=================================================================
As filed with the Securities and Exchange Commission
on April 10, 2000.
Registration No. 333-__________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
TEMTEX INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 75-1321869
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5400 LBJ Freeway
Suite 1375
Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
----------------------
1999 OMNIBUS SECURITIES PLAN
(Full title of the plan)
---------------------
Roger N. Stivers Copy to:
Chief Financial Officer J. David Washburn, Esq.
5400 LBJ Freeway ARTER & HADDEN LLP
Suite 1375 1717 Main Street, Suite 4100
Dallas, Texas Dallas, Texas 75201-4605
(Name and address of (214) 761-2100
agent for service)
(972) 726-7175
(Telephone number,
including area code,
of agent for service)
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Per Aggregate Offering Registration
to be Registered (1) Registered Share Price Fee
- -------------------- ------------ ---------------- ------------------ ---------------
<C> <S> <C> <C> <C>
Common Stock 175,000 shares (2) $253,120(2) $66.82
$.20 par value
</TABLE>
(1) The securities to be registered represent shares of
Common Stock reserved for issuance under the 1999 Omnibus
Securities Plan of Temtex Industries, Inc. (the "Plan"). Pursuant
to Rule 416, shares of Common Stock of the Company issuable
pursuant to the exercise of options granted or to be granted
under the Plan in order to prevent dilution resulting from any
future stock split, stock divided or similar transaction, are
also being registered hereunder.
(2) Estimated pursuant to Rule 457(h) solely for the
purpose of calculating the registration fee as follows: (i) the
maximum proposed offering price at which outstanding options
under the Plan (91,000 shares of Common Stock) may be exercised
is $148,120 and (ii) the maximum proposed offering price at which
unissued options may be exercised under the Plan (84,000 shares
of Common Stock) is $105,000, calculated on the basis of the
average of the high and low sales prices per share of Common
Stock on the Nasdaq Stock Market's SmallCap Market on April 6,
2000 ($1.25), in accordance with Rule 457(c).
<PAGE>
================================================================
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual
Information.*
* Information required by Part I to be contained in the
Section 10(a) Prospectus is omitted from the Registration
Statement in accordance with Rule 428 under the Securities
Act of 1933, as amended (the "Securities Act"), and the Note
to Part I of Form S-8.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Temtex Industries, Inc. (the "Company") hereby incorporates
by reference in this Registration Statement the following
documents previously filed or to be filed with the Securities and
Exchange Commission (the "Commission"):
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1999;
(b) the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1999;
(c) the description of the Company's common stock, par
value $.20 per share (the "Common Stock"), contained in
the Company's Registration Statement on Form 8-A,
including any amendment or report filed for the purpose
of updating such description; and
(d) all documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent
to the date of this Registration Statement shall be
deemed to be incorporated herein by reference and to be
a part hereof from the date of filing of such documents
until such time as there shall have been filed a post-
effective amendment that indicates that all securities
offered under the Registration Statement have been sold
or that deregisters all securities remaining unsold at
the time of the amendment.
Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of
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<PAGE>
this Registration Statement to the extent that the statement
contained herein or in any subsequently filed document that also
is or is deemed to be incorporated by reference herein, or in any
document forming any part of the Section 10(a) Prospectus to be
delivered to participants in connection with, modifies or
supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides generally that a Delaware corporation may
indemnify its directors and officers against expenses, judgments,
fines and settlements actually and reasonably incurred by them in
connection with any civil suit or action, except actions by or in
the right of the corporation, or any administrative or
investigative proceeding if, in connection with the matters in
issue, they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the
corporation, and in connection with any criminal suit or
proceeding, if in connection with the matters in issue, they had
no reasonable cause to believe their conduct was unlawful.
Section 145 further provides that in connection with the defense
or settlement of any action by or in the right of the
corporation, a Delaware corporation may indemnify its directors
and officers against expenses actually and reasonably incurred by
them, if, in connection with the matters in issue, they acted in
good faith and in a manner they reasonably believed to be in, or
not opposed to, the best interests of the corporation. Section
145 further permits a Delaware corporation to grant its directors
and officers additional rights of indemnification through bylaw
provisions and otherwise and to purchase indemnity insurance on
behalf of its directors and officers.
Article Eleventh of the Registrant's Certificate of
Incorporation provides that no director shall be liable to the
Registrant or its stockholders for monetary damages for breach of
the duty of care to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
Article Eleventh of the Registrant's Certificate of
Incorporation and Article Seventh, Section 7, of the Registrant's
bylaws provide, in general, that the Registrant shall indemnify
its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law.
Item 7. Exemption from Registration Claimed.
Not applicable.
-3-
<PAGE>
Item 8. Exhibits.
(a) Exhibits.
Exhibit Description
----------- -----------------------------------------
4.1 1999 Omnibus Securities Plan for Temtex
Industries, Inc. (the "Plan") (filed herewith)
4.2 Form of Stock Option Agreement relating to
options granted under the Plan (filed herewith)
5.1 Opinion of Arter & Hadden LLP (filed herewith)
23.1 Consent of Arter & Hadden LLP (included in
their opinion filed as Exhibit 5.1) (filed
herewith)
23.2 Consent of Ernst & Young LLP (filed herewith)
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change to such information in the registration
statement; provided, however, that clauses (i) and (ii) do
not apply if the information required to be included in a
post-effective amendment by those clauses is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
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<PAGE>
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
[Signature Page Follows]
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable
grounds to believe that it meets all the requirements for filing
on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, Texas, on April 6, 2000.
TEMTEX INDUSTRIES, INC.
By: /s/ R. N. STIVERS
------------------------------------
R.N. Stivers
Vice President - Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the
following persons and in the capacities indicated on April 6,
2000.
Signature Title
- ------------------------------ --------------------------------
/s/ James E. Upfield Chairman of the Board
- ------------------------------
James E. Upfield
/s/ E. R. Buford Chief Executive Officer, President
- ------------------------------ and Director (Principal Executive
E. R. Buford Officer)
/s/ R. N. Stivers Vice President - Finance and Chief
- ------------------------------ Financial Officer
R. N. Stivers (Principal Financial and Accounting
Officer)
- ------------------------------ Director
Richard W. Griner
- ------------------------------ Director
Joseph V. Mariner, Jr.
/s/ Larry J. Parsons Director
- ------------------------------
Larry J. Parsons
/s/ Scott K. Upfield Director
- ------------------------------
Scott K. Upfield
-6-
<PAGE>
EXHIBIT INDEX
Exhibit Description
----------- -------------------------------------------------
4.1 1999 Omnibus Securities Plan for Temtex
Industries, Inc. (the "Plan") (filed herewith)
4.2 Form of Stock Option Agreement relating to
options granted under the Plan (filed herewith)
5.1 Opinion of Arter & Hadden LLP (filed herewith)
23.1 Consent of Arter & Hadden LLP (included in their
opinion filed as Exhibit 5.1) (filed herewith)
23.2 Consent of Ernst & Young LLP (filed herewith)
-7-
TEMTEX INDUSTRIES, INC.
1999 OMNIBUS SECURITIES PLAN
Adopted Effective October 28, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. PURPOSE OF PLAN 3
ARTICLE 2. EFFECTIVE DATE AND TERM OF PLAN 3
2.1 Term of Plan 3
2.2 Effect on Awards 3
2.3 Stockholder Approval 4
ARTICLE 3. SHARES SUBJECT TO PLAN 4
3.1 Number of Shares 4
3.2 Source of Shares 4
3.3 Availability of Unused Shares 4
3.4 Adjustment Provisions 4
3.5 Substitute Awards 5
ARTICLE 4. ADMINISTRATION OF PLAN 5
4.1 Administering Body 6
4.2 Authority of Administering Body 7
4.3 Eligibility 8
4.4 No Liability 8
4.5 Amendments 8
4.6 Other Compensation Plans 9
4.7 Plan Binding on Successors 9
4.8 References to Successor Statutes,
Regulations and Rules 9
4.9 Issuances for Compensation Purposes Only 9
4.10 Invalid Provisions 9
4.11 Governing Law 9
ARTICLE 5. GENERAL AWARD PROVISIONS 10
5.1 Participation in the Plan 10
5.2 Award Agreements 10
5.3 Exercise of Awards 11
5.4 Payment for Awards 11
5.5 No Employment or Other Continuing Rights 12
5.6 Restrictions Under Applicable Laws and
Regulations 12
5.7 Additional Conditions 14
5.8 No Privileges of Stock Ownership 14
5.9 Non-Transferable 14
5.10 Information to Recipients 15
5.11 Withholding Taxes 15
5.12 Legends on Common Stock Certificates 16
5.13 Effect of Termination of Employment on Awards 16
5.14 Effect of Termination of Engagement on Awards
- Non-employees Only 17
5.15 Transfer; Leave of Absence 17
5.16 Limits on Awards to Certain Eligible Persons 18
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<PAGE>
ARTICLE 6. STOCK OPTIONS 18
6.1 Nature of Stock Options 18
6.2 Option Exercise Price 18
6.3 Option Period and Vesting 19
6.4 Special Provisions Regarding Incentive Stock
Options 19
6.5 Reload Options 20
6.6 Restrictions 20
ARTICLE 7. RESTRICTED STOCK AWARDS 20
7.1 Nature of Restricted Stock Awards 20
7.2 Rights as Stockholders 21
7.3 Restriction 21
7.4 Repurchase or Restricted Stock 21
7.5 Escrows 22
7.6 Vesting of Restricted Stock 22
7.7 Waiver, Deferral and Reinvestment of
Dividends 22
ARTICLE 8. UNRESTRICTED STOCK AWARDS 22
8.1 Grant or Sale of Unrestricted Stock 22
ARTICLE 9. PERFORMANCE STOCK AWARDS 22
9.1 Nature of Performance Stock Awards 23
9.2 Rights as a Stockholder 23
9.3 Acceleration, Waiver, Etc. 23
ARTICLE 10. DIVIDEND EQUIVALENT RIGHTS 23
10.1 Dividend Equivalent Rights 23
10.2 Interest Equivalents 24
ARTICLE 11. STOCK APPRECIATION RIGHTS 24
11.1 Grant of Stock Appreciation Rights 24
11.2 Coupled Stock Appreciation Rights 24
11.3 Independent Stock Appreciation Rights 25
11.4 Payment and Limitations on Exercise 25
ARTICLE 12. REORGANIZATIONS 26
12.1 Corporate Transactions Not Involving a
Change in Control 26
12.2 Corporate Transactions Involving a Change in
Control 26
ARTICLE 13. DEFINITIONS 27
-ii-
<PAGE>
TEMTEX INDUSTRIES, INC.
