting to
be held in the year 2000 must be received by Neff no later than March 25, 2000
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to such meeting.
The Directors know of no other business to be presented at the Annual
Meeting. If other matters properly come before the meeting, the persons named as
proxies will vote on them in accordance with their best judgment.
You are urged to complete, sign, date and return your proxy promptly to
make certain your shares of Class A Common Stock will be voted at the Annual
Meeting. For your convenience in returning the proxy, an addressed envelope is
enclosed, requiring no additional postage if mailed in the United States.
For the Directors,
/s/ KEVIN P. FITZGERALD
-----------------------
Kevin P. Fitzgerald
Chief Executive Officer, President,
Treasurer and Secretary
YOUR PROXY IS IMPORTANT.
PLEASE SIGN, DATE AND MAIL IT TODAY.
23
<PAGE>
Neff Corp.
Annual Meeting of Shareholders
Hotel Sofitel
5800 Blue Lagoon Drive
Miami, Florida
May 24, 1999
10:00 a.m.
FOLD AND DETACH HERE
PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS OF NEFF CORP.
The undersigned hereby constitutes and appoints Jorge Mas and Kevin P.
Fitzgerald (the "Proxies"), or any one of them with full power of substitution,
attorneys and proxies for the undersigned to vote all shares of Common Stock of
Neff Corp. (the "Company") that the undersigned would be entitled to vote at the
1999 Annual Meeting of Shareholders to be held at the Hotel Sofitel, 5800 Blue
Lagoon Drive, Miami, Florida 33126, at 10:00 a.m. on Monday, May 24, 1999, or
any adjournments or postponements thereof, on the following matters coming
before the Annual Meeting:
(1) Election of two (2) Class l Directors as described in the Proxy
Statement of the Board of Directors.
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
for the nominees listed below
ARTHUR B. LAFFER
JOEL-TOMAS CITRON
(To withhold authority to vote for any individual nominee,
write the nominee's name below:)
FOR AGAINST ABSTAIN
(2) To ratify the appointment of Deloitte & [ ] [ ] [ ]
Touche LLP as independent auditors for
the fiscal year ending December 31, 1999.
(3) To approve the Neff Corp. 1999 Stock [ ] [ ] [ ]
Incentive Plan.
(Continued and to be signed on reverse)
<PAGE>
FOLD AND DETACH HERE
(4) In their discretion, upon any other business which may properly be
presented at the Annual Meeting or any adjournments or postponements
thereof.
Receipt of the Notice of Annual Meeting of Stockholders, the Proxy
Statement dated April 16, 1999, and the Company's Annual Report on Form 10-K for
the year ended December 31, 1998 is acknowledged.
ANY PROPER PROXY RECEIVED BY THE COMPANY AS TO WHICH NO CHOICE HAS BEEN
INDICATED WILL BE VOTED BY THE PROXIES "FOR" THE NOMINEES AND THE PROPOSALS SET
FORTH ABOVE.
Date: ---------------------------------------------, 1999
Signature: ----------------------------------------------
Signature: ----------------------------------------------
(Please sign exactly as your name or names appear on this
proxy. When signing as executor, guardian, trustee, joint
owners, agent, authorized representative or a corporate
owner, or other representative, please give your full title
as such.)
EXHIBIT 99.1
NEFF CORP
1999 STOCK INCENTIVE PLAN
<PAGE>
NEFF CORP.
1999 STOCK INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Neff Corp., a Delaware
corporation (the "Company"), by providing an incentive to its employees,
officers, consultants and directors and thereby encouraging them to devote their
abilities and industry to the success of the Company's business enterprise. It
is intended that this purpose be achieved by extending to employees (including
future employees who have received a formal written offer of employment),
officers, consultants and directors of the Company and its Subsidiaries an added
long-term incentive for high levels of performance and unusual efforts through
the grant of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Dividend Equivalent Rights, Performance Awards, Share
Awards and Restricted Stock (as each term is herein defined).
2. Definitions.
For purposes of the Plan:
2.1 "100% Affiliate" means with respect to any Person, (i) each other
Person that, directly or indirectly, owns or controls one hundred percent (100%)
of the stock having ordinary voting power in the election of directors of such
Person, (ii) each other Person of which the stock having ordinary voting power
in the election of its directors is owned or controlled one hundred percent
(100%) by such Person, or (iii) each other Person of which the stock having
ordinary voting power in the election of its directors is owned or controlled
one hundred percent (100%) by any Person defined in clause (i) above or any of
its 100% Affiliates.
2.2 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (a) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (b) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.3 "Affiliate" means any entity, directly or indirectly, controlled by,
controlling or under common control with the Company or any corporation or other
entity acquiring, directly or indirectly, all or substantially all the assets
and business of the Company, whether by operation of law or otherwise.
2.4 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.
1
<PAGE>
2.5 "Award" means a grant of Restricted Stock, a Stock Appreciation Right,
a Performance Award, a Dividend Equivalent Right, a Share Award or any or all of
them.
2.6 "Board" means the Board of Directors of the Company.
