<PAGE>
As filed with the Securities and Exchange Commission on November 19, 1999
File No. 333-----
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BROWN & SHARPE MANUFACTURING COMPANY
Delaware ___________________________ 05-0113140
(State or Other Jurisdiction Exact name of registrant as (I.R.S. Employer
of Incorporation or specified in its charter) Identification No.)
Organization)
Precision Park
200 Frenchtown Road
North Kingstown, Rhode Island 02852
(Address of Principal Executive Offices)
1999 EQUITY INCENTIVE PLAN
________________________
(Full Title of the Plan)
Andrew C. Genor
Vice President and Chief Financial Officer
Brown & Sharpe Manufacturing Company
Precision Park, 200 Frenchtown Road
North Kingston, Rhode Island 02852
(401) 886-2000
______________________________________________
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
Title Of Securities Amount Proposed Maximum Proposed Maximum Amount Of
To Be To Be Offering Price Per Aggregate Offering Registration
Registered Registered/(1)/ Share/(2)/ Price Fee/(3)/
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common
Stock, Par Value 1,800,000 shares $2.469 $4,444,200 $1,235.49
$1.00
- -----------------------------------------------------------------------------------------------------------------
Class B Common 1,800,000 shares (See above) (See above) (See above)
$1.00
=================================================================================================================
</TABLE>
(1) No more than 1,800,000 shares of Class A Common Stock and Class B Common
Stock in the aggregate may be issued. As of November 18, 1999, only
1,495,091 shares of Class B Common Stock are available and authorized for
issuance. If the Registrant foresees issuing a greater number of shares of
Class B Common Stock under the 1999 Equity Incentive Plan, such issuance
will be subject to stockolder authorization of the necessary additional
shares of Class B Common Stock.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h) on the basis of the average of the high and low
prices of the Brown & Sharpe Class A Common Stock, par value $1.00,
reported on the New York Stock Exchange on November 17, 1999.
(3) Calculated on the basis of 1,800,000 shares of Class A Common Stock, par
value $1.00 per share, because no market exists for the shares of Class B
Common Stock, par value $1.00 per share, which shares of Class B Common
Stock are convertible into shares of Class A Common Stock on a one-for-one
basis.
Exhibit Index on Page II-8
Page 1 of 8_ Pages.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
Brown & Sharpe Manufacturing Company (the "Registrant" or the
"Company") hereby incorporates the following documents herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, as filed with the Securities and
Exchange Commission (the "Commission") on March 26, 1999,
pursuant to Section 13 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act.")
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999, and September 30, 1999 as filed with the
Commission pursuant to Section 13 under the Exchange Act, on May
14, 1999, August 13, 1999, and November 15, 1999, respectively.
(c) Annual Reports on Form 11-K for the fiscal year ended December
31, 1998 for The Brown & Sharpe Savings and Retirement Plan, and
The Brown & Sharpe Savings and Retirement Plan for Management
Employees, each as filed with the Commission pursuant to Section
15(d) under the Exchange Act, on June 28, 1999.
(d) The information under the caption "Description of Capital Stock"
on pages 22 and 23 in the Company's Prospectus dated October 1,
1980 filed pursuant to Rule 424(b) under the Securities Act of
1933, and any amendments or reports which have been or will be
filed in the future for the purpose of updating such information.
(e) The description of the Registrant's Class B Common Stock included
in the Registrant's effective registration statement on Form 8-A,
as filed with the Commission on April 28, 1988, and any
amendments or reports which have been or will be filed in the
future for the purpose of updating such information.
All documents subsequently filed by the Registrant pursuant to Section
13(a), Section 13(c), Section 14 and Section 15(d) of the Exchange Act prior to
the filing of a post-effective amendment to this Registration Statement that
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated herein by
reference from the date of filing of such documents.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Howard K. Fuguet, a partner at the firm of Ropes & Gray (which firm's
opinion is provided as Exhibit 5 hereto) serves on the board of directors of the
Registrant.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
II-1
<PAGE>
Section 145 of the Delaware General Corporation Law, as amended, provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor, against expenses actually and reasonably incurred in connection with the
defense or settlement of such action or suit if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interest of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or such other court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided, however, that such provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
Section 10 of the Registrant's By-Laws provides the following:
This corporation shall, to the maximum extent permitted from
time to time under the law of the State of Delaware, indemnify
and upon request shall advance expenses to any person who is or
was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was
or has agreed to be a director or officer of this corporation
or any direct or indirect subsidiaries of this corporation, or
while such a director or officer is or was serving at the
request of this corporation as a director, officer, partner,
trustee, employee or agent of any corporation, partnership,
joint venture, trust or other enterprise, including service
with respect to employee benefit plans, against expenses
(including attorney's fees and expenses), judgments, fines,
penalties and amounts paid in settlement incurred in connection
with the investigation, preparation to defend or defense of
such action, suit, proceeding or claim; provided, however, that
the foregoing shall not require this corporation to indemnify
or advance expenses to any person in connection with any
action, suit, proceeding,
II-2
<PAGE>
claim or counterclaim initiated by or on behalf of such person. Such
indemnification shall not be exclusive of other indemnification rights
arising under any By-Law, agreement, vote of directors or stockholders or
otherwise and shall inure to the benefit of the heirs and legal
representatives of such person. Any person seeking indemnification under
this Section 10 shall be deemed to have met the standard of conduct
required for such indemnification unless the contrary shall be established.