1999 OMNIBUS SECURITIES PLAN
-----------------------------------------------
1. PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests
of the Company, its Affiliated Entities and its stockholders by
using investment interests in the Company to attract, retain and
motivate its management and other persons, including officers,
directors, key employees and certain consultants, to encourage
and reward such persons' contributions to the performance of the
Company and to align their interests with the interests of the
Company's stockholders. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Article 13.
2. EFFECTIVE DATE AND TERM OF PLAN
2.1. TERM OF PLAN. This Plan became effective as of the
Effective Date and shall continue in effect until the Expiration
Date, at which time this Plan shall automatically terminate.
2.2. EFFECT ON AWARDS. Awards may be granted during the
Plan Term, but no Awards may be granted after the Plan Term.
Notwithstanding the foregoing, each Award properly granted under
this Plan during the Plan Term shall remain in effect after
termination of this Plan until such Award has been exercised,
terminated or expired, as applicable, in accordance with its
terms and the terms of this Plan.
2.3. STOCKHOLDER APPROVAL. This Plan shall be approved by
the Company's stockholders within twelve (12) months after the
Effective Date. The effectiveness of any Awards granted prior to
such stockholder approval shall be specifically subject to, and
conditioned upon, such stockholder approval.
3. SHARES SUBJECT TO PLAN
3.1. NUMBER OF SHARES. The maximum number of shares of
Common Stock reserved and available for issuance under this Plan
shall be 175,000, subject to adjustment as set forth in
Section 3.4.
3.2. SOURCE OF SHARES. The Common Stock to be issued under
this Plan will be made available, at the discretion of the Board,
either from authorized but unissued shares of Common Stock or
from previously issued shares of Common Stock reacquired by the
Company, including without limitation, shares purchased on the
open market.
3.3. AVAILABILITY OF UNUSED SHARES. Shares of Common Stock
underlying unexercised, unearned or yet-to-be acquired portions
of any Award granted under this Plan that expire, terminate or
are canceled, and shares of Common Stock issued pursuant to
Awards under this Plan that are reacquired by the Company
pursuant to the terms under which such shares were
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<PAGE>
issued, will again become available for the grant of further
Awards under this Plan. Notwithstanding the provisions of this
Section 3.3, no shares of Common Stock may again be optioned,
granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an incentive stock option under
Section 422 of the IRC.
3.4. ADJUSTMENT PROVISIONS.
(a) If (i) the outstanding shares of Common Stock of
the Company are increased, decreased or exchanged for a
different number or kind of shares or other securities, or
if additional shares or new or different shares or other
securities are distributed in respect of such shares of
Common Stock (or any stock or securities received with
respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all
of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock
split, reverse stock split, spin-off or other distribution
with respect to such shares of Common Stock (or any stock or
securities received with respect to such Common Stock), or
(ii) the value of the outstanding shares of Common Stock of
the Company is reduced by reason of an extraordinary cash
dividend, an appropriate and proportionate adjustment may be
made in (1) the maximum number and kind of shares or
securities available for issuance under this Plan, (2) the
number and kind of shares or other securities that can be
granted to any one individual Recipient under his or her
Awards, (3) the number and kind of shares or other
securities subject to then outstanding Awards under this
Plan, and/or (4) the price for each share or other unit of
any other securities subject to then outstanding Awards
under this Plan, without changing the aggregate exercise
price (i.e., the exercise price multiplied by the number of
securities comprising such Awards) as to which such Awards
remain exercisable.
(b) No fractional interests will be issued under this
Plan resulting from any adjustments, but the Administering
Body, in its sole discretion, may make a cash payment in
lieu of any fractional shares of Common Stock issuable as a
result of such adjustments.
(c) To the extent any adjustments relate to stock or
securities of the Company, such adjustments shall be made by
the Administering Body, whose determination in that respect
shall be final, binding and conclusive.
(d) The grant of Awards pursuant to this Plan shall
not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) No adjustment to the terms of an Incentive Stock
Option shall be made unless such adjustment either (i) would
not cause such Incentive Stock Option to lose its status as
an incentive stock option under the provisions of the IRC or
(ii) is agreed to in writing by the Administering Body and
the Recipient.
3.5 SUBSTITUTE AWARDS. The Administering Body may grant
Awards under this Plan in substitution for stock and stock based
Awards held by employees of another corporation who
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<PAGE>
become employees of the Company or a Subsidiary Corporation as a
result of a merger or consolidation of the employing corporation
with the Corporation or a Subsidiary Corporation or the
acquisition by the Company or a Subsidiary Corporation of
property or stock of the employing corporation. The
Administering Body may direct that the substitute Awards be
granted on such terms and conditions as the Administering Body
considers appropriate in the circumstances.
4. ADMINISTRATION OF PLAN
4.1 ADMINISTERING BODY.
(a) Subject to the provisions of Section 4.1(b)(ii),
this Plan shall be administered by the Board or by the Stock
Plan Committee of the Board appointed pursuant to
Section 4.1(b). The Stock Plan Committee may (but is not
required to be), in the discretion of the Board, the same as
the compensation committee of the Board.
(b)
(i) The Board in its sole discretion may
from time to time appoint a Stock Plan Committee of not
less than two (2) Board members to administer this Plan
and, subject to applicable law, to exercise all of the
powers, authority and discretion of the Board under
this Plan. The Board may from time to time increase or
decrease (but not below two (2)) the number of members
of the Stock Plan Committee, remove from membership on
the Stock Plan Committee all or any portion of its
members, and/or appoint such person or persons as it
desires to fill any vacancy existing on the Stock Plan
Committee, whether caused by removal, resignation or
otherwise. The Board may disband the Stock Plan
Committee at any time and thereby revest in the Board
the administration of this Plan.
(ii) Notwithstanding the foregoing provisions
of this Section 4.1(b) to the contrary, upon becoming
and so long as the Company remains an Exchange Act
Registered Company and has not, by action of the Board,
elected to opt out of the provisions of this
Section 4.1(b)(ii), (1) the Board shall appoint the
Stock Plan Committee, (2) this Plan shall be
administered by the Stock Plan Committee and (3) each
member of the Stock Plan Committee shall be a Non-
employee Director, and, in addition, if Awards are to
be made to persons subject to Section 162(m) of the IRC
and such Awards are intended to constitute Performance-
Based Compensation, then each member of the Stock Plan
Committee shall, in addition to being a Non-employee
Director, be an Outside Director.
(iii) The Stock Plan Committee shall report to
the Board the names of Eligible Persons granted Awards,
the precise type of Award granted, the number of shares
of Common Stock issuable pursuant to such Award and the
terms and conditions of each such Award.
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<PAGE>
4.2 AUTHORITY OF ADMINISTERING BODY.
(a) Subject to the express provisions of this Plan,
the Administering Body shall have the power to interpret and
construe this Plan and any agreements or other documents
defining the rights and obligations of the Company and such
Eligible Persons who have been granted Awards hereunder and
thereunder, to determine all questions arising hereunder and
thereunder, to adopt and amend such rules and regulations
for the administration hereof and thereof as it may deem
desirable, and otherwise to carry out the terms of this Plan
and such agreements and other documents. The interpretation
and construction by the Administering Body of any provisions
of this Plan or of any Award shall be conclusive and
binding. Any action taken by, or inaction of, the
Administering Body relating to this Plan or any Award shall
be within the absolute discretion of the Administering Body
and shall be conclusive and binding upon all persons.
Subject only to compliance with the express provisions
hereof, the Administering Body may act in its absolute
discretion in matters related to this Plan and any and all
Awards.
(b) Subject to the express provisions of this Plan,
the Administering Body may from time to time, in its
discretion, select the Eligible Persons to whom, and the
time or times at which, such Awards shall be granted, the
nature of each Award, the number of shares of Common Stock
that comprise or underlie each Award, the period for the
purchase or exercise of each Award, as applicable, the
Performance Criteria applicable to the Award, if any, and
such other terms and conditions applicable to each
individual Award as the Administering Body shall determine.
The Administering Body may grant, at any time, new Awards to
an Eligible Person who has previously received Awards
whether such prior Awards are still outstanding, have
previously been canceled, disposed of or exercised as a
whole or in part, as applicable, or are canceled in
connection with the issuance of new Awards. The
Administering Body may grant Awards singly, in combination
or in tandem with other Awards, as it determines in its
discretion. Any and all terms and conditions of the Awards,
including the purchase or exercise price, as the case may
be, may be established by the Administering Body without
regard to existing Awards.
(c) Any action of the Administering Body with respect
to the administration of this Plan shall be taken pursuant
to a majority vote of the authorized number of members of
the Administering Body or by the unanimous written consent
of its members; provided, however, that (i) if the
Administering Body is the Stock Plan Committee and consists
of two (2) members, then actions of the Administering Body
must be unanimous and (ii) if the Administering Body is the
Board, actions taken at a meeting of the Board shall be
valid if approved by directors constituting a majority of
the required quorum for such meeting.
4.3. ELIGIBILITY. Only Eligible Persons shall be eligible
to receive Awards under this Plan as shall be selected from
time to time by the Administering Body, in its sole and
absolute discretion.
4.4. NO LIABILITY. No member of the Board or the Stock Plan
Committee or any designee thereof will be liable for any action
or inaction with respect to this Plan or any Award
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<PAGE>
or any transaction arising under this Plan or any Award, except
in circumstances constituting bad faith of such member.
4.5 AMENDMENTS.
(a) The Administering Body may, insofar as permitted
by applicable law, rule or regulation, from time to time
suspend or discontinue this Plan or revise or amend it in
any respect whatsoever, and this Plan as so revised or
amended will govern all Awards hereunder, including those
granted before such revision or amendment; provided,
however, that no such revision or amendment shall alter,
impair or diminish any rights or obligations under any Award
previously granted under this Plan, without the written
consent of the Recipient. Without limiting the generality
of the foregoing, the Administering Body is authorized to
amend this Plan to comply with or take advantage of
amendments to applicable laws, rules or regulations,
including amendments to the Securities Act, Exchange Act or
the IRC or any rules or regulations promulgated thereunder.
No stockholder approval of any amendment or revision shall
be required unless (i) such approval is required by
applicable law, rule or regulation or (ii) an amendment or
revision to this Plan is required by any stock exchange or
automated quotation system then listing the shares of Common
Stock.
(b) The Administering Body may, with the written
consent of a Recipient, make such modifications in the terms
and conditions of an Award as it deems advisable. Without
limiting the generality of the foregoing, the Administering
Body may, in its discretion with the written consent of
Recipient, at any time and from time to time after the grant
of any Award (i) accelerate or extend the vesting or
exercise period of any Award as a whole or in part, (ii)
adjust or reduce the purchase or exercise price, as
applicable, of Awards held by such Recipient by cancellation
of such Awards and granting of Awards at lower purchase or
exercise prices or by modification, extension or renewal of
such Awards and (iii) reduce or otherwise modify the
Performance Criteria applicable to any Award. In the case
of Incentive Stock Options, Recipients acknowledge that
extensions of the exercise period may result in the loss of
the favorable tax treatment afforded incentive stock options
under Section 422 of the IRC.