2.7 "Cause" means:
(a) for purposes of Section 6.4, the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement, misappropriation
or conversion of assets or opportunities of the Company or any of its
Subsidiaries; and
(b) in the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is, as of the date of the applicable Agreement,
subject to the terms of an employment agreement between such Optionee or
Grantee and the Company or Subsidiary, which employment agreement includes
a definition of "Cause", the term "Cause" as used in this Plan or any
Agreement shall have the meaning set forth in such employment agreement
during the period that such employment agreement remains in effect; and
(c) in all other cases, the term "Cause" as used in this Plan or any
Agreement shall mean (i) intentional failure to perform reasonably assigned
duties, (ii) dishonesty or willful misconduct in the performance of duties,
(iii) involvement in a transaction in connection with the performance of
duties to the Company or any of its Subsidiaries which transaction is
adverse to the interests of the Company or any of its Subsidiaries and
which is engaged in for personal profit or (iv) willful violation of any
law, rule or regulation (other than traffic violations or similar offenses)
in connection with the performance of duties.
2.8 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, without limitation, in the case of a
spin-off, dividend or other distribution in respect of Shares, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.
2.9 A "Change in Control" shall mean the occurrence during the term of the
Plan of:
(a) An acquisition in one or more transactions (other than directly
from the Company or pursuant to Options or Awards granted under this Plan
or otherwise by the Company) of any voting securities of the Company (the
"Voting Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), immediately after which such Person has
2
<PAGE>
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of thirty percent (30%) or more of the then outstanding
Shares or the combined voting power of the Company's then outstanding
Voting Securities; provided, however, that Beneficial Ownership by any of
Jorge Mas, Juan Carlos Mas, Jose Ramon Mas, or aggregate Beneficial
Ownership by General Electric Capital Corporation and any of its 100%
Affiliates, of thirty percent (30%) or more of the then outstanding Shares
or the combined voting power of the Company's then outstanding Voting
Securities shall not constitute a Change in Control; provided further,
however, in determining whether a Change in Control has occurred, Shares or
Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other Person of
which a majority of its voting power or its voting equity securities or
equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(b) Except as a result of the provisions regarding the election of
directors by holders of the Company's Series A Redeemable Preferred Stock
in the event of dividend arrearages with respect thereto, the individuals
who, as of the date of adoption of the Plan are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least two-thirds
of the members of the Board; provided, however, that if the election, or
nomination for election by the Company's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as
a member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization of the Company where:
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
3
<PAGE>
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, (iii) any employee benefit plan (or any trust forming
a part thereof) that, immediately prior to such merger,
consolidation or reorganization, was maintained by the Company,
or any Subsidiary, or (iv) any Person who, immediately prior to
such merger, consolidation or reorganization had Beneficial
Ownership of fifty percent (50%) or more of the then outstanding
Voting Securities or Shares, has Beneficial Ownership of fifty
percent (50%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities or its
common stock.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the
assets of the Company to any Person (other than a transfer to a
Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
If an Eligible Individual's employment is terminated by the Company without
Cause prior to the date of a Change in Control but the Eligible Individual
reasonably demonstrates that the termination (A) was at the request of a third
4
<PAGE>
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control or (B) otherwise arose in connection with, or in
anticipation of, a Change in Control which has been threatened or proposed, such
termination shall be deemed to have occurred after a Change in Control for
purposes of this Plan provided a Change in Control shall actually have occurred.
2.10 Code means the Internal Revenue Code of 1986, as amended.
2.11 Committee means a committee, as described in Section 3.1, appointed by
the Board from time to time to administer the Plan and to perform the functions
set forth herein.
2.12 "Company" means Neff Corp.
2.13 "Common Stock" means the Class A Common Stock, par value $.01 per
share, of the Company.
2.14 "Director" means a director of the Company.
2.15 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is, as of the date of the applicable Agreement,
subject to the terms of an employment agreement between such Optionee or
Grantee and the Company or Subsidiary, which employment agreement includes
a definition of "Disability", the term "Disability" as used in this Plan or
any Agreement shall have the meaning set forth in such employment agreement
during the period that such employment agreement remains in effect; and
(b) the term "Disability" as used in the Company's long-term
disability plan, if any; and
(c) in all other cases, the term "Disability" as used in this Plan or
any Agreement shall mean a physical or mental infirmity which impairs the
Optionee's or Grantee's ability to perform substantially his or her duties
for a period of one hundred eighty (180) consecutive days.
2.16 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.17 "Dividend Equivalent Right" means a right to receive all or some
portion of the cash dividends that are or would be payable with respect to
Shares.
2.18 "Eligible Individual" means any of the following individuals who is
designated by the Committee as eligible to receive Options or Awards subject to
the conditions set forth herein: (a) any director (including Nonemployee and
Outside Directors), officer or employee of the Company or a Subsidiary, (b) any
5
<PAGE>
individual to whom the Company or a Subsidiary has extended a formal, written
offer of employment, or (c) any consultant or advisor of the Company or a
Subsidiary.
2.19 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.20 "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or, if such
Shares are not so listed or admitted to trading, the average of the per Share
closing bid price and per Share closing asked price on such date as quoted on
the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.21 "Grantee" means a person to whom an Award has been granted under the
Plan.
2.22 "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.