The Registrant has entered into separate Indemnity Agreements with
directors and officers to carry out the provisions of Section 10 of the By-Laws.
In addition, the Registrant maintains a directors' and officers' liability
insurance policy.
Item 7. Exemption From Registration Claimed.
-----------------------------------
Not applicable.
<PAGE>
Item 8. Exhibits.
--------
Exhibit
5. Opinion of Ropes & Gray.
10.1. 1999 Equity Incentive Plan.
23.1. Consent of Ropes & Gray (See Exhibit 5).
23.2. Consent of Ernst & Young LLP.
24. Power of Attorney (Included on Signature Page).
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 this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above shall not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Securities
and Exchange Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act 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 that is incorporated by reference in the
II-4
<PAGE>
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.
II-5
<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
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of North Kingstown, State of Rhode Island, on this
19th day of November, 1999.
BROWN & SHARPE MANUFACTURING COMPANY
By:_____________________
Name: Andrew C. Genor
Title: Vice President and Chief Financial Officer
POWER OF ATTORNEY
-----------------
Dated: November 19, 1999
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes and constitutes Frank T. Curtin and Andrew C. Genor, and each
of them singly, his true and lawful attorneys, with full power to them, to
execute in the name and on behalf of such person in the capacities indicated
below any and all amendments (including any post-effective amendments) to this
Registration Statement and to file the same, with exhibits thereto, and other
documents in connection therewith, making such changes in this Registration
Statement as the Registrant deems appropriate, and hereby ratifies and confirms
his signature as it may be signed by said attorneys, or any of them, to any and
all such amendments.
/s/ Frank T. Curtin Date
- --------------------------------------- ----
Frank T. Curtin, President, Chief
Executive Officer and Director
(Principal Executive Officer)
/s/ Russell A. Boss
- --------------------------------------
Russell A. Boss
Director
/s/ Howard K. Fuguet
- --------------------------------------
Howard K. Fuguet
Director
/s/ Harry A. Hammerly
- --------------------------------------
Harry A. Hammerly
Director
/s/ J. Robert Held
- --------------------------------------
J. Robert Held
Director
II-6
<PAGE>
/s/ Andrew C. Genor
- ----------------------------------------------
Andrew C. Genor
Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Henry D. Sharpe, III
- ----------------------------------------------
Henry D. Sharpe, III
Director
/s/ John M. Nelson
- ----------------------------------------------
John M. Nelson
Director
/s/ Paul R. Tregurtha
- ----------------------------------------------
Paul R. Tregurtha
Director
/s/ Roger E. Levien
- ----------------------------------------------
Roger E. Levien
Director
/s/ Alfred J. Corso
- ----------------------------------------------
Alfred J. Corso
Controller
(Principal Accounting Officer)
II-7
<PAGE>
EXHIBIT INDEX
Number Title of Exhibit
- ------ ----------------
5. Opinion of Ropes & Gray.
10.1 1999 Equity Incentive Plan.
23.1. Consent of Ropes & Gray (See Exhibit 5).
23.2. Consent of Ernest & Young LLP.
24. Power of Attorney (Included on Signature Page).
II-8
<PAGE>
EXHIBIT 5
[LETTERHEAD OF ROPES & GRAY APPEARS HERE]
November 19, 1999
Brown & Sharpe Manufacturing Company
Precision Park, 200 Frenchtown Road
North Kingston, Rhode Island 02852
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration
statement on Form S-8 (the "Registration Statement"), to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of an aggregate of 1,800,000 shares of
Class A Common Stock, $1.00 par value per share and Class B Common Stock, $1.00
par value share (the "Shares"), of Brown & Sharpe Manufacturing Company, a
Delaware Corporation (the "Company").