(c) Except as otherwise provided in this Plan or in
the applicable Award Agreement, no amendment, revision,
suspension or termination of this Plan will, without the
written consent of the Recipient, alter, terminate, impair
or adversely affect any right or obligation under any Award
previously granted under this Plan.
4.6. OTHER COMPENSATION PLANS. The adoption of this Plan
shall not affect any other stock option, securities purchase,
incentive or other compensation plans in effect for the Company,
and this Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for Employees,
Directors, Consultants or others, whether or not approved by
stockholders.
4.7. PLAN BINDING ON SUCCESSORS. This Plan shall be binding
upon the successors and assigns of the Company.
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<PAGE>
4.8. REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES.
Any reference in this Plan to a particular statute, regulation or
rule shall also refer to any successor provision of such statute,
regulation or rule.
4.9. ISSUANCES FOR COMPENSATION PURPOSES ONLY. This Plan
constitutes an "employee benefit plan" as defined in Rule 405
promulgated under the Securities Act. Awards to eligible
Employees or Directors shall be granted for any lawful
consideration, including compensation for services rendered,
promissory notes or otherwise. Awards to Consultants shall be
granted only in exchange for bona fide services rendered by such
consultants or advisors and such services must not be in
connection with the offer and sale of securities in a capital-
raising transaction.
4.10. INVALID PROVISIONS. In the event that any
provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all
such other provisions shall be given full force and effect to the
same extent as though the invalid and unenforceable provision
were not contained herein.
4.11. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the internal laws of the State
of Delaware, without giving effect to the principles of the
conflicts of laws thereof.
5. GENERAL AWARD PROVISIONS
5.1. PARTICIPATION IN THE PLAN.
(a) A person shall be eligible to receive Award grants
under this Plan if, at the time of the grant of such Award,
such person is an Eligible Person.
(b) Incentive Stock Options may be granted only to
Employees meeting the employment requirements of Section 422
of the IRC.
(c) Notwithstanding anything to the contrary herein,
the Administering Body may, in order to fulfill the purposes
of this Plan, modify grants of Awards to Recipients who are
foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or
local custom.
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5.2. AWARD AGREEMENTS.
(a) Each Award granted under this Plan shall be
evidenced by an Award Agreement, which shall be duly
executed on behalf of the Company and by the Recipient or,
in the Administering Body's discretion, a confirming
memorandum issued by the Company to the Recipient setting
forth such terms and conditions applicable to such Award as
the Administering Body may in its discretion determine.
Award Agreements may but need not be identical and shall
comply with and be subject to the terms and conditions of
this Plan, a copy of which shall be provided to each
Recipient and incorporated by reference into each Award
Agreement. Any Award Agreement may contain such other
terms, provisions and conditions not inconsistent with this
Plan as may be determined by the Administering Body.
(b) In case of any conflict between this Plan and any
Award Agreement, this Plan shall control.
(c) In consideration of the granting of an Award under
the Plan, if requested by the Company, the Recipient shall
agree, in the Award Agreement, to remain in the employ of
(or to consult for or to serve as a Non-employee Director
of, as applicable) the Company or any Affiliated Entity for
a period of at least one (1) year (or such shorter period as
may be fixed in the Award Agreement or by action of the
Administering Body following grant of the Award) after the
Award is granted (or, in the case of a Non-employee
Director, until the next annual meeting of stockholders of
the Company).
5.3. EXERCISE OF AWARDS. No Award granted hereunder shall
be issuable or exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. Not less than
100 shares of Common Stock (or such other amount as is set forth
in the applicable Award Agreement) may be purchased at one time
and Stock Options, or other Awards, as applicable, must be
purchased or exercised, as applicable, in multiples of 100 unless
the number purchased is the total number at the time available
for purchase under the terms of the Award. An Award shall be
deemed to be claimed or exercised when the Secretary or other
designated official of the Company receives appropriate written
notice, on such form acceptable to the Company, from the
Recipient, together with payment of the applicable purchase or
exercise price made in accordance with the Award Agreement and
any amounts required under Section 5.11. Notwithstanding any
other provision of this Plan, the Administering Body may impose,
by rule and/or in Award Agreements, such conditions upon the
exercise of Awards (including without limitation conditions
limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including
without limitation Rule 16b-3 and Rule 10b-5 under the Exchange
Act, and any amounts required under Section 5.11 or other
applicable section of or regulation under the IRC.
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5.4. Payment for Awards.
(a) Awards requiring payment of a purchase or exercise
price shall be payable upon the exercise of such Award
pursuant to any Award granted hereunder by delivery of legal
tender of the United States or payment of such other
consideration as the Administering Body may from time to
time deem acceptable in any particular instance.
(b) The Company may assist any person to whom Awards
are granted hereunder (including without limitation any
Employee, Director or Consultant of the Company) in the
payment of the exercise price or other amounts payable in
connection with the receipt or exercise of such Award, by
lending such amounts to such person on such terms and at
such rates of interest and upon such security (if any) as
shall be approved by the Administering Body.
(c) In the discretion of the Administering Body,
payments for purchase or exercise of Awards may be by
matured capital stock of the Company (i.e., owned longer
than six (6) months) delivered in transfer to the Company by
or on behalf of the person exercising the Award and duly
endorsed in blank or accompanied by stock powers duly
endorsed in blank, with signatures guaranteed in accordance
with the Exchange Act if required by the Administering Body
(valued at Fair Market Value as of the exercise date), or
such other consideration as the Administering Body may from
time to time in the exercise of its discretion deem
acceptable in any particular instance; provided, however,
that the Administering Body may, in the exercise of its
discretion, (i) allow exercise of Stock Options in a broker-
assisted or similar transaction in which the exercise price
is not received by the Company until promptly after
exercise, and/or (ii) allow the Company to loan the
applicable purchase or exercise price to the Recipient, if
the purchase or exercise will be followed by a prompt sale
of some or all of the underlying shares and a portion of the
sale proceeds is dedicated to full payment of the purchase
or exercise price and amounts required pursuant to
Section 5.11.
5.5. NO EMPLOYMENT OR OTHER CONTINUING RIGHTS. Nothing
contained in this Plan (or in any Award Agreement or in any other
agreement or document related to this Plan or to Awards granted
hereunder) shall confer upon any Eligible Person or Recipient any
right to continue in the employ (or other business relationship)
of the Company or any Affiliated Entity or constitute any
contract or agreement of employment or engagement, or interfere
in any way with the right of the Company or any Affiliated Entity
to reduce such person's compensation or other benefits or to
terminate the employment or engagement of such Eligible Person or
Recipient, with or without cause. Except as expressly provided
in this Plan or in any Award Agreement pursuant to this Plan, the
Company shall have the right to deal with each Recipient in the
same manner as if this Plan and any such Award Agreement did not
exist, including without limitation with respect to all matters
related to the hiring, retention, discharge, compensation and
conditions of the employment or engagement of the Recipient. Any
questions as to whether and when there has been a termination of
a Recipient's employment or engagement, the reason (if any) for
such termination, and/or the consequences thereof under the terms
of this Plan or any statement evidencing the grant of Awards
pursuant to this Plan shall be determined by the Administering
Body, and the Administering Body's determination thereof shall be
final and binding.
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5.6. RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.
(a) All Awards granted under this Plan shall be
subject to the requirement that, if at any time the Company
shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to any
such Award granted under this Plan upon any securities
exchange or under any federal, state or foreign law, or the
consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection
with, the granting of such Awards or the issuance, if any,
or purchase of shares in connection therewith, such Awards
may not be granted or exercised as a whole or in part unless
and until such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any
conditions not acceptable to the Company. During the term
of this Plan, the Company will use reasonable efforts to
seek to obtain from the appropriate regulatory agencies any
requisite qualifications, consents, approvals or
authorizations in order to issue and sell such number of
shares of its Common Stock as shall be sufficient to satisfy
the requirements of this Plan. The inability of the Company
to obtain from any such regulatory agency having
jurisdiction thereof the qualifications, consents, approvals
or authorizations deemed by the Company to be necessary for
the lawful issuance and sale of any shares of its Common
Stock hereunder shall relieve the Company of any liability
in respect of the nonissuance or sale of such stock as to
which such requisite authorization shall not have been
obtained.
(b) The Company shall be under no obligation to
register or qualify the issuance of Awards or underlying
shares of Common Stock under the Securities Act or
applicable state securities laws. Unless the shares of
Common Stock applicable to any such Award have been
registered under the Securities Act and qualified or
registered under applicable state securities laws, the
Company shall be under no obligation to issue any shares of
Common Stock covered by any Award unless the Award and
underlying shares of Common Stock, as applicable, may be
issued pursuant to applicable exemptions from such
registration or qualification requirements. In connection
with any such exempt issuance, the Administering Body may
require the Recipient to provide a written representation
and undertaking to the Company, satisfactory in form and
scope to the Company and upon which the Company may
reasonably rely, that such Recipient is acquiring such
securities for his or her own account as an investment and
not with a view to, or for sale in connection with, the
distribution of any such shares of stock, and that such
person will make no transfer of the same except in
compliance with any rules and regulations in force at the
time of such transfer under the Securities Act and other
applicable law, and that if shares of stock are issued
without such registration, a legend to this effect (together
with any other legends deemed appropriate by the
Administering Body) may be endorsed upon the securities so
issued. The Company may also order its transfer agent to
stop transfers of such securities. The Administering Body
may also require the Recipient to provide the Company such
information and other documents as the Administering Body
may request in order to satisfy the Administering Body as to
the investment sophistication and experience of the
Recipient and as to any other conditions for compliance with
any such exemptions from registration or qualification.
5.7. ADDITIONAL CONDITIONS. Any Award may also be subject
to such other provisions (whether or not applicable to any other
Award or Eligible Person) as the Administering Body
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determines appropriate including without limitation (a)
provisions to assist the Recipient in financing the purchase of
Common Stock issuable as a result of such Award, (b) provisions
for the forfeiture of or restrictions on resale or other
disposition of shares of Common Stock acquired under any form of
benefit, (c) provisions giving the Company the right to
repurchase shares of Common Stock acquired under any form of
benefit in the event the Recipient elects to dispose of such
shares, and (d) provisions to comply with federal and state
securities laws and federal and state income tax withholding
requirements.