2.23 "Nonemployee Director" means a director of the Company who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.24 "Nonqualified Stock Option" means an Option which is not an Incentive
Stock Option.
2.25 "Option" means a Nonqualified Stock Option, an Incentive Stock Option,
a Formula Option, or any or all of them.
2.26 "Optionee" means a person to whom an Option has been granted under the
Plan.
2.27 "Outside Director" means a director of the Company who is an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
2.28 "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.
2.29 "Performance Awards" means Performance Units, Performance Shares or
either or both of them.
6
<PAGE>
2.30 "Performance-Based Compensation" means any Option or Award that is
intended to constitute "performance based compensation" within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.
2.31 "Performance Cycle" means the time period specified by the Committee
at the time Performance Awards are granted during which the performance of the
Company, a Subsidiary or a Division will be measured.
2.32 "Performance Objectives" has the meaning set forth in Section 11.
2.33 "Performance Shares" means Shares issued or transferred to an Eligible
Individual under Section 11.
2.34 "Performance Units" means Performance Units granted to an Eligible
Individual under Section 11.
2.35 "Plan" means the Neff Corp. 1999 Stock Incentive Plan, as amended and
restated from time to time.
2.36 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles.
2.37 "Restricted Stock" means Shares issued or transferred to an Eligible
Individual pursuant to Section 10.
2.38 "Share Award" means an Award of Shares granted pursuant to Section 12.
2.39 "Shares" means the Class A Common Stock, par value $.01 per share, of
the Company.
2.40 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8
hereof.
2.41 "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company.
2.42 "Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
2.43 "Tax Benefit" means an actual decrease in the Company's liability for
taxes in any period.
2.44 "Ten-Percent Stockholder" means an Eligible Individual, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the
7
<PAGE>
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee, which shall be
appointed by the Board. The Committee shall hold meetings at such times as may
be necessary for the proper administration of the Plan. The Committee shall keep
minutes of its meetings. A quorum shall consist of not fewer than two (2)
members of the Committee and a majority of a quorum may authorize any action.
Any decision or determination reduced to writing and signed by a majority of all
of the members of the Committee shall be as fully effective as if made by a
majority vote at a meeting duly called and held. The Committee shall consist of
at least two (2) Directors and may consist of the entire Board; provided,
however, that (A) if the Committee consists of less than the entire Board, each
member shall be a Nonemployee Director and (B) to the extent necessary for any
Option or Award intended to qualify as Performance-Based Compensation to so
qualify, each member of the Committee, whether or not it consists of the entire
Board, shall be an Outside Director.
3.2 For purposes of the preceding sentence, if one or more members of the
Committee is not a Nonemployee Director and an Outside Director but recuses
himself or herself or abstains from voting with respect to a particular action
taken by the Committee, then the Committee, with respect to that action, shall
be deemed to consist only of the members of the Committee who have not recused
themselves or abstained from voting. No member of the Committee shall be liable
for any action, failure to act, determination or interpretation made in good
faith with respect to this Plan or any transaction hereunder. The Company hereby
agrees to indemnify each member of the Committee for all costs and expenses and,
to the extent permitted by applicable law, any liability incurred in connection
with defending against, responding to, negotiating for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind arising
in connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Options shall be
granted under the Plan and the number of such Options to be granted and to
prescribe the terms and conditions (which need not be identical) of each
such Option, including the exercise price per Share subject to each Option,
and make any amendment or modification to any Option Agreement consistent
with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall be granted
under the Plan and to determine the number of Stock Appreciation Rights,
Performance Awards, Shares of Restricted Stock and/or Dividend Equivalent
Rights to be granted pursuant to each Award, the terms and conditions
8
<PAGE>
(which need not be identical) of each such Award, including the
restrictions or Performance Objectives relating to Awards and the maximum
value of any Award, and make any amendment or modification to any Award
Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and Awards
granted hereunder and to establish, amend and revoke rules and regulations
for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable, including so that the Plan
complies with Rule 16b-3 under the Exchange Act, the Code to the extent
applicable and other applicable law, and otherwise to make the Plan fully
effective. All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and conclusive upon the
Company, its Subsidiaries, the Optionees and Grantees, and all other
persons having any interest therein;
(d) to determine the duration and purposes for leaves of absence which
may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the
Plan;
(e) to exercise its sole discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 1,000,000; provided, however, that the
maximum number of Shares that may be the subject of Options and Awards (other
than Performance Units denominated in dollars) granted to an Eligible Individual
in any calendar year period may not exceed 300,000 Shares. The maximum dollar
amount of cash or the Fair Market Value of Shares that any Eligible Individual
may receive in any calendar year in respect of Performance Units denominated in
dollars may not exceed $5,000,000. Upon a Change in Capitalization, the maximum
number of Shares referred to in the first two sentences of this Section 4.1
shall be adjusted in number and kind pursuant to Section 13. The Company shall
reserve for the purposes of the Plan, out of its authorized but unissued Shares
or out of Shares held in the Company's treasury, or partly out of each, such
number of Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award (other
than the granting of a Performance Unit denominated in dollars), the number
of Shares shall be reduced by the number of Shares in respect of which the
9
<PAGE>
Option or Award is granted or denominated; provided, however, that if any
Option is exercised by tendering Shares, either actually or by attestation,
to the Company as full or partial payment of the purchase price, the
maximum number of Shares available under Section 4.1 shall be increased by
the number of Shares so tendered.