We have acted as counsel to the Company and are familiar with the actions
taken by the Company in connection with the Company's 1999 Equity Incentive Plan
(the "Plan"). For purposes of this opinion, we have examined the Plan and such
other documents as we deemed appropriate.
For purposes of our opinion, we have assumed that (i) any consideration
received by the Company upon the issuance or exercise of any award granted under
the Plan will at least be equal to the par value of the Shares issuable upon the
exercise of any stock options or subject to any other award, and (ii) the number
of shares to be issued upon any such exercise or issuance, together with the
total number of shares of the Company's Class A Common Stock and Class B Common
Stock previously outstanding, will not exceed the authorized number of such
shares of Class A Common Stock or Class B Common Stock, as the case may be,
specified in the Company's Certificate of Incorporation as then in effect. In
this connection, we call your attention to the fact that the number of shares of
Class B Common Stock which are authorized and available for issuance is
1,495,091.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized and, when the Shares have been issued and sold and consideration
received therefor by the Company in accordance with the terms of the Plan, will
be validly issued, fully paid and non-assessable.
<PAGE>
ROPES & GRAY
Brown & Sharpe Manufacturing Company November 19, 1999
-2-
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Ropes & Gray
<PAGE>
EXHIBIT 10.1
BROWN & SHARPE MANUFACTURING COMPANY
1999 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to advance
the interests of Brown & Sharpe Manufacturing Company (the "Company") and its
subsidiaries by enhancing their ability to attract and retain employees and
other individuals or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries through awards
based on the Company's common stock, either Class A Common Stock, $1 par value
or Class B Common Stock, $1 par value ("Stock"), and cash incentives.
The Plan is intended to accomplish these goals by enabling the Company
to grant awards ("Awards") in the form of Options, Stock Appreciation Rights,
Restricted Stock or Unrestricted Stock Awards, Deferred Stock Awards,
Performance Awards, Other Stock-Based Awards, or loans or supplemental grants,
or combinations thereof, all as more fully described below.
2. ADMINISTRATION
Unless otherwise determined by the Board of Directors of the Company
(the "Board"), the Plan will be administered by a committee of the Board
designated for such purpose (the "Committee"). The Committee shall consist of
at least two directors. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members. During such times as any Stock is registered
under the Securities Exchange Act of 1934 (the "1934 Act"), at least two members
of the Committee shall be "non-employee directors" within the meaning of Rule
16b-3 promulgated under the 1934 Act and "outside directors" within the meaning
of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as amended (the
"Code") (the "Outside Directors"). If any member of the Committee is not an
Outside Director, or a non-employee director, a sub-committee (the "Sub-
Committee") consisting solely of the non-employee directors and Outside
Directors shall administer the Plan in connection with Awards to "officers" of
the Company within the meaning of Section 16(b) of the 1934 Act or with respect
to any Award intended to be exempt under Section 162(m)(3) of the Code. Any
references to the Committee in this Plan shall also mean the Sub-Committee.
The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award; (c) determine the type or types of each Award; (d) determine the terms
and conditions of each Award, including provisions for accelerated vesting upon
the achievement of Company stock price levels; (e) waive compliance by a holder
of an Award with any obligations to be performed by such holder under the Award
and waive any terms or conditions of an Award; (f) subject to the provisions of
Section 6.1(b), amend or cancel an existing Award in whole or in part (and if an
award is canceled, grant another Award in its place on such terms and conditions
as the Committee shall specify), except that the Committee may not, without the
consent of the holder of an Award, take any action under this
<PAGE>
clause with respect to such Award if such action would adversely affect the
rights of such holder; (g) prescribe the form or forms of any instruments to be
used under the Plan, including any written notices and elections required of
Participants (as defined below), and change such forms from time to time; (h)
adopt, amend and rescind rules and regulations for the administration of the
Plan; and (i) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by any provision
of the Plan, will be conclusive and will bind all parties. Nothing in this
paragraph shall be construed as limiting the power of the Committee to make
adjustments under Section 7.3 or Section 8.6. In the case of any Award intended
to be eligible for the performance-based compensation exception under Section
162(m), the Committee shall exercise its discretion consistent with qualifying
the Award for such exception.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Awards may be made prior to such stockholder
approval if made subject thereto. No Award may be granted under the Plan after
February 11, 2009 (the 10th anniversary of day before Board approval), but
Awards previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section
----------------
8.6, the aggregate number of shares of Stock that may be delivered under the
Plan will be 1,800,000. If any Award requiring exercise by the Participant for
delivery of Stock terminates without having been exercised in full, or if any
Award payable in Stock or cash is satisfied in cash rather than Stock, the
number of shares of Stock as to which such Award was not exercised or for which
cash was substituted will be available for future grants. Shares of Restricted
Stock that have been forfeited in accordance with the terms of the applicable
Award and shares held back, in satisfaction of the exercise price or tax
withholding requirements, from shares that would otherwise have been delivered
pursuant to an Award shall also be available for future grants. The number of
shares of Stock delivered under an Award shall be determined net of any
previously acquired Shares tendered by the Participant in payment of the
exercise price or of withholding taxes.