5.8. NO PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise
set forth herein, a Recipient shall have no rights as a
stockholder with respect to any shares issuable or issued in
connection with an Award until the date of the receipt by the
Company of all amounts payable in connection with the purchase or
exercise, as applicable, of the Award, the satisfaction or waiver
of all applicable Performance Criteria and performance by the
Recipient of all obligations applicable thereto. Status as an
Eligible Person shall not be construed as a commitment that any
Award will be granted under this Plan to an Eligible Person or to
Eligible Persons generally. No person shall have any right,
title or interest in any fund or in any specific asset (including
shares of capital stock) of the Company by reason of any Award
granted hereunder. Neither this Plan (nor any documents related
hereto) nor any action taken pursuant hereto (or thereto) shall
be construed to create a trust of any kind or a fiduciary
relationship between the Company and any Person. To the extent
that any Person acquires a right to receive Awards hereunder,
such right shall be no greater than the right of any unsecured
general creditor of the Company.
5.9. NON-TRANSFERABLE.
(a) No Award under the Plan may be sold, pledged,
assigned or transferred in any manner other than by will or
the laws of descent and distribution or, subject to the
consent of the Administering Body, pursuant to a DRO, unless
and until such Award has been exercised, or the shares
underlying such Award have been issued, and all restrictions
applicable to such shares have lapsed. No Award or interest
or right therein shall be subject to liability for the
debts, contracts or engagements of the Recipient or his or
her successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other
legal or equitable proceedings (including bankruptcy), and
any attempted disposition thereof shall be null and void and
of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
(b) During the lifetime of the Recipient, only he or
she may exercise an Option or other Award (or any portion
thereof) granted to him or her under the Plan, unless it has
been disposed of with the consent of the Administering Body
pursuant to a DRO. After the death of the Recipient, any
exercisable portion of an Option or other Award may, prior
to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by
his personal representative or by any person empowered to do
so under the deceased Recipient's will or under the then
applicable laws of descent and distribution.
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5.10 INFORMATION TO RECIPIENTS.
(a) The Administering Body in its sole discretion
shall determine what, if any, financial and other
information shall be provided to Recipients and when such
financial and other information shall be provided after
giving consideration to applicable federal and state laws,
rules and regulations, including without limitation
applicable federal and state securities laws, rules and
regulations.
(b) The furnishing of financial and other information
that is confidential to the Company shall be subject to the
Recipient's agreement that the Recipient shall maintain the
confidentiality of such financial and other information,
shall not disclose such information to third parties, and
shall not use the information for any purpose other than
evaluating an investment in the Company's securities under
this Plan. The Administering Body may impose other
restrictions on the access to and use of such confidential
information and may require a Recipient to acknowledge the
Recipient's obligations under this Section 5.10(b) (which
acknowledgment shall not be a condition to the Recipient's
obligations under this Section 5.10(b)).
5.11. WITHHOLDING TAXES. Whenever the granting, vesting or
exercise of any Award granted under this Plan, or the transfer of
any shares issued upon exercise of any Award, gives rise to tax
or tax withholding liabilities or obligations, the Administering
Body shall have the right to require the Recipient to remit to
the Company an amount sufficient to satisfy any federal, state
and local withholding tax requirements prior to issuance of such
shares. The Administering Body may, in the exercise of its
discretion, allow satisfaction of tax withholding requirements by
accepting delivery of stock of the Company (or by withholding a
portion of the stock otherwise issuable in connection with such
Awards).
5.12. LEGENDS ON COMMON STOCK CERTIFICATES. Each
certificate representing shares acquired as a result of any Award
granted hereunder shall be endorsed with all legends, if any,
required by applicable federal and state securities and other
laws to be placed on the certificate. The determination of which
legends, if any, shall be placed upon such certificates shall be
made by the Administering Body in its sole discretion and such
decision shall be final and binding.
5.13. EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS -
EMPLOYEES ONLY.
(a) Termination. Subject to Section 5.13(b), and
except as otherwise provided in a written agreement between
the Company and the Recipient, which may be entered into at
any time before or after termination of employment of the
Recipient, in the event of the termination of an Employee
Recipient's employment, all of the Recipient's unvested
Awards shall terminate and all of the Recipient's
unexercised Awards shall expire and become unexercisable as
of the earlier of (A) the date such Awards would have
expired in accordance with their terms had the Recipient
remained employed and (B) (i) six (6) months after the
Recipient's engagement is terminated as a result of death or
Permanent Disability and (ii) ninety (90) days after
Recipient's engagement is terminated for any other reason.
(b) ALTERATION OF VESTING AND EXERCISE PERIODS.
Notwithstanding anything to the contrary in Section 5.13(a),
the Administering Body may in its discretion designate
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shorter or longer periods to claim or otherwise exercise
Awards following a Recipient's termination of employment;
provided, however, that any shorter periods determined by
the Administering Body shall be effective only if provided
for in the instrument that evidences the grant to the
Recipient of such Award or if such shorter period is agreed
to in writing by the Recipient. Notwithstanding anything to
the contrary herein, Awards shall be claimed or exercisable
by a Recipient following such Recipient's termination of
employment only to the extent that installments thereof had
become exercisable on or prior to the date of such
termination; and provided, further, that the Administering
Body may, in its discretion, elect to accelerate the vesting
of all or any portion of any Awards that had not vested on
or prior to the date of such termination.
5.14. EFFECT OF TERMINATION OF ENGAGEMENT ON AWARDS - NON-
EMPLOYEES ONLY.
(a) Termination. Subject to Section 5.14(b), and
except as otherwise provided in a written agreement between
the Company and the Recipient, which may be entered into at
any time before or after termination of engagement of the
Recipient, in the event of the termination of any non-
Employee Recipient's engagement (including, Directors and
Consultants), all of the Recipient's unvested Awards shall
terminate and all of the Recipient's unexercised Awards
shall expire and become unexercisable as of the earlier of
(A) the date such Awards would have expired in accordance
with their terms had the Recipient remained engaged by the
Company and (B)(i) six (6) months after Recipient's
engagement is terminated as a result of death or Permanent
Disability and (ii) ninety (90) days after Recipient's
engagement is terminated for any other reason.
(b) Alternation of Vesting and Exercise Periods.
Notwithstanding anything to the contrary in Section 5.14(a),
the Administering Body may, in its discretion, designate
shorter or longer periods to claim or otherwise exercise
Awards following a non-Employee Recipient's termination of
engagement; provided, however, that any shorter periods
determined by the Administering Body shall be effective only
if provided for in the instrument that evidences the grant
to the Recipient of such Award or if such shorter period is
agreed to in writing by the Recipient. Notwithstanding
anything to the contrary herein, awards shall be claimed or
exercisable by a Recipient following such Recipient's
termination of engagement only to the extent that the
installments thereof had become exercisable on or prior to
the date of such termination; and provided further, that the
Administering Body may, in its discretion, elect to
accelerate the vesting of all or any portion of any Awards
that had not vested on or prior to the date of such
termination.
5.15. TRANSFER; LEAVE OF ABSENCE. For purposes of this
Plan, the transfer by a Recipient to the employment or engagement
of (i) the Company from a Subsidiary Corporation, (ii) from the
Company to a Subsidiary Corporation or (iii) from one Subsidiary
Corporation to another Subsidiary Corporation (including, with
respect to Consultants, the assignment between the Company and a
Subsidiary Corporation or between two Subsidiary Corporations, as
applicable, of an agreement pursuant to which such services are
rendered) or, with respect solely to Employees, an approved leave
of absence for military service, sickness, or for any other
purpose approved by the Company, shall not be deemed a
termination. In the case of any Employee on an approved leave of
absence, the Administering Body may make such provision
respecting continuance of Awards as the Administering Body in its
discretion deems appropriate,
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except that in no event shall a Stock Option or other Award be
exercisable after the date such Award would expire in accordance
with its terms had the Recipient remained continuously employed.
5.16. LIMITS ON AWARDS TO CERTAIN ELIGIBLE PERSONS.
(a) Limitations Applicable to Section 162(m)
Participants. Notwithstanding any other provision of this
Plan, in order for the compensation attributable to Awards
hereunder to qualify as Performance-Based Compensation, no
one Eligible Person shall be granted any one or more Awards
with respect to more than 150,000 shares of Common Stock in
any one calendar year. The limitation set forth in this
Section 5.16 shall be subject to adjustment as provided in
Section 3.4 and under Article 11, but only to the extent
such adjustment would not affect the status of compensation
attributable to Awards hereunder as Performance-Based
Compensation.
(b) Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of this Plan, the Plan,
and any Award granted or awarded to any individual who is
then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange
Act (including any amendment to Rule 16b-3 of the Exchange
Act) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such
applicable exemptive rule.
6. STOCK OPTIONS
6.1. NATURE OF STOCK OPTIONS. Subject to the limitations
provided otherwise herein, Stock Options may be Incentive Stock
Options or Non-qualified Stock Options.
6.2. OPTION EXERCISE PRICE. The exercise price for each
Stock Option shall be determined by the Administering Body as of
the date such Stock Option is granted. The exercise price shall
be no less than the Fair Market Value of the Common Stock subject
to the Option. The Administering Body may, with the consent of
the Recipient and subject to compliance with statutory or
administrative requirements applicable to Incentive Stock
Options, amend the terms of any Stock Option to provide that the
exercise price of the shares remaining subject to the Stock
Option shall be reestablished at a price not less than 100% of
the Fair Market Value of the Common Stock on the effective date
of the amendment. No modification of any other term or provision
of any Stock Option that is amended in accordance with the
foregoing shall be required, although the Administering Body may,
in its discretion, make such further modifications of any such
Stock Option as are not inconsistent with this Plan.
6.3. OPTION PERIOD AND VESTING. Stock Options granted
hereunder shall vest and may be exercised as determined by the
Administering Body, except that exercise of such Stock Options
after termination of the Recipient's employment or engagement
shall be subject to Section 5.13 or 5.14, as the case may be.
Each Stock Option granted hereunder and all rights or obligations
thereunder shall expire on such date as shall be determined by
the Administering Body, but not later than ten (10) years after
the date the Stock Option is granted and shall be subject to
earlier termination as provided herein or in the Award Agreement.
The Administering
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Body may, in its discretion at any time and from time to time
after the grant of a Stock Option, accelerate vesting of such
Option as a whole or in part by increasing the number of shares
then purchasable, provided that the total number of shares
subject to such Stock Option may not be increased. Except as
otherwise provided herein, a Stock Option shall become
exercisable, as a whole or in part, on the date or dates
specified by the Administering Body and thereafter shall remain
exercisable until the expiration or earlier termination of the
Stock Option.