(b) In connection with the granting of a Performance Unit denominated
in dollars, the number of Shares shall be reduced by an amount equal to the
quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date
the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof expires, is
canceled, is settled in cash (including the settlement of tax withholding
obligations using Shares) or is otherwise terminated for any reason without
having been exercised or payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, canceled, settled or
otherwise terminated portion of the Option or Award may again be the subject of
Options or Awards granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement; provided,
however, that no Eligible Individual shall receive any Incentive Stock Options
unless he is an employee of the Company, a Parent or a Subsidiary at the time
the Incentive Stock Option is granted.
5.2 Purchase Price. The purchase price (which may be greater than, less
than or equal to the Fair market Value on the date of grant) or the manner in
which the purchase price is to be determined for Shares under each Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Option is granted (110% in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for such term as
the Committee shall determine, provided that an Incentive Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and a Nonqualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted.
The Committee may, subsequent to the granting of any Option, extend the term
thereof, but in no event shall the term as so extended exceed the maximum term
provided for in the preceding sentence.
10
<PAGE>
5.4 Vesting. Subject to Section 7.4, each Option shall become exercisable
in such installments (which need not be equal) and at such times as may be
designated by the Committee and set forth in the Agreement. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.
5.5 Deferred Delivery of Option Shares. The Committee may, in its
discretion permit Optionees to elect to defer the issuance of Shares upon the
exercise of one or more Nonqualified Stock Options granted pursuant to the Plan.
The terms and conditions of such deferral shall be determined at the time of the
grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the grant.
5.6 Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date of the grant) of Shares
with respect to which Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of the Code)
granted under all other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.6) are exercisable by an Optionee
for the first time during any calendar year exceeds $100,000, such Incentive
Stock Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants,
Options which were intended to be Incentive Stock Options shall be treated as
Nonqualified Stock Options according to the order in which they were granted
such that the most recently granted Options are first treated as Nonqualified
Stock Options.
6. Reserved.
7. Terms and Conditions Applicable to All Options.
7.1 Non-Transferability. No Option granted hereunder shall be transferable
by the Optionee to whom it is granted otherwise than by will or by the laws of
descent and distribution or, in the case of an Option other than an Incentive
Stock Option, in the Committee's sole discretion, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the
Exchange Act), and, except with respect to an Option transferred pursuant to a
domestic relations order, an Option shall be exercisable during the lifetime of
such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may set forth in
the Agreement evidencing an Option (other than an Incentive Stock Option) at the
time of grant or thereafter, that the Option may be transferred to members of
the Optionee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Option shall be deemed to be the Optionee. For this purpose, immediate family
means the Optionee's spouse, parents, children, stepchildren and grandchildren
11
<PAGE>
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company at
the Company's principal executive office, specifying the number of Shares to be
purchased and, to the extent applicable, accompanied by payment therefor and
otherwise in accordance with the Agreement pursuant to which the Option was
granted. The exercise price for any Shares purchased pursuant to the exercise of
an Option shall be paid, as determined by the Committee in its discretion, in
either of the following forms (or any combination thereof): (a) cash or (b) the
transfer, either actually or by attestation, to the Company of Shares that have
been held by the Optionee for at least six (6) months (or such lesser period as
may be permitted by the Committee), prior to the exercise of the Option, such
transfer to be upon such terms and conditions as determined by the Committee. In
addition, Options may be exercised through a registered broker-dealer pursuant
to such cashless exercise procedures which are, from time to time, deemed
acceptable by the Committee. Any Shares transferred to the Company (or withheld
upon exercise) as payment of the exercise price under an Option shall be valued
at their Fair Market Value on the day preceding the date of exercise of such
Option. If requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse thereon
a notation of such exercise and return such Agreement to the Optionee. No
fractional Shares (or cash in lieu thereof) shall be issued upon exercise of an
Option and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (a) the Option
shall have been exercised pursuant to the terms thereof, (b) the Company shall
have issued and delivered Shares to the Optionee, and (c) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may
be set forth in the applicable Agreement.
7.4 Effect of Change in Control.
(a) In the event of a Change in Control, all Options outstanding on
the date of such Change in Control shall become immediately and fully
exercisable. In addition, to the extent set forth in an Agreement
evidencing the grant of an Option, an Optionee will be permitted to
surrender to the Company for cancellation within sixty (60) days after such
Change in Control any Option or portion of an Option to the extent not yet
exercised and the Optionee will be entitled to receive a cash payment in an
amount equal to the excess, if any, of (i) (A) in the case of a
Nonqualified Stock Option, the greater of (1) the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to the Option
or portion thereof surrendered or (2) the Adjusted Fair Market Value of the
Shares subject to the Option or portion thereof surrendered or (B) in the
case of an Incentive Stock Option, the Fair Market Value, on the date
12
<PAGE>
preceding the date of surrender, of the Shares subject to the Option or
portion thereof surrendered, over (ii) the aggregate exercise price for
such Shares under the Option or portion thereof surrendered. In the event
an Optionee's employment with, or service as a Director of, the Company and
its Subsidiaries terminates following a Change in Control, each Option held
by the Optionee that was exercisable as of the date of termination of the
Optionee's employment or service shall remain exercisable for a period
ending not before the earlier of (x) the first anniversary of the
termination of the Optionee's employment or service or (y) the expiration
of the stated term of the Option.