(b) Special Limitations Applicable to Certain Awards. Subject to
------------------------------------------------
adjustment as provided in Section 8.6(a) to the extent such adjustment is
consistent with the continued satisfaction with respect to Awards of the
requirements of Section 162(m)(4)(C) of the Code, the maximum number of shares
of Stock for which Options and Stock Appreciation Rights may be awarded under
the Plan to any participant during any one year period is in the case of each
such form of Award 350,000 shares. For maximum limits relating to Performance
Awards, see Section 6.5 below.
---
(c) Shares to be Delivered. Stock delivered under the Plan may be
----------------------
either authorized but unissued Stock or previously issued Stock acquired and
held by the Company. No fractional shares of Stock will be delivered under the
Plan.
2
<PAGE>
5. ELIGIBILITY AND PARTICIPATION
Each key employee of the Company or any of its subsidiaries (an
"Employee") and each other individual or entity (other than employees of the
Company or any of its subsidiaries, but including without limitation directors
of the Company or a subsidiary of the Company) who, in the opinion of the
Committee, is in a position to make a significant contribution to the success of
the Company or its subsidiaries will be eligible to receive Awards under the
Plan (each such Employee, other individual or entity receiving an Award, "a
Participant"). Participants shall also include individuals who have accepted an
offer of employment from the Company and who the Company reasonably believes
will be key employees upon commencing employment with the Company (a "New
Hire"). For purposes of the Plan, a "subsidiary" is any corporation (other than
the employer corporation) in an unbroken chain of corporations beginning with
the employer corporation if, at the time of the granting of the option, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in or of the other corporation in such chain. Eligibility for
ISOs is further limited to those individuals whose employment status would
qualify them for the tax treatment described in Sections 421 and 422 of the
Code.
6. TYPES OF AWARDS
6.1 Options.
(a) Nature of Options. An option ("Option") is an Award giving the
-----------------
recipient the right on exercise thereof to purchase Stock.
Both "incentive stock options", as defined in Section 422(b) of the
Code (any Option intended to qualify as an incentive stock option being
hereinafter referred to as an "ISO"), and Options that are not ISOs, may be
granted under the Plan. ISOs shall be awarded only to Employees. An Option
awarded under the Plan shall be a non-ISO unless it is expressly designated as
an ISO at time of grant. Once an ISO has been granted, no action by the
Committee that would cause the Option to lose its status under the Code as an
incentive stock option will be effective without consent of the Option holder.
(b) Exercise Price. The exercise price of an Option will be
--------------
determined by the Committee subject to the following:
(1) The exercise price of an Option shall not be less than 100% of
the fair market value of the Stock subject to the Option, determined as of
the effective date of the Option.
(2) In no case may the exercise price paid for Stock which is part of
an original issue of authorized Stock be less than the par value per share
of the Stock.
(3) The Committee may not reduce the exercise price of an Option at
any time after the time of grant, with or without the consent of the Option
holder, thereby prohibiting the cancellation of higher prices and the
reissue of lower priced Options ("Repriced Options").
(c) Duration of Options. The latest date on which an Option may be
-------------------
exercised will be the tenth anniversary of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified by
the Committee at the time the Option was granted.
3
<PAGE>
(d) Exercise of Options. An Option will become exercisable at such
-------------------
time or times, and on such conditions, as the Committee may specify, including
provisions for acceleration of vesting upon the achievement of certain Company
stock price levels. The Committee may at any time and from time to time
accelerate the time at which all or any part of the Option may be exercised.
Except as otherwise determined by the Committee, any period during which a
Participant who is an Employee is on an unpaid leave of absence (or other unpaid
absence) from the Company shall toll the period of time over which an option
becomes exercisable. Any exercise of an Option must be in writing, signed by
the proper person and delivered or mailed to the Company, accompanied by (1) any
documents required by the Committee and (2) payment in full in accordance with
paragraph (e) below for the number of shares for which the Option is exercised.