6.4. SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS.
(a) Notwithstanding anything in this Article 6 to the
contrary, the exercise price and vesting period of any Stock
Option intended to qualify as an Incentive Stock Option
shall comply with the provisions of Section 422 of the IRC
and the regulations thereunder. As of the Effective Date,
such provisions require, among other matters, that (i) the
exercise price must not be less than the Fair Market Value
of the underlying stock as of the date the Incentive Stock
Option is granted, and not less than 110% of the Fair Market
Value as of such date in the case of a grant to a
Significant Stockholder; and (ii) that the Incentive Stock
Option not be exercisable after the expiration of five (5)
years from the date of grant in the case of an Incentive
Stock Option granted to a Significant Stockholder.
(b) The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock
for which one or more Incentive Stock Options granted to any
Recipient under this Plan (or any other option plan of the
Company or any of its Subsidiary Corporations or affiliates)
may for the first time become exercisable as Incentive Stock
Options under the federal tax laws during any one calendar
year shall not exceed $100,000.
(c) Any Options granted as Incentive Stock Options
pursuant to this Plan that for any reason fail or cease to
qualify as such shall be treated as Non-qualified Stock
Options.
6.5. RELOAD OPTIONS. At the discretion of the Administering
Body, Stock Options granted pursuant to this Plan may include a
"reload" feature pursuant to which a Recipient exercising an
Option by the delivery of a number of shares of matured capital
stock in accordance with Section 5.4(c) hereof and the Award
Agreement would automatically be granted an additional Option
(with an exercise price equal to the Fair Market Value of the
Common Stock on the date the additional Option is granted and
with the same expiration date as the original Option being
exercised, and with such other terms as the Administering Body
may provide) to purchase that number of shares of Common Stock
equal to the number delivered to exercise the original Option.
6.6. RESTRICTIONS. The Administering Body, in its sole and
absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Award Agreement
and may be referred to on the certificates evidencing such
shares. The Recipient shall give the Company prompt notice of any
disposition of shares of Common Stock required by exercise of an
Incentive Stock Option within (i) two years from the date of
granting (including the date the Option is modified, extended or
renewed for purposes of section
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424(h) of the IRC) such Option to such Recipient or (ii) one year
after the transfer of such shares to such Recipient.
7. RESTRICTED STOCK AWARDS
7.1. NATURE OF RESTRICTED STOCK AWARDS. The Administering
Body may grant Restricted Stock Awards to any Eligible Person. A
Restricted Stock Award is an Award entitling the recipient to
acquire, at par value or such other purchase price determined by
the Administering Body (but not less than the par value thereof
unless permitted by applicable state law), shares of Common Stock
subject to such restrictions and conditions as the Administering
Body may determine at the time of grant ("Restricted Stock").
Conditions may be based on continuing employment (or other
business relationships) and/or the achievement of pre-established
Performance Criteria.
7.2. RIGHTS AS STOCKHOLDERS. Subject to Section 7.3, upon
delivery of the shares of the Restricted Stock to the escrow
holder pursuant to Section 7.5, the Recipient shall have, unless
otherwise provided by the Administering Body, all the rights of a
stockholder with respect to said shares, subject to the
restrictions in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made
with respect to the shares; provided, however, that in the
discretion of the Administering Body, any extraordinary
distributions with respect to the Common Stock shall be subject
to the restrictions set forth in Section 7.3.
7.3. RESTRICTION. All shares of Restricted Stock issued
under this Plan (including any shares received by holders thereof
with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Administering Body shall
provide, which restrictions may include, without limitation,
restrictions concerning voting rights and transferability and
restrictions based on duration of employment or engagement with
the Company or its Affiliated Entities, Company performance and
individual performance; provided, however, that, unless the
Administering Body otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a
person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six (6) months
and one (1) day have elapsed from the date on which the
Restricted Stock was issued, and provided, further, that, except
with respect to shares of Restricted Stock granted to
Section 162(m) participants, by action taken after the Restricted
Stock is issued, the Administering Body may, on such terms and
conditions as it may determine to be appropriate, remove any or
all of the restrictions imposed by the terms of the Award
Agreement. Restricted Stock may not be sold or encumbered until
all restrictions are terminated or expire.
7.4. REPURCHASE OF RESTRICTED STOCK. The Administering Body
shall provide in the terms of each individual Award Agreement
that the Company shall have a right to repurchase from the
Recipient the Restricted Stock then subject to restrictions under
the Award Agreement immediately upon a termination of employment
(with or without cause and for any reason whatsoever) or, if
applicable, upon a termination of engagement (with or without
cause and for any reason whatsoever) between the Recipient and
the Company, at a cash price per share equal to the price paid by
the Recipient for such Restricted Stock; provided, however, that
except with respect to shares of Restricted Stock granted to
Section 162(m) participants, the Administering
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Body in its sole and absolute discretion may provide that no such
right of repurchase shall exist in the event of a termination of
employment or engagement following a Change in Control of the
Company or because of the Recipient's death or Permanent
Disability.
7.5. ESCROWS. The Secretary of the Company or such other
escrow holder as the Administering Body may appoint shall retain
physical custody of each certificate representing Restricted
Stock until all of the restrictions imposed under the Award
Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.
7.6. VESTING OF RESTRICTED STOCK. The Administering Body at
the time of grant shall specify the date or dates and/or
attainment of pre-established Performance Criteria and other
conditions on which Restricted Stock shall become vested, subject
to such further rights of the Company or its assigns as may be
specified in the instrument evidencing the Restricted Stock
Award.
7.7. WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The
written instrument evidencing the Award of Restricted Stock may
require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
8. UNRESTRICTED STOCK AWARDS
8.1. GRANT OR SALE OF UNRESTRICTED STOCK.
(a) Grant or Sale of Unrestricted Stock. The
Administering Body may, in its sole discretion, grant (or
sell at a purchase price determined by the Administering
Body) an Unrestricted Stock Award to any Eligible Person,
pursuant to which such individual may receive shares of
Common Stock free of any vesting restrictions ("Unrestricted
Stock") under the Plan. Unrestricted Stock Awards may be
granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in
lieu of any cash compensation due to such individual.
(b) Deferral of Awards. Each Recipient who has made
an election to receive shares of Unrestricted Stock under
this Article 8 will have the right to defer receipt of up to
100% of such shares of Unrestricted Stock payable to such
Recipient in accordance with such rules and procedures as
may from time to time be established by the Administering
Body for that purpose, and such election shall be effective
on the later of the date six (6) months and one (1) day from
the date of such election or the beginning of the next
calendar year. The deferred Unrestricted Stock shall be
entitled to receive Dividend Equivalent Rights settled in
shares of Common Stock.
9. PERFORMANCE STOCK AWARDS
9.1. NATURE OF PERFORMANCE STOCK AWARDS. A Performance
Stock Award is an Award entitling the Recipient to acquire shares
of Common Stock upon the attainment of specified Performance
Criteria. The Administering Body may make Performance Stock
Awards independent of or in connection with the granting of any
other Award under the Plan. Performance Stock Awards may be
granted under the Plan to any Eligible Person. The Administering
Body, in its sole discretion, shall determine whether and to whom
Performance
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<PAGE>
Stock Awards shall be made, the Performance Criteria applicable
under each such Award, the periods during which performance is to
be measured, and all other limitations and conditions applicable
to the awarded shares; provided, however, that the Administering
Body may rely on the Performance Criteria and other standards
applicable to other performance unit plans of the Company in
setting the standards for Performance Stock Awards under the
Plan.
9.2. RIGHTS AS A STOCKHOLDER. A Recipient receiving a
Performance Stock Award shall have the rights of a stockholder
only as to shares actually received by the Recipient under the
Plan and not with respect to shares subject to the Award but not
actually received by the Recipient. A Recipient shall be
entitled to receive a stock certificate evidencing the
acquisition of shares of Common Stock under a Performance Stock
Award only upon satisfaction of all conditions specified in the
Award Agreement evidencing the Performance Stock Award (or in a
performance plan adopted by the Administering Body).
9.3. ACCELERATION, WAIVER, ETC. At any time prior to the
Participant's termination of employment (or other business
relationship) by the Company, the Administering Body may, in its
sole discretion, accelerate, waive or, subject to the other
provisions of this Plan, amend any and all of the goals,
restrictions or conditions imposed under any Performance Stock
Award.
10. DIVIDEND EQUIVALENT RIGHTS
10.1 DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent
Right is an Award entitling the Recipient to receive credits
based on cash dividends that would be paid on the shares of
Common Stock specified in the Dividend Equivalent Right (or other
Award to which it relates) if such shares were held by the
Recipient. A Dividend Equivalent Right may be granted hereunder
to any Eligible Person, as a component of another Award or as a
freestanding Award. The terms and conditions of Dividend
Equivalent Rights shall be specified in the Award Agreement.
Dividend equivalents credited to the holder of a Dividend
Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Common Stock, which may
thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan
sponsored by the Company, if any. Dividend Equivalent Rights nay
be settled in cash or shares of Common Stock or a combination
thereof, in a single installment or installments. A Dividend
Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on,
such other Award and that such Dividend Equivalent Right shall
expire or be forfeited or annulled under the same conditions as
such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions
different from such other Award.
10.2 INTEREST EQUIVALENTS. Any Award under this Plan that
is settled in whole or in part in cash on a deferred basis may
provide in the grant for interest equivalents to be credited with
respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as
may be specified by the grant.
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<PAGE>
11. STOCK APPRECIATION RIGHTS
11.1. GRANT OF STOCK APPRECIATION RIGHTS. A Stock
Appreciation Right may be granted to any Eligible Person selected
by the Administering Body. A Stock Appreciation Right may be
granted (a) in connection and simultaneously with the grant of a
Stock Option, (b) with respect to previously granted Stock
Options, or (c) independent of a Stock Option. A Stock
Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Administering Body shall
impose and shall be evidenced by an Award Agreement.
11.2. COUPLED STOCK APPRECIATION RIGHTS.
(a) A Coupled Stock Appreciation Right ("CSAR") shall
be related to a particular Stock Option and shall be
exercisable only when and to the extent the related Stock
Option is exercisable.
(b) A CSAR may be granted to the Recipient for no more
than the number of shares subject to the simultaneously or
previously granted Stock Option to which it is coupled.
(c) A CSAR shall entitle the Recipient (or other
person entitled to exercise the Stock Option pursuant to the
Plan) to surrender to the Company unexercised a portion of
the Stock Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from
the Company in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Stock
Option exercise price from the Fair Market Value of a share
of Common Stock on the date of exercise of the CSAR by the
number of shares of Common Stock with respect to which the
CSAR shall have been exercised, subject to any limitations
the Administering Body may impose.