(b) To the extent set forth in the applicable Agreement, if, as a
result of a Change in Control transaction, an Option intended to qualify as
an Incentive Stock Option fails to so qualify solely because of the failure
to meet the holding requirements of Code Section 422(a)(1) (a
"Disqualifying Disposition"), the Company shall make a cash payment to the
Optionee equal to the amount which will, after taking into account all
taxes imposed on the Disqualifying Disposition and the receipt of such
payment, leave the Optionee in the same after-tax position the Optionee
would have been in had the Code Section 422(a)(1) holding requirements been
met at the time of the Disqualifying Disposition, provided, however, that
no payment described in this Section shall exceed the Tax Benefit to the
Company resulting from deductions relating to ordinary income recognized by
the Optionee as a result of the Disqualifying Disposition. The payment
described in this Section shall be made by the Company within thirty (30)
days of the filing by the Company of the federal tax return which includes
the tax items associated with the income recognized by the Optionee as a
result of the Disqualifying Disposition (or, if the Tax Benefit described
in the preceding sentence is not realized until a later year, within thirty
(30) days of the filing by the Company of the federal tax return with
respect to which such Tax Benefit is realized).
8. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in connection with the
grant of an Option, grant Stock Appreciation Rights in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. If granted
in connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine) and shall, except as provided in this Section 8, be subject to
the same terms and conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (a) at any
time if unrelated to an Option, or (b) if related to an Option, either at the
time of grant, or (except in the case of Incentive Stock Options) at any time
thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection with an
Option shall be exercisable at such time or times and only to the extent
that the related Options are exercisable, and will not be transferable
13
<PAGE>
except to the extent the related Option may be transferable. A Stock
Appreciation Right granted in connection with an Incentive Stock Option
shall expire no ltaer than the expiration of the related Incentive Stock
Option and shall be exercisable only if the Fair Market Value of a Share on
the date of exercise exceeds the exercise price specified in the related
Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation Right
related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (i) the excess of the Fair Market Value of a
Share on the date preceding the date of exercise of such Stock Appreciation
Right over the per Share exercise price under the related Option, by (ii)
the number of Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of
the number of Shares as to which the Stock Appreciation Right is exercised,
and upon the exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be canceled to the
extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Individuals Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.7), vesting and duration
as the Committee shall determine, but in no event shall they have a term of
greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (a) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (b) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
8.4 Non-Transferability. No Stock Appreciation Right shall be transferable
by the Grantee to whom it was granted otherwise than by will or by the laws of
descent and distribution or, in the Committee's sole discretion, (except in the
case of a Stock Appreciation Right granted in connection with an Incentive Stock
Option) pursuant to a domestic relations order (within the meaning of Rule
16a-12 promulgated under the Exchange Act), and, except with respect to a Stock
Appreciation Right transferred pursuant to a domestic relations order, such
Stock Appreciation Right shall be exercisable during the lifetime of such
Grantee only by the Grantee or his or her guardian or legal representative. The
14
<PAGE>
terms of such Stock Appreciation Right shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Grantee.
8.5 Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail to the Secretary
of the Company at the Company's principal executive office, specifying the
number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.
8.6 Form of Payment. Payment of the amount determined under Sections 8.2(b)
or 8.3 may be made in the discretion of the Committee solely in whole Shares in
a number determined at their Fair Market Value on the date preceding the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a combination
of cash and Shares. If the Committee decides to make full payment in Shares and
the amount payable results in a fractional Share, payment for the fractional
Share will be made in cash.
8.7 Effect of Change in Control. In the event of a Change in Control, all
Stock Appreciation Rights shall become immediately and fully exercisable. In
addition, to the extent set forth in an Agreement evidencing the grant of a
Stock Appreciation Right unrelated to an Option, a Grantee will be entitled to
receive a payment from the Company in cash or stock, in either case, with a
value equal to the excess, if any, of (a) the greater of (i) the Fair Market
Value, on the date preceding the date of exercise, of the underlying Shares
subject to the Stock Appreciation Right or portion thereof exercised and (ii)
the Adjusted Fair Market Value, on the date preceding the date of exercise, of
the Shares over (b) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised. In the event a Grantee's employment with the
Company terminates following a Change in Control, each Stock Appreciation Right
held by the Grantee that was exercisable as of the date of termination of the
Grantee's employment shall remain exercisable for a period ending not before the
earlier of the first anniversary of (x) the termination of the Grantee's
employment or (y) the expiration of the stated term of the Stock Appreciation
Right.
9. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals in tandem
with an Option or Award or as a separate Award. The terms and conditions
(including, without limitation, the terms and conditions relating to a Change in
Control) applicable to each Dividend Equivalent Right shall be specified in the
Agreement under which the Dividend Equivalent Right is granted. Amounts payable
in respect of Dividend Equivalent Rights may be payable currently or deferred
until the lapsing of restrictions on such Dividend Equivalent Rights or until
the vesting, exercise, payment, settlement or other lapse of restrictions on the
Option or Award to which the Dividend Equivalent Rights relate. In the event
15
<PAGE>
that the amount payable in respect of Dividend Equivalent Rights are to be
deferred, the Committee shall determine whether such amounts are to be held in
cash or reinvested in Shares or deemed (notionally) to be reinvested in Shares.
If amounts payable in respect of Dividend Equivalent Rights are to be held in
cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine. Dividend Equivalent
Rights may be settled in cash or Shares or a combination thereof, in a single
installment or multiple installments. With respect to Dividend Equivalent Rights
granted in tandem with an Option, the Agreement may provide that the Optionee
may elect to have amounts payable in respect of such Dividend Equivalent Rights
applied against the purchase price of such Option. To the extent necessary for
any Dividend Equivalent Right intended to qualify as Performance-Based
Compensation under Section 162(m) of the Code to so qualify, the terms and
conditions of the Dividend Equivalent Right shall be such that payment of the
Dividend Equivalent Right is contingent upon attainment of specified Performance
Objectives within the Performance Cycle, as provided for in Section 11, and such
Dividend Equivalent Right shall be treated as a Performance Award for purposes
of Sections 11 and 16.
10. Restricted Stock.
10.1 Grant. The Committee may in its sole discretion grant Awards to
Eligible Individuals of Restricted Stock, which shall be evidenced by an
Agreement between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 10.
10.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
sole discretion of the Committee, an escrow agreement and any other documents
which the Committee may require as a condition to the issuance of such Shares.
If a Grantee shall fail to execute the Agreement evidencing a Restricted Stock
Award, or any documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with a Restricted Stock Award shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Unless the Committee determines otherwise and as set forth in the Agreement,
upon delivery of the Shares to the escrow agent, the Grantee shall have all of
the rights of a stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.
10.3 Non-transferability. Until all restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
16
<PAGE>
in Section 10.4, such Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee.
10.4 Lapse of Restrictions.
(a) Generally. Subject to Section 10.4(b), restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or times and on
such terms and conditions as the Committee may determine. The Agreement
evidencing the Award shall set forth any such restrictions.
(b) Effect of Change in Control. Unless the Committee shall determine
otherwise at the time of the grant of an Award of Restricted Stock, the
restrictions upon Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth any such
provisions.
10.5 Modification or Substitution. Subject to the terms of the Plan,
including, without limitation, Section 16, the Committee may modify outstanding
Awards of Restricted Stock or accept the surrender of outstanding shares of
Restricted Stock (to the extent the restrictions on such Shares have not yet
lapsed) and grant new Awards in substitution for them.
10.6 Treatment of Dividends. At the time an Award of Shares of Restricted
Stock is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on such Shares by the Company shall be (a) deferred until the lapsing of
the restrictions imposed upon such Shares and (b) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.
10.7 Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.
11. Performance Awards.
11.1 Performance Units. The Committee, in its discretion, may grant Awards
of Performance Units to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
17
<PAGE>
contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
11.3(c) of (i) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of Performance Objective
attainment; provided, however, that, the Committee may at the time a Performance
Unit is granted specify a maximum amount payable in respect of a vested
Performance Unit. Each Agreement shall specify the number of Performance Units
to which it relates, the Performance Objectives which must be satisfied in order
for the Performance Units to vest and the Performance Cycle within which such
Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 11.3(c) and 11.4, a
Grantee shall become vested with respect to the Performance Units to the
extent that the Performance Objectives set forth in the Agreement are
satisfied for the Performance Cycle.
(b) Payment of Awards. Subject to Section 11.3(c), payment to Grantees
in respect of vested Performance Units shall be made as soon as practicable
after the last day of the Performance Cycle to which such Award relates
unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be
set forth in the Agreement. Subject to Section 11.4, such payments may be
made entirely in Shares valued at their Fair Market Value as of the day
preceding the date of payment or such other date specified by the
Committee, entirely in cash, or in such combination of Shares and cash as
the Committee in its discretion shall determine at any time prior to such
payment; provided, however, that if the Committee in its discretion
determines to make such payment entirely or partially in Shares of
Restricted Stock, the Committee must determine the extent to which such
payment will be in Shares of Restricted Stock and the terms of such
Restricted Stock at the time the Award is granted.
11.2 Performance Shares. The Committee, in its discretion, may grant Awards
of Performance Shares to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee. Each
Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time an
Award of Performance Shares is made the time or times at which the actual
Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued
until the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the sole discretion of the
Committee, an escrow agreement and any other documents which the Committee
may require as a condition to the issuance of such Performance Shares. If a
Grantee shall fail to execute the Agreement evidencing an Award of
Performance Shares, the appropriate blank stock powers and, in the
18
<PAGE>
discretion of the Committee, an escrow agreement and any other documents
which the Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with
an Award of Performance Shares shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have, in the
discretion of the Committee, all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to
receive all dividends or other distributions paid or made with respect to
the Shares.