If desired the Committee may provide for vesting prior to the date the Option
becomes exercisable.
(e) Payment for Stock. Stock purchased on exercise of an Option must
-----------------
be paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing his Option (or in the case of an Option which is not an
ISO, by the Committee at or after the grant of the Option), (i) through the
delivery of shares of Stock which have been held for at least six months (unless
the Committee approves a shorter period) and which have a fair market value on
the last business day preceding the date of exercise equal to the exercise
price, (ii) by delivery of a promissory note of the Participant to the Company
containing such terms as are specified by the Committee (provided that if the
Stock delivered upon exercise of the Option is an original issue of authorized
but unissued Stock, at least so much of the exercise price as represents the par
value of the Stock shall be paid in cash), (iii) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or (iv) by any combination of the
foregoing permissible forms of payment.
(f) Discretionary Payments. If (i) the market price of shares of
----------------------
Stock subject to an Option (other than an Option which is in tandem with a Stock
Appreciation Right as described in Section 6.2) exceeds the exercise price of
the Option at the time of its exercise, and (ii) the person exercising the
Option so requests in writing, the Committee may in its sole discretion cancel
the Option and cause the Company to pay in cash or in shares of Common Stock
(valued at fair market value) to the person exercising the Option an amount
equal to the difference between the fair market value of the Stock which would
have been purchased pursuant to the exercise (determined on the date the Option
is canceled) and the aggregate exercise price which would have been paid.
(g) Reload Awards. The Committee may provide that upon the exercise
-------------
of an Award through the tender of previously owned shares of Stock, the
Participant or other person exercising the award will automatically receive a
new Award of like kind covering a number of shares of Stock tendered in payment
of the exercise price of the first Award.
6.2 Stock Appreciation Rights.
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
-----------------------------------
("Stock Appreciation Right" or "SAR") is an Award entitling the holder on
exercise to receive an amount in cash or Stock or a combination thereof (such
form to be determined by the Committee) determined in whole or in part by
reference to appreciation, from and after the date of grant, in the fair market
value of a share of Stock. SARs may be based solely on appreciation in the fair
market value of Stock or on a comparison of such appreciation with some other
measure of market growth such as (but not limited) to
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appreciation in a recognized market index. The date as of which such
appreciation or other measure is determined shall be the exercise date unless
another date is specified by the Committee.
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights
----------------------------------
may be granted in tandem with, or independently of, Options granted under the
Plan.
(1) Rules Applicable to Tandem Awards. When Stock Appreciation
---------------------------------
Rights are granted in tandem with Options, (A) the Stock Appreciation Right
will be exercisable only at such time or times, and to the extent, that the
related Option is exercisable and will be exercisable in accordance with
the procedure required for exercise of the related Option and may be
exercised only when the market price of the Stock, subject to the Option,
exceeds the exercise price; (B) the Stock Appreciation Right will terminate
and no longer be exercisable upon the termination or exercise of the
related Option, except that a Stock Appreciation Right granted with respect
to fewer than the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related Option has been
exercised or has terminated exceeds the number of shares not covered by the
Stock Appreciation Right; (C) the Option will terminate and no longer be
exercisable upon the exercise of the related Stock Appreciation Right; and
(D) the Stock Appreciation Right will be transferable only with the related
Option.
(2) Exercise of Independent Stock Appreciation Rights. A Stock
-------------------------------------------------
Appreciation Right not granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as the Committee
may specify. Except as otherwise determined by the Committee, any period
during which a Participant who is an Employee is on an unpaid leave of
absence (or other unpaid absence) from the Company shall toll the period of
time over which a Stock Appreciation Right becomes exercisable. The
Committee may at any time accelerate the time at which all or any part of
the Right may be exercised.
Any exercise of an independent Stock Appreciation Right must be in
writing, signed by the proper person and delivered or mailed to the
Company, accompanied by any other documents required by the Committee.
6.3 Restricted and Unrestricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and provisions
-------------------------
of the Plan, the Committee may grant or sell shares of Stock in such amounts and
upon such terms and conditions as the Committee shall determine subject to the
restrictions described below ("Restricted Stock").
(b) Restricted Stock Agreement. The Committee may require, as a
--------------------------
condition to an Award, that a recipient of a Restricted Stock Award enter into a
Restricted Stock Award Agreement, setting forth the terms and conditions of the
Award and making payment of the purchase price. In lieu of a Restricted Stock
Award Agreement, the Committee may provide the terms and conditions of an Award
in a notice to the Participant of the Award, in the resolution approving the
Award, or in such other manner as it deems appropriate. The stock certificate
representing the Restricted Stock shall be appropriately legended to reflect the
applicable restrictions.