11.3. INDEPENDENT STOCK APPRECIATION RIGHTS.
(a) An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Stock Option and shall have the
terms set by the Administering Body. An ISAR shall be
exercisable in such installments as the Administering Body
may determine. An ISAR shall cover such number of shares of
Common Stock as the Administering Body may determine;
provided, however, that unless the Administering Body
otherwise provides in the terms of the ISAR or otherwise, no
ISAR granted to a person subject to Section 16 of the
Exchange Act shall be exercisable until at least six (6)
months and one day has elapsed from the date on which the
Stock Option was granted. The exercise price per share of
the Common Stock subject to each ISAR shall be set by the
Administering Body. An ISAR is exercisable only while the
Recipient remains employed or engaged by the Company;
provided that the Administering Body may determine that the
ISAR may be exercised subsequent to termination of
employment or engagement or following a Change in Control of
the Company, or because of the Recipient's retirement, death
or Permanent Disability, or otherwise.
(b) An ISAR shall entitle the Recipient (or other
person entitled to exercise the ISAR pursuant to the Plan)
to exercise all or a specified portion of the ISAR (to the
extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying
the difference obtained by subtracting the exercise price
per share of the ISAR from the Fair Market Value of a share
of Common Stock on the date of
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<PAGE>
exercise of the ISAR by the number of shares of Common Stock
with respect to which the ISAR shall have been exercised,
subject to any limitations the Administering Body may
impose.
11.4. PAYMENT AND LIMITATIONS ON EXERCISE.
(a) Payment of the amounts determined under
Section 11.2(c) and 11.3(b) above shall be in cash, in
Common Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination
of both, as determined by the Administering Body. To the
extent such payment is effected in Common Stock it shall be
made subject to satisfaction of all provisions of the Plan
pertaining to Stock Options.
(b) Holders of Stock Appreciation Rights may be
required to comply with any timing or other restrictions
with respect to the settlement or exercise of a Stock
Appreciation Right, including a window-period limitation, as
may be imposed in the discretion of the Administering Body.
12. REORGANIZATIONS
12.1. CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN
CONTROL. If the Company shall consummate any Reorganization not
involving a Change in Control in which holders of shares of
Common Stock are entitled to receive in respect of such shares
any securities, cash or other consideration (including without
limitation a different number of shares of Common Stock), each
Award outstanding under this Plan shall thereafter be claimed or
exercisable, in accordance with this Plan, only for the kind and
amount of securities, cash and/or other consideration receivable
upon such Reorganization by a holder of the same number of shares
of Common Stock as are subject to that Award immediately prior to
such Reorganization, and any adjustments will be made to the
terms of the Award, and the underlying Award Agreement, in the
sole discretion of the Administering Body as it may deem
appropriate to give effect to the Reorganization.
12.2. CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL.
As of the effective time and date of any Change in Control, this
Plan and any then outstanding Awards (whether or not vested)
shall automatically terminate unless (a) provision is made in
writing in connection with such transaction for the continuance
of this Plan and for the assumption of such Awards, or for the
substitution for such Awards of new grants covering the
securities of a successor entity or an affiliate thereof, with
appropriate adjustments as to the number and kind of securities
and exercise prices, in which event this Plan and such
outstanding Awards shall continue or be replaced, as the case may
be, in the manner and under the terms so provided; or (b) the
Board otherwise has provided or shall provide in writing for such
adjustments as it deems appropriate in the terms and conditions
of the then-outstanding Awards (whether or not vested), including
without limitation (i) accelerating the vesting of outstanding
Awards and/or (ii) providing for the cancellation of Awards and
their automatic conversion into the right to receive the
securities, cash and/or other consideration that a holder of the
shares underlying such Awards would have been entitled to receive
upon consummation of such Change in Control had such shares been
issued and outstanding immediately prior to the effective date
and time of the Change in Control (net of the appropriate option
exercise prices). If, pursuant to the foregoing provisions of
this Section 12.2, this Plan and the Awards granted hereunder
shall terminate by reason of the
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<PAGE>
occurrence of a Change in Control without provision for any of
the actions described in clause (a) or (b) hereof, then any
Recipient holding outstanding Awards shall have the right, at
such time immediately prior to the consummation of the Change in
Control as the Board shall designate, to convert, claim or
exercise, as applicable, the Recipient's Awards to the full
extent not theretofore converted, claimed or exercised, including
any installments which have not yet become vested.
13. DEFINITIONS
Capitalized terms used in this Plan and not otherwise
defined shall have the meanings set forth below:
"Administering Body" shall mean the Board as long as no
Stock Plan Committee has been appointed and is in effect and
shall mean the Stock Plan Committee as long as the Stock Plan
Committee is appointed and in effect.
"Affiliated Entity" means any Parent Corporation or
Subsidiary Corporation.
"Award" or "Awards," except where referring to a particular
category or grant under the Plan, shall include Incentive Stock
Options, Non-qualified Stock Options, Restricted Stock Awards,
Unrestricted Stock Awards, Performance Stock Awards, Dividend
Equivalent Rights and Stock Appreciation Rights.
"Award Agreement" means the agreement or confirming
memorandum setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Change in Control" means the following and shall be deemed
to occur if any of the following events occur:
(a) Any Person becomes after the Effective Date the
beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either
the then outstanding shares of Common Stock or the combined
voting power of the Company's then outstanding securities
entitled to vote generally in the election of directors; or
(b) Individuals who, as of the effective date hereof,
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after
the effective date hereof whose election, or nomination for
election by the Company's stockholders, is approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of
the Incumbent Board unless that individual was nominated or
elected by any Person having the power to exercise, through
beneficial ownership, voting agreement and/or proxy, 50% or
more of either the outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election
of directors, in which case that individual shall not be
considered
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<PAGE>
to be a member of the Incumbent Board unless such
individual's election or nomination for election by the
Company's stockholders is approved by a vote of at least two-
thirds of the directors then comprising the Incumbent Board;
or
(c) Consummation by the Company of the sale or other
disposition by the Company of all or substantially all of
the Company's assets or a reorganization or merger or
consolidation of the Company with any other person, entity
or corporation, other than
(i) a reorganization or merger or consolidation
that would result in the voting securities of the
Company outstanding immediately prior thereto (or, in
the case of a reorganization or merger or consolidation
that is preceded or accomplished by an acquisition or
series of related acquisitions by any Person, by tender
or exchange offer or otherwise, of voting securities
representing 5% or more of the combined voting power of
all securities of the Company, immediately prior to
such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either
by remaining outstanding or by being converted into
voting securities of another entity, more than fifty
percent (50%) of the combined voting power of the
voting securities of the Company or such other entity
outstanding immediately after such reorganization or
merger or consolidation (or series of related
transactions involving such a reorganization or merger
or consolidation), or
(ii) a reorganization or merger or consolidation
effected to implement a recapitalization or
reincorporation of the Company (or similar transaction)
that does not result in a material change in beneficial
ownership of the voting securities of the Company or
its successor; or
(d) Approval by the stockholders of the Company or any
order by a court of competent jurisdiction of a plan of
liquidation of the Company.
(e) Notwithstanding the foregoing, a Change in Control
of the type described in paragraph (b), (c) or (d) shall be
deemed to be completed on the date it occurs, and a Change
in Control of the type described in paragraph (a) shall be
deemed to be completed as of the date the entity or group
attaining 50% or greater ownership has elected its
representatives to the Company's Board of Directors and/or
caused its nominees to become officers of the Company with
the authority to terminate or alter the terms of employee's
employment.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means the common stock of the Company as
constituted on the Effective Date of this Plan, and as thereafter
adjusted as a result of any one or more events requiring
adjustment of outstanding Awards under Section 3.4 above.
"Company" means Temtex Industries, Inc., a Delaware
corporation.
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<PAGE>
"Consultant" means any consultant or advisor if:
(a) the consultant or advisor renders bona fide services to
the Company or any Affiliated Entity;
(b) the services rendered by the consultant or advisor
are not in connection with the offer or sale of securities
in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Company's
securities; and
(c) the consultant or advisor is a natural person who
has contracted directly with the Company or an Affiliated
Entity to render such services.
"CSAR" means a coupled stock appreciation right as
defined in Section 4.2.
"Director" means any person serving on the Board of the
Company irrespective of whether such person is also an Employee
of the Company.
"Dividend Equivalent Right" shall mean any Award granted
pursuant to Article 10 of this Plan.
"DRO" shall mean a domestic relations order as defined by
the IRC or Title I of ERISA or the rules thereunder.
"Effective Date" means October 28, 1999, which is the date
this Plan was adopted by the Board.
"Eligible Person" shall include key Employees, Directors and
Consultants of the Company or of any Affiliated Entity.
"Employee" means any officer or other employee (as defined
in accordance with Section 3401(c) of the IRC) of the Company or
any Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Act Registered Company" means that the Company has
any class of any equity security registered pursuant to
Section 12 of the Exchange Act.
"Expiration Date" means the tenth anniversary of the
Effective Date.
"Fair Market Value" of a share of the Company's capital
stock as of a particular date shall be: (a) if the stock is
listed on an established stock exchange or exchanges (including
for this purpose, the Nasdaq National Market), the closing sale
prices of the stock quoted for such date as reported in the
transactions index of each such exchange, as published in The
Wall Street Journal and determined by the Administering Body, or,
if no sale price was quoted in any such index for such date, then
as of the next preceding date on which such a sale price was
quoted; or (b) if the stock is not then listed on an exchange or
the Nasdaq National Market, the average of the closing bid and
asked prices per share for the stock in the over-the-counter
market as quoted on The Nasdaq Small Cap Market on such date (in
the case of (a) or (b), subject to adjustment as and if necessary
and appropriate to set an exercise price not less than 100% of
the Fair Market
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<PAGE>
Value of the stock on the date an option is granted); or (c) if
the stock is not then listed on an exchange or quoted in the over-
the-counter market, an amount determined in good faith by the
Administering Body; provided, however, that (i) when appropriate,
the Administering Body, in determining Fair Market Value of
capital stock of the Company, may take into account such other
factors as it may deem appropriate under the circumstances and
(ii) if the stock is traded on the Nasdaq Small Cap Market and
both sales prices and bid and asked prices are quoted or
available, the Administering Body may elect to determine Fair
Market Value under either clause (i) or (ii) above.
Notwithstanding the foregoing, the Fair Market Value of capital
stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC.
"Incentive Stock Option" means a Stock Option that qualifies
as an incentive stock option under Section 422 of the IRC, or any
successor statute thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"ISAR" means an independent stock appreciation right as
defined in Section 11.3.
"Non-employee Director" means any director of the Company
who qualifies as a "non-employee director" within the meaning of
Rule 16b-3.