(b) Non-transferability. Until any restrictions upon the Performance
Shares awarded to a Grantee shall have lapsed in the manner set forth in
Sections 11.2(c) or 11.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may
also impose such other restrictions and conditions on the Performance
Shares, if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 11.3(c) and 11.4,
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such
terms, conditions and satisfaction of Performance Objectives as the
Committee may, in its discretion, determine at the time an Award is
granted.
(d) Treatment of Dividends. At the time the Award of Performance
Shares is granted, the Committee may, in its sole discretion, determine
that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on Shares represented by such Award which have
been issued by the Company to the Grantee shall be (i) deferred until the
lapsing of the restrictions imposed upon such Performance Shares and (ii)
held by the Company for the account of the Grantee until such time. In the
event that dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in shares of Stock (which shall
be held as additional Performance Shares) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of each
year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance Shares in respect of
which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Performance
Shares shall be forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.
19
<PAGE>
11.3 Performance Objectives
(a) Establishment. Performance Objectives for Performance Awards may
be expressed in terms of (i) earnings per Share, (ii) Share price, (iii)
pre-tax profits, (iv) net earnings, (v) return on equity or assets, (vi)
revenues, (vii) EBITDA, (viii) market share or market penetration, (ix)
dividends or (x) any combination of the foregoing and may be determined
before or after accounting changes, special charges, foreign currency
effects, acquisitions, divestitures or other extraordinary events.
Performance Objectives may be in respect of the performance of the Company
and its Subsidiaries (which may be on a consolidated basis), a Subsidiary
or a Division. Performance Objectives may be absolute or relative (to prior
performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a
progression within a specified range. The Performance Objectives with
respect to a Performance Cycle shall be established in writing by the
Committee by the earlier of (x) the date on which a quarter of the
Performance Cycle has elapsed or (y) the date which is ninety (90) days
after the commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remain substantially
uncertain.
(b) Effect of Certain Events. At the time of the granting of a
Performance Award, or at any time thereafter, in either case to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in
which performance will be measured against the Performance Objectives (or
may adjust the Performance Objectives) to reflect the impact of specified
corporate transactions, accounting or tax law changes and other
extraordinary and nonrecurring events.
(c) Determination of Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance
Award that is intended to constitute Performance-Based Compensation made to
a Grantee who is subject to Section 162(m) of the Code, the Committee shall
certify in writing that the applicable Performance Objectives have been
satisfied.
11.4 Effect of Change in Control. In the event of a Change in Control:
(a) With respect to Performance Units, unless otherwise determined by
the Committee at the time of the Award and set forth in the Agreement, the
Grantee shall (i) become fully vested in Performance Units and (ii) be
entitled to receive in respect of all Performance Units which become vested
as a result of a Change in Control a cash payment within ten (10) business
days after such Change in Control in an amount as determined by the
Committee at the time of the Award of such Performance Unit and as set
forth in the Agreement.
(b) With respect to Performance Shares, unless otherwise determined by
the Committee at the time of the Award and set forth in the Agreement, any
20
<PAGE>
unissued Performance Shares shall be issued and restrictions shall lapse
immediately on all Performance Shares.
(c) The Agreements evidencing Performance Shares and Performance Units
shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but
not limited to, provisions for the adjustment of applicable Performance
Objectives.
11.5 Non-transferability. Until the vesting of Performance Units or the
lapsing of any restrictions on Performance Shares, as the case may be, such
Performance Units or Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
11.6 Modification. Subject to the terms of the Plan, the Committee may
modify outstanding Performance Awards or accept the surrender of outstanding
Performance Awards and grant new Performance Awards in substitution for them.
12. Other Share Based Awards.
12.1 Share Awards. The Committee may grant a Share Award to any Eligible
Individual on such terms and conditions as the Committee may determine in its
sole discretion. Share Awards may be made as additional compensation for
services rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company.
13. Employment Agreement Governs Termination of Employment.
An employment agreement, if applicable, between an Optionee or Grantee and
the Company shall govern with respect to the terms and conditions applicable to
such Option or Award upon a termination or change in the status of the
employment of the Optionee or Grantee, to the extent that such employment
agreement provides for terms and conditions that differ from the terms and
conditions provided for in the applicable Agreement or the Plan; provided,
however, that to the extent necessary for an Option or Award intended to qualify
as performance-based compensation under Section 162(m) of the Code to so
qualify, the terms of the applicable Agreement or the Plan shall govern the
Option or Award; and, provided further, that the Committee shall have reviewed
and, in its sole discretion, approved the employment agreement.
14. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (ii) the
maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted to any Eligible
Individual in any calendar year period, (iii) the number and class of
21
<PAGE>
Shares or other stock or securities which are subject to outstanding
Options or Awards granted under the Plan and the exercise price therefor,
if applicable and (iv) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments
in the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria
which were applicable to the Shares subject to the Award or Option, as the
case may be, prior to such Change in Capitalization.
15. Effect of Certain Transactions.
Subject to Sections 7.4, 8.7, 10.4(b) and 11.4 or as otherwise provided in
an Agreement, in the event of (a) the liquidation or dissolution of the Company
or (b) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms, except that following a Transaction each Optionee
and Grantee shall be entitled to receive in respect of each Share subject to any
outstanding Options or Awards, as the case may be, upon exercise of any Option
or payment or transfer in respect of any Award, the same number and kind of
stock, securities, cash, property or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share;
provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Options and Awards prior to
such Transaction.