(c) Transferability and Other Restrictions. Except as otherwise
--------------------------------------
provided in this Section 6.3, the shares of Restricted Stock granted herein may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable period or periods established by
the Committee and the satisfaction of any other conditions or restrictions
established by the Committee
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(such period during which a share of Restricted Stock is subject to such
restrictions and conditions is referred to as the "Restricted Period"). Except
as the Committee may otherwise determine under Section 7.1 or Section 7.2, if a
Participant dies or suffers a Status Change (as defined at Section 7.2(a)) for
any reason during the Restricted Period, the Company may purchase the shares of
Restricted Stock subject to such restrictions and conditions for the amount of
cash paid by the Participant for such shares; provided, that if no cash was paid
by the Participant such shares of Restricted Stock shall be automatically
forfeited to the Company.
During the Restricted Period with respect to any shares of Restricted
Stock, the Company shall have the right to retain in the Company's possession
the certificate or certificates representing such shares.
(d) Removal of Restrictions. Except as otherwise provided in this
-----------------------
Section 6.3, a share of Restricted Stock covered by a Restricted Stock grant
shall become free from restrictions under the Plan upon completion of the
Restricted Period, including the passage of any applicable period of time and
satisfaction of any conditions to vesting. Except as otherwise determined by
the Committee, any period during which a Participant who is an Employee is on
leave of absence (or other unpaid absence) from the Company shall, to the extent
the Restricted Period relates to the passage of time, toll such time period.
The Committee shall have the right at any time, in its sole discretion,
immediately to waive or accelerate all or any part of the restrictions and
conditions with regard to all or any part of the shares held by any Participant.
(e) Notice of Election. Any Participant making an election under
------------------
Section 83(b) of the Code with respect to Restricted Stock must give a copy of
the election to the Company within ten days after filing with the Internal
Revenue Service.
(f) Voting Rights, Dividends and Other Distributions. During the
------------------------------------------------
Restricted Period, Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights and shall receive all regular cash
dividends paid with respect to such shares. Except as the Committee shall
otherwise determine, any other cash dividends and other distributions paid to
Participants with respect to shares of Restricted Stock, including any dividends
and distributions paid in shares, shall be subject to the same restrictions and
conditions as the shares of Restricted Stock with respect to which they were
paid.
(g) Other Awards Settled with Restricted Stock. The Committee may,
------------------------------------------
at the time any Award described in this Section 6 is granted, provide that any
or all of the Stock delivered pursuant to the Award will be Restricted Stock.
(h) Unrestricted Stock. Subject to the terms and provisions of the
------------------
Plan, the Committee may grant shares of Stock free of restrictions under the
Plan in such amounts and upon such terms and conditions as the Committee shall
determine.
6.4 Deferred Stock.
A Deferred Stock Award ("Deferred Stock Award") is an unfunded and
unsecured promise by the Company to deliver shares of Stock in the future
("Deferred Stock"). Delivery of the Stock will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Stock will
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take place. At the time any Award described in this Section 6 is granted, the
Committee may provide that any or all of the Stock delivered pursuant to the
Award will be Deferred Stock.
6.5 Performance Awards.
The Committee may, at the time an Award described in Sections 6.1, 6.2,
6.3, 6.4 or 6.7 is granted, impose the additional condition that performance
goals must be met prior to the Participant's realization of any vesting, payment
or benefit under the Award. In addition, the Committee may make awards entitling
the Participant to receive an amount in cash upon attainment of specified
performance goals (a "Cash Incentive"). Any Award or Cash Incentive made subject
to performance goals as described in the preceding two sentences shall be a
"Performance Award" subject to the provisions of this Section 6.5 in addition to
any other applicable provisions of the Plan or the Award. Performance Awards may
consist of Cash Incentives or Awards that are intended to qualify for the
performance-based compensation exception under Section 162(m) of the Code, other
than Options or Stock Appreciation Rights intended to qualify for such exception
by reason of the special rules under Section 162(m) of the Code applicable to
stock options and stock appreciation rights granted at an exercise price not
less than fair market value on the date of grant ("Qualified Performance
Awards") or Cash Incentives or Awards that either are not intended so to qualify
or are Options or Stock Appreciation Rights intended to qualify for such
exception by reason of the special rules under Section 162(m) of the Code
applicable to stock options and stock appreciation rights granted at an exercise
price not less than fair market value on the date of grant ("Other Performance
Awards"). The Committee will determine the performance measures, the period or
periods during which performance is to be measured, and all other terms and
conditions applicable to the Performance Award. The performance measures to
which a Performance Award is subject may be related to personal performance,
corporate performance, departmental performance, or any other category of
performance established by the Committee, including the achievement of specified
Company stock price levels. In the case of a Qualified Performance Award,
payment under the Award or of the Cash Incentive must be conditioned on the
satisfaction of one or more "qualified performance measures" preestablished by
the Committee in accordance with the rules under Section 162(m) of the Code and
on certification (within the meaning of the rules under Section 162(m) of the
Code) by the Committee that such measure or measures have been met or exceeded.