"Non-qualified Stock Option" means a Stock Option that is
not an Incentive Stock Option.
"Outside Director" means an "outside director" as defined in
the regulations adopted under Section 162(m) of the IRC.
"Parent Corporation" means any Parent Corporation as defined
in Section 424(e) of the IRC.
"Performance-Based Compensation" means performance-based
compensation as described in Section 162(m) of the IRC. If the
amount of compensation an Eligible Person will receive under any
Award is not based solely on an increase in the value of Common
Stock after the date of grant, the Stock Plan Committee, in order
to qualify Awards as performance-based compensation under
Section 162(m) of the IRC, can condition the granting, vesting or
exercisability or purchase price of such Awards on the attainment
of a preestablished, objective performance goal. For this
purpose, a preestablished, objective performance goal may include
one or more of the following performance criteria: (a) book
value; (b) earnings per share (including earnings before
interest, taxes and amortization); (c) return on equity;
(d) total stockholder return; (e) return on capital; (f) return
on assets or net assets; (g) income or net income; (h) operating
income or net operating income; (i) operating margin; (j)
attainment of stated goals related to the Company's
capitalization, costs, financial condition or results of
operations; and (k) any other similar performance criteria.
"Performance Criteria" shall mean the following business
criteria with respect to the Company, any Affiliated Entity or
any division or operating unit: (a) net income, (b) pre-tax
income, (c) operating income, (d) cash flow, (e) earnings per
share, (f) return on equity, (g) return on invested capital or
assets, (h) cost reductions or savings, (i) funds from
operations,
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<PAGE>
(j) appreciation in the fair market value of Common Stock, (k)
earnings before any one or more of the following items:
interest, taxes, depreciation or amortization and (l) such other
criteria deemed appropriate by the Administering Body.
"Performance Stock Awards" means Awards granted pursuant to
Article 9.
"Permanent Disability" shall mean that the Recipient becomes
physically or mentally incapacitated or disabled so that the
Recipient is unable to perform substantially the same services as
the Recipient performed prior to incurring such incapacity or
disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such
incapacity or disability, and the determination of such physician
to be binding upon the Company and the Recipient), and such
incapacity or disability continues for a period of three
consecutive months or six months in any 12-month period or such
other period(s) as may be determined by the Stock Plan Committee
with respect to any Award, provided that for purposes of
determining the period during which an Incentive Stock Option may
be exercised pursuant to Section 5.13(b)(ii) hereof, Permanent
Disability shall mean "permanent and total disability" as defined
in Section 22(e) of the IRC.
"Person" means any person, entity or group, within the
meaning of Section 13(d) or 14(d) of the Exchange Act, but
excluding (a) the Company and its Subsidiary Corporations, (b)
any employee stock ownership or other employee benefit plan
maintained by the Company that is qualified under ERISA and (c)
an underwriter or underwriting syndicate that has acquired the
Company's securities solely in connection with a public offering
thereof.
"Plan" means this 1999 Omnibus Securities Plan of the
Company.
"Plan Term" means the period during which this Plan remains
in effect (commencing on the Effective Date and ending on the
Expiration Date).
"Recipient" means a person who has received Awards under
this Plan or any person who is the successor in interest to a
Recipient.
"Reorganization" means any merger, consolidation or other
reorganization.
"Restricted Stock" shall have the meaning ascribed thereto
in Section 7.1.
"Restricted Stock Awards" means any Award granted pursuant
to Article 7 of this Plan.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Significant Stockholder" is an individual who, at the time
an Award is granted to such individual under this Plan, owns more
than 10% of the combined voting power of all classes of stock of
the Company or of any Parent Corporation or Subsidiary
Corporation (after application of the attribution rules set forth
in Section 424(d) of the IRC).
"Stock Appreciation Right" means a stock appreciation right
granted under Article 11 of this Plan.
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<PAGE>
"Stock Option" or "Option" means a right to purchase stock
of the Company granted under Article 6 of this Plan to an
Eligible Person.
"Stock Plan Committee" means the committee appointed by the
Board to administer this Plan pursuant to Section 4.1.
"Subsidiary Corporation" means any Subsidiary Corporation as
defined in Section 424(f) of the IRC.
"Unrestricted Stock" shall have the meaning ascribed thereto
in Section 8.1.
"Unrestricted Stock Award" means any Award granted pursuant
to Article 8 of this Plan.
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NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER
1999 OMNIBUS SECURITIES PLAN
OF
TEMTEX INDUSTRIES, INC.
STOCK OPTION AGREEMENT (this "Agreement") entered into this
___ day of _______________, _____, between TEMTEX INDUSTRIES,
INC., a Delaware corporation (the "Corporation"), and
________________, an Eligible Person (as that term is defined by
the Corporation's 1999 Omnibus Securities Plan (the "Plan")) (the
"Optionee," which term as used herein shall be deemed to include
any successor to the Optionee by will or by the laws of descent
and distribution, unless the context shall otherwise require, as
provided in the Plan).
Pursuant to the Plan, the Administering Body approved the
issuance to the Optionee, effective as of the date set forth
above, of a Non-qualified Stock Option to purchase up to an
aggregate of __________ shares of common stock of the Corporation
(the "Common Stock"), at the price of $____ per share (the
"Option Price") which represents not less than 100% of the Fair
Market Value of a share of Common Stock determined in accordance
with the Plan, upon the terms and conditions hereinafter set
forth. (Capitalized terms used herein but not defined herein
shall have the meaning ascribed to them in the Plan).
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as
follows:
1. OPTION; OPTION PRICE. On behalf of the Corporation,
the Administering Body hereby grants as of the date of this
Agreement to the Optionee the option (the "Option") to purchase,
subject to the terms and conditions of this Agreement and the
provisions of the Plan (which is incorporated by reference herein
and which in all cases shall control in the event of any conflict
with the terms, definitions and provisions of this Agreement),
_________ shares of Common Stock of the Corporation at an
exercise price per share equal to the Option Price. A copy of
the Plan as in effect on the date hereof has been supplied to the
Optionee, and the Optionee by executing this Agreement hereby
acknowledges receipt thereof.
2. TERM. The term (the "Option Term") of the Option shall
commence on the date of this Agreement and shall terminate on the
_______ (___) anniversary of the date of this Agreement, [not to
exceed ten (10) years] unless such Option shall theretofore have
been terminated in accordance with the terms hereof or the
provisions of the Plan.
3. VESTING; RESTRICTIONS ON EXERCISE.
(a) Subject to the provisions of Sections 5 and 8 hereof,
and unless accelerated, as set forth in the Plan or as provided
herein, the Option granted hereunder shall vest and become
<PAGE>
exercisable for the number of shares set forth opposite the dates
noted below (the "Option Vesting Schedule").
Cumulative
Date(s) Number of Vested Shares
______________ _______
______________ _______
______________ _______
______________ _______
______________ _______
(b) If the Corporation shall consummate any Reorganization
not involving a Change in Control in which holders of shares of
Common Stock are entitled to receive in respect of such shares
any securities, cash or other consideration (including, without
limitation, a different number of shares of Common Stock), the
Option shall thereafter be exercisable, in accordance with the
Plan and this Agreement, only for the kind and amount of
securities, cash and/or other consideration receivable upon such
Reorganization by a holder of the same number of shares of Common
Stock as are subject to the Option immediately prior to such
Reorganization, and any adjustments will be made to the terms of
the Option in the sole discretion of the Administering Body as it
may deem appropriate to give effect to the Reorganization. If
the Corporation shall consummate any Reorganization or other
corporate transaction which involves a Change of Control, the
rights of Optionee as to any adjustments or other matters
resulting therefrom shall be as set forth in the Plan.
(c) Subject to the provisions of Sections 5 and 8 hereof,
shares as to which the Option becomes exercisable pursuant to the
foregoing provisions may be purchased at any time thereafter
prior to the expiration or termination of the Option.
4. TERMINATION OF OPTION.
(a) The unexercised portion of the Option shall
automatically and without notice terminate and become null and
void at the time of the earliest to occur of:
(i) six (6) months after the Optionee's engagement
with the Corporation is terminated as a result of death or
Permanent Disability;
(ii) ninety (90) days after the Optionee's engagement
with the Corporation is terminated for any reason other than
death or Permanent Disability; or
(iii) the expiration date of the term of the Option.
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5. PROCEDURE FOR EXERCISE.
(a) Subject to the requirements of Section 8, the Option
may be exercised, from time to time, in whole or in part (but for
the purchase of a whole number of shares only), by delivery of a
written notice, a form of which has been attached as Annex A
hereto (the "Notice"), from the Optionee to the Chief Financial
Officer of the Corporation, which Notice shall:
(i) state that the Optionee elects to exercise the
Option;
(ii) state the number of vested shares with respect to
which the Option is being exercised (the "Optioned Shares");
(iii) state the date upon which the Optionee
desires to consummate the purchase of the Optioned Shares
(which date must be prior to the termination of such Option
and no later than thirty (30) days after the date of receipt
of such Notice);
(iv) include any representations of the Optionee
required under Section 8(c); and
(v) if the Option shall be exercised pursuant to
Section 9 by any person other than the Optionee, include
evidence to the satisfaction of the Administering Body of
the right of such person to exercise the Option.
(b) Payment of the Option Price for the Optioned Shares
shall be made in U.S. dollars by personal check, bank draft or
money order payable to the order of the Corporation or by wire
transfer.
(c) The Corporation shall issue a stock certificate in the
name of the Optionee (or such other person exercising the Option
in accordance with the provisions of Section 9) for the Optioned
Shares as soon as practicable after receipt of the Notice and
payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall have no
rights as a stockholder of the Corporation with respect to any
Optioned Shares until the date the Optionee or his nominee
(which, for purposes of this Agreement, shall include any third
party agent selected by the Administering Body to hold such
Optioned Shares on behalf of the Optionee), guardian or legal
representative is the holder of record of such Optioned Shares.
7. ADJUSTMENTS.
(a) If at any time while the Option is outstanding, (1)
there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of
a stock dividend, stock split, combination of shares or through
any recapitalization resulting in a stock split-up, spin-off,
combination or exchange of shares of Common Stock or (2) the
value of the outstanding shares of Common Stock is reduced by
reason of an
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<PAGE>
extraordinary cash dividend, then, and in each such event,
appropriate adjustment shall be made in the number of shares and
the exercise price per share covered by the Option, so that the
same proportion of the Corporation's issued and outstanding
shares of Common Stock shall remain subject to purchase at the
same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the
issuance by the Corporation of shares of its capital stock of any
class, or securities convertible into shares of capital stock of
any class, either in connection with a direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with
respect to, the number of or exercise price of shares of Common
Stock covered by the Option.