16. Interpretation.
(a) The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith.
Any provisions inconsistent with such Rule shall be inoperative and shall
not affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement, each
Option, Stock Appreciation Right and Performance Award granted under the
Plan is intended to be Performance-Based Compensation (except that, in the
event of a Change In Control, payment of Performance Awards to a Grantee
who remains a "covered employee" with respect to such payment wihtin the
meaning of Section 162(m)(3) of the Code may not qualify as
Performance-Based Compensation). The Committee shall not be entitled to
exercise any discretion otherwise authorized hereunder with respect to such
Options or Awards if the ability to exercise such discretion or the
22
<PAGE>
exercise of such discretion itself would cause the compensation
attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation. Notwithstanding anything to the contrary in
the Plan, the provisions of the Plan may at any time be bifurcated by the
Board or the Committee in any manner so that certain provisions of the Plan
or any Performance Award intended (or required in order) to satisfy the
applicable requirements of Section 162(m) of the Code are only applicable
to persons whose compensation is subject to Section 162(m).
17. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
as are specifically recommended by an independent accounting firm retained by
the Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including, without limitation, (a)
deferring the vesting, exercise, payment, settlement or lapsing of restrictions
with respect to any Option or Award, (b) providing that the payment or
settlement in respect of any Option or Award be made in the form of cash, Shares
or securities of a successor or acquirer of the Company, or a combination of the
foregoing, and (c) providing for the extension of the term of any Option or
Award to the extent necessary to accommodate the foregoing, but not beyond the
maximum term permitted for any Option or Award.
18. Effective Date, Termination and Amendment of the Plan or Modification of
Options and Awards.
18.1 Effective Date. The effective date of this Plan shall be the date the
Plan is adopted by the Board, subject only to the approval of the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of the stockholders duly held in
accordance with the applicable laws of the State of Delaware within twelve (12)
months of the adoption of the Plan by the Board.
18.2 Plan Amendment or Termination. The Plan shall terminate on the day
preceding the tenth anniversary of the date of its adoption by the Board
and no Option or Award may be granted thereafter. Subject to Section 6.5,
the Board may sooner terminate the Plan and the Board may at any time and
from time to time amend, modify or suspend the Plan; provided, however,
that:
(a) no such amendment, modification, suspension or termination shall
impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a
result of the Plan; and
23
<PAGE>
(b) to the extent necessary under any applicable law, regulation or
exchange requirement no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law, regulation
or exchange requirement.
18.3 Modification of Options and Awards. No modification of an Option or Award
shall adversely alter or impair any rights or obligations under the Option
or Award without the consent of the Optionee or Grantee, as the case may
be.
19. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
20. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:
(a) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
21. Regulations and Other Approvals; Governing Law.
21.1 Except as to matters of federal law, the Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to conflicts of laws
principles thereof.
21.2 The obligation of the Company to sell or deliver Shares with respect
to Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
24
<PAGE>
21.3 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.
21.4 Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its sole discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by 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 grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
21.5 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Company may place on any certificate representing any such
Shares any legend deemed desirable by the Company's counsel to comply with
federal or state securities laws and the Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act or the rules and
regulations promulgated thereunder.
22. Miscellaneous.
22.1 Multiple Agreements. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Individual during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously granted to that
Eligible Individual.
22.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable income
in connection with the receipt of Shares or cash hereunder (a "Taxable
Event"), the Optionee or Grantee shall pay to the Company an amount equal
to the federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the
Taxable Event (the "Withholding Taxes") prior to the issuance, or release
from escrow, of such Shares or the payment of such cash. The Company shall
25
<PAGE>
have the right to deduct from any payment of cash to an Optionee or Grantee
an amount equal to the Withholding Taxes in satisfaction of the obligation
to pay Withholding Taxes. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Optionee or Grantee may make a
written election (the "Tax Election"), which may be accepted or rejected in
the discretion of the Committee, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value equal to
the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive
Stock Option within the two-year period commencing on the day after the
date of the grant or within the one-year period commencing on the day after
the date of transfer of such Share or Shares to the Optionee pursuant to
such exercise, the Optionee shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written notice to
the Company at its principal executive office.
22.3 Loans. The Company shall be entitled, if the Committee in its sole
discretion deems it necessary or desirable, to lend money to an Optionee or
Grantee for purposes of (a) exercising his or her rights under an Option or
Award hereunder or (b) paying any income tax liability related to an Option or
Award; provided, however, that Nonemployee Directors shall not be eligible to
receive such loans. Such a loan shall be evidenced by a promissory note payable
to the order of the Company executed by the Optionee or Grantee and containing
such other terms and conditions as the Committee may deem desirable.
22.4 Effective Date. The effective date of this Plan shall be as determined
by the Board, subject only to the approval by the affirmative vote of the
holders of a majority of the securities of the Company present, or represented,
and entitled to vote at a meeting of stockholders duly held in accordance with
the applicable laws of the State of Delaware within twelve (12) months of the
adoption of the Plan by the Board.
26