For purposes of the preceding sentence, a qualified performance measure is an
objectively determinable measure of performance based on any one or more of the
following (on a consolidated, divisional, subsidiary, line of business or
geographical basis or in combinations thereof): (i) sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation or amortization, whether or not on a continuing operations
or an aggregate or per share basis; return on equity, investment, capital or
assets; inventory level or turns; one or more operating ratios; borrowing
levels, leverage ratios or credit rating; market share; capital expenditures;
cash flow; stock price; stockholder return; or any combination of the foregoing;
or (ii) acquisitions and divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split-ups and the like; reorganizations;
recapitalizations, restructurings, financings (issuance of debt or equity) and
refinancings; transactions that would constitute a change of control; or any
combination of the foregoing. A qualified performance measure and targets with
respect thereto determined by the Committee need not be based upon an increase,
a positive or improved result or avoidance of loss. The maximum number of shares
of Stock subject to Performance Awards (other than Cash Incentives) awarded to
any Participant in any one year period shall be 350,000 shares. The maximum
amount payable under Cash Incentives to any Participant for any year shall be
$500,000.
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6.6 Loans and Supplemental Grants.
(a) Loans. The Company may make a loan to a Participant, either at
-----
the time of or after the grant to him or her of any Award. Such a loan may be
made in connection with either the purchase of Stock under the Award or the
payment of any federal, state, and local income tax in respect of income
recognized as a result of the Award. The Committee will have full authority to
decide whether to make such a loan and to determine the amount, terms and
conditions of the loan, including the interest rate (which may be zero), whether
the loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the loan is to be repaid and the conditions, if
any, under which it may be forgiven. However, no loan may have a term
(including extensions) exceeding ten years in duration.
(b) Cash Grants. In connection with any Award, the Committee may at
-----------
the time such Award is made or at a later date provide for and make a cash
payment to the Participant not to exceed an amount equal to (a) the amount of
any federal, state and local income tax on ordinary income for which the
Participant will be liable with respect to the Award, plus (b) an additional
amount on a grossed-up basis necessary to make him or her whole after tax,
discharging all the Participant's income tax liabilities arising from all
payments under this Section 6, all based on such reasonable estimates of
applicable tax rates as the Committee may determine.
6.7 Other Stock-Based Awards.
(a) Nature of Awards. The Committee may grant other Awards under
----------------
which Stock is or may in the future be acquired ("Other Stock-Based Awards").
Such awards may include, without limitation, debt securities convertible into or
exchangeable for shares of Stock upon such conditions, including attainment of
performance goals, as the Committee shall determine. Such convertible or
exchangeable securities may have such terms and conditions as the Committee may
determine at the time of grant. However, no convertible or exchangeable debt
shall be issued unless the Committee shall have provided (by Company right of
repurchase, right to require conversion or exchange, or other means deemed
appropriate by the Committee) a means of avoiding any right of the holders of
such debt to prevent a Company transaction by reason of covenants in such debt.
(b) Purchase Price; Form of Payment. The Committee may determine the
-------------------------------
consideration, if any, payable upon the issuance or exercise of an Other Stock-
Based Award. The Committee may permit payment by certified check or bank check
or other instrument acceptable to the Committee or by surrender of other shares
of Stock (excluding shares then subject to restrictions under the Plan).
(c) Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver
-----------------------------------------------------------------
of Restrictions. The Committee may determine the conditions under which an
- ---------------
Other Stock-Based Award shall be forfeited or, in the case of an Award involving
a payment by the recipient, the conditions under which the Company may or must
repurchase such Award or related Stock. At any time the Committee may in its
sole discretion accelerate, waive, or, amend any or all of the limitations or
conditions imposed under any Other Stock-Based Award.
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7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1 Death or Disability.