(c) Without limiting the generality of the foregoing, the
existence of the Option shall not affect in any manner the right
or power of the Corporation to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or
other changes in the Corporation's capital structure or its
business; (ii) any merger or consolidation of the Corporation;
(iii) any issue by the Corporation of debt securities, or
preferred or preference stock that would rank above the shares of
Common Stock covered by the Option; (iv) the dissolution or
liquidation of the Corporation; (v) any sale, transfer or
assignment of all or any part of the assets or business of the
Corporation; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE.
(a) The Option shall be exercisable only in accordance with
this Agreement and the terms of the Plan, including the
provisions regarding the period when the Option may be exercised
and the number of shares of Common Stock that may be acquired
upon exercise.
(b) The Option may not be exercised as to less than one
hundred (100) shares of Common Stock at any one time unless less
than one hundred (100) shares of Common Stock remain to be
purchased upon the exercise of the Option.
(c) To exercise the Option, the Optionee shall follow the
provisions of Section 5 hereof. Upon the exercise of the Option
at a time when there is not in effect a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") relating to the shares of Common Stock issuable upon
exercise of the Option, the Administering Body in its discretion
may, as a condition to the exercise of the Option, require the
Optionee (i) to represent in writing that the shares of Common
Stock received upon exercise of the Option are being acquired for
investment and not with a view to distribution and (ii) to make
such other representations and warranties as are deemed
appropriate by counsel to the Corporation. No Option may be
exercised and no shares of Common Stock shall be issued and
delivered upon the exercise of the Option unless and until the
Corporation and/or the Optionee shall have complied
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<PAGE>
with all applicable federal or state registration, listing and/or
qualification requirements and all other requirements of law or
of any regulatory agencies having jurisdiction.
(d) Stock certificates representing shares of Common Stock
acquired upon the exercise of the Option that have not been
registered under the Securities Act shall, if required by the
Administering Body, bear an appropriate legend which may, at the
discretion of the Administering Body, take the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
(e) The exercise of each Option and the issuance of shares
in connection with the exercise of an Option shall, in all cases,
be subject to each of the following conditions: (i) compliance
with the terms of the Plan and this Agreement, (ii) the
satisfaction of withholding tax or other withholding liabilities,
(iii) as necessary, the listing, registration or qualification of
any to-be-issued shares upon any securities exchange, The Nasdaq
Stock Market or other trading or quotation system or under any
federal or state law and (iv) the consent or approval of any
regulatory body. The Administering Body shall in its sole
discretion determine whether one or more of these conditions is
necessary or desirable to be satisfied in connection with the
exercise of an Option and prior to the delivery or purchase of
shares pursuant to the exercise of an Option. The exercise of an
Option shall not be effective unless and until such condition(s)
shall have been satisfied or the Administering Body shall have
waived such conditions, in its sole discretion.
9. RESTRICTION ON TRANSFER. The Option may not be
assigned or transferred except by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations
order as defined in the IRC, and may be exercised during the
lifetime of the Optionee only by the Optionee or the Optionee's
guardian or legal representative or assignee pursuant to a
qualified domestic relations order. If the Optionee dies, the
Option shall thereafter be exercisable, during the period
specified in Section 4(a)(i), by his executors or administrators
or by a person who acquired the right to exercise such Option by
bequest or inheritance to the full extent to which the Option was
exercisable by the Optionee at the time of his death. If the
Optionee becomes inflicted with a Permanent Disability, the
Option shall thereafter be exercisable, during the period
specified in Section 4(a)(i), by his legal representatives to the
full extent to which the Option was exercisable by the Optionee
at the time of his Permanent Disability. The Option shall not be
subject to execution, attachment or similar process. Any
attempted assignment or transfer
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<PAGE>
of the Option contrary to the provisions hereof, and the levy of
any execution, attachment or similar process upon the Option,
shall be null and void and without effect.
10. NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if (i) personally delivered, (ii) sent by nationally-
recognized overnight courier or (iii) sent by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Optionee, to the address set forth on the
signature page hereto; and
if to the Corporation, to:
Temtex Industries, Inc.
5400 LBJ Freeway, Suite 1375
Dallas, Texas 75240-2602
Attention: Chief Financial Officer
or to such other address as the party to whom notice is to be
given may have furnished to each other party in writing in
accordance herewith. Any such communication shall be deemed to
have been given (i) when delivered, if personally delivered, (ii)
on the first Business Day (as hereinafter defined) after
dispatch, if sent by nationally-recognized overnight courier and
(iii) on the third Business Day following the date on which the
piece of mail containing such communication is posted, if sent by
mail. As used herein, "Business Day" means a day that is not a
Saturday, Sunday or a day on which banking institutions in the
city to which the notice or communication is to be sent are not
required to be open.
11. NO WAIVER. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different
nature.
12. OPTIONEE UNDERTAKING. The Optionee hereby agrees to
take whatever additional actions and execute whatever additional
documents the Corporation or its counsel may in their reasonable
judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement
or the Plan.
13. MODIFICATION OF RIGHTS. The rights of the Optionee are
subject to modification and termination in certain events as
provided in this Agreement and the Plan.
14. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware applicable to contracts made and to be wholly performed
therein.
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<PAGE>
15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
16. ENTIRE AGREEMENT. This Agreement and the Plan
constitute the entire agreement between the parties with respect
to the subject matter hereof, and supersede all previously
written or oral negotiations, commitments, representations and
agreements with respect thereto.
TEMTEX INDUSTRIES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
OPTIONEE:
____________________________________
Name:_______________________________
Address:____________________________
____________________________
____________________________
Annexes
Annex A - Form of Exercise Notice
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<PAGE>
ANNEX A
-------
EXERCISE NOTICE
Ladies/Gentlemen:
I hereby exercise my Stock Option to purchase _________ shares of
Common Stock of TEMTEX INDUSTRIES, INC. at the option price of
$____ per share as provided in the Non-qualified Stock Option
Agreement dated the ___ day of ________________.
I acknowledge that I previously received a copy of the 1999
Omnibus Securities Plan of Temtex Industries, Inc. and executed a
Stock Option Agreement, and I have carefully reviewed both
documents.
I have considered the tax implications of my option and the
exercise thereof. I hereby tender my personal check, bank draft
or money order payable to TEMTEX INDUSTRIES, INC. in the amount
of $____________ or, I have wire transferred $_______________ to
TEMTEX INDUSTRIES, INC., which transfer shall be subject to the
confirmation of receipt of funds by the Corporation. [If payment
is to be made by wire transfer, the Optionee should contact the
Corporation's Chief Financial Officer or Controller in advance to
obtain wiring instructions.]
______________________________
Optionee
______________________________
Date
ARTER & HADDEN LLP
1717 Main Street, Suite 4100
Dallas, Texas 75201
Tel: 214.761.2100
Fax: 214.741.7139
April 10, 2000
Board of Directors
Temtex Industries, Inc.
5400 LBJ Freeway, Suite 1375
Dallas, Texas 75240
Re: Temtex Industries, Inc.
Registration Statement on Form S-8
1999 Omnibus Securities Plan
-----------------------------------
Gentlemen:
We have acted as counsel to Temtex Industries, Inc., a
Delaware corporation (the "Company"), in connection with the
preparation and filing of a Registration Statement on Form S-8
(the "Registration Statement") to be filed with the Securities
and Exchange Commission on or about April 10, 2000, under the
Securities Act of 1933, as amended (the "Securities Act"),
relating to 175,000 shares of the $.20 par value common stock
(the "Common Stock") of the Company that will be issued on the
exercise of stock options (collectively, the "Options") granted
or that may be granted under the 1999 Omnibus Securities Plan of
Temtex Industries, Inc. (the "Plan").
You have requested the opinion of this firm with respect to
certain legal aspects of the Registration Statement. In
connection therewith, we have examined and relied upon the
original, or copies identified to our satisfaction, of (1) the
Certificate of Incorporation and the Bylaws of the Company; (2)
minutes and records of the corporate proceedings of the Company
with respect to the establishment and approval of the Plan, the
granting of the Options under the Plan, the issuance of shares of
Common Stock pursuant to the Plan and related matters; (3) the
Registration Statement and exhibits thereto, including the Plan
and the form of stock option agreement under the Plan, each
listed as exhibits to the Registration Statement; and (4) such
other documents and instruments as we have deemed necessary for
the expression of the opinions herein contained. In making the
foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us
as originals, and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. As
to various questions of fact material to this opinion, and as to
the content and form of the Certificate
<PAGE>
Board of Directors - Temtex Industries, Inc.
April 10, 2000'
Page 2
of Incorporation, the Bylaws, minutes, records, resolutions and
other documents or writings of the Company, we have relied, to
the extent we deem reasonably appropriate, upon representations
or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the
Company, without independent check or verification of their
accuracy.
Based upon our examination, consideration of, and reliance
on the documents and other matters described above, and subject
to the comments and exceptions noted below, we are of the opinion
that, assuming (i) the outstanding Options were duly granted and
the Options to be granted in the future will be duly granted in
accordance with the terms of the Plan, (ii) the Company maintains
an adequate number of authorized but unissued shares and/or
treasury shares of Common Stock available for issuance to those
persons who exercise Options granted under the Plan, (iii) the
exercise of Options are in accordance with the provisions thereof
and in accordance with the provisions of the Plan, and (iv) the
consideration for the shares of Common Stock issuable upon the
exercise of the Options is actually received by the Company as
provided in the particular Option in accordance with the terms of
the Plan, and such consideration exceeds the par value of such
shares, then the shares of Common Stock issued pursuant to the
exercise of the Options will be validly issued, fully paid and
nonassessable.
We bring to your attention the fact that this legal opinion
is an expression of professional judgment and not a guaranty of
result. This opinion is rendered as of the date hereof, and we
undertake no, and hereby disclaim any, obligation to advise you
of any changes in or new developments that might affect any
matters or opinions set forth herein.
This opinion is limited in all respects to the Delaware
General Corporation Law on the date hereof.
We hereby consent to the filing of this opinion as
Exhibit 5.1 to the Registration Statement and to references to
our firm included in or made a part of the Registration
Statement. In giving this consent, we do not admit that we come
within the category of person whose consent is required under
Section 7 of the Securities Act or the Rules and Regulations of
the Securities and Exchange Commission thereunder. This opinion
may not be relied upon by any person other than the addressee
identified above.
Respectfully submitted,
/s/ Arter & Hadden LLP
ARTER & HADDEN LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the 1999 Omnibus Securities
Plan of our report dated October 21, 1999 with respect to the
consolidated financial statements and schedule of Temtex
Industries, Inc. and Subsidiaries included in its Annual Report
(Form 10-K) for the year ended August 31, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Dallas, Texas
April 4, 2000