Except as the Committee may otherwise determine, if a Participant dies
or becomes permanently and totally disabled (as determined by the Committee),
the following will apply:
(a) All Options and Stock Appreciation Rights held by the Participant
immediately prior to death or such permanent and total disability, to the extent
then exercisable, may be exercised by the Participant's executor or
administrator or the person or persons to whom the Option or Right is
transferred by will or the applicable laws of descent and distribution or the
Participant's guardian, at any time within the one year period ending with the
first anniversary of the Participant's death or permanent and total disability,
as the case may be (or such shorter or longer period as the Committee may
determine), and shall thereupon terminate, and if such a participant thereafter
dies while the option is still exercisable, the option will be exercisable for
one year from that date. In no event, however, shall an Option or Stock
Appreciation Right remain exercisable beyond the latest date on which it could
have been exercised without regard to this Section 7. All Options and Stock
Appreciation Rights held by a Participant immediately prior to death or such
permanent and total disability that are not then exercisable shall accelerate
and become vested at death or such permanent and total disability.
(b) All Restricted Stock held by the Participant must be transferred
to the Company (and, in the event the certificates representing such Restricted
Stock are held by the Company, such Restricted Stock will be so transferred
without any further action by the Participant in accordance with Section
6.3(c)).
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award, Supplemental Grant, or Other Stock-Based Award to which the Participant
was not irrevocably entitled prior to death or such permanent and total
disability will be forfeited and the Award canceled as of the time of death or
such permanent and total disability.
7.2 Termination of Service (Other Than By Death or Disability).
If (i) a Participant who is an Employee ceases to be an Employee for
any reason other than death or disability (as defined above), (ii) there is a
termination (other than by reason of death or disability or satisfactory
completion of the project or service as determined by the Committee) of the
consulting, service or similar relationship in respect of which a non-Employee
Participant was granted an Award hereunder or (iii) a New Hire's offer of
employment is terminated prior to the New Hire commencing employment with the
Company or the New Hire does not commence his or her employment with the Company
within two months after receipt of an Award hereunder (such termination of the
employment or other relationship being hereinafter referred to as a "Status
Change"), then, except as the Committee may otherwise determine, the following
will apply:
(a) All Options and Stock Appreciation Rights held by the Participant
that were not exercisable immediately prior to the Status Change shall terminate
at the time of the Status Change. Any Options or Rights that were exercisable
immediately prior to the Status Change will continue to be exercisable for a
period of three months (or one year in the case of retirement at or after age 60
with the consent of the Company), and shall thereupon terminate, unless the
Award provides by its terms for immediate termination in the event of a Status
Change or unless the Status Change results from a discharge for
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cause which in the opinion of the Committee casts such discredit on the
Participant as to justify immediate termination of the Award. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section 7. For purposes of this paragraph, in the case of a Participant who is
an Employee, a Status Change shall not be deemed to have resulted by reason of
(i) a sick leave or other bona fide leave of absence approved for purposes of
the Plan by the Committee, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of employment
between the Company and a subsidiary or between subsidiaries, or to the
employment of a corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option in a transaction to which Section
424(a) of the Code applies. A Status Change will be deemed to have occurred, in
the case of an employee Participant, upon termination of the Participant's
employment with the Company and its Subsidiaries (whether or not the Participant
continues in the service of the Company or its Subsidiaries in some capacity
other than that of an employee of the Company or its Subsidiaries) and in the
case of any other Participant, when the service relationship in respect of which
the Award was granted terminates (whether or not the Participant continues in
the service of the Company or its Subsidiaries in some other capacity).
(b) All Restricted Stock held by the Participant at the time of the
Status Change must be transferred to the Company (and, in the event the
certificates representing such Restricted Stock are held by the Company, such
Restricted Stock will be so transferred without any further action by the
Participant) in accordance with Section 6.3(c) above.
(c) Any payment or benefit under a Deferred Stock Award, Performance
Award, Supplemental Grant, or Other Stock-Based Award to which the Participant
was not irrevocably entitled prior to the Status Change will be forfeited and
the Award canceled as of the date of such Status Change.
7.3.1 Change in Control Provision.
As used herein, a Change in Control and related definitions shall have
the meanings as set forth in Section 7.3.3 below.
Immediately prior to the occurrence of a Change in Control:
(a) Each Option and Stock Appreciation Right shall automatically
become fully exercisable unless the Committee shall otherwise expressly provide
at the time of grant.
(b) Restrictions and conditions on Restricted Stock, Deferred Stock,
Performance Award, Supplemental Grant, and Other Stock-based Awards shall
automatically be deemed waived to the extent, if any, specified (whether at or
after time of grant) by the Committee.
In addition to the foregoing and Sections 6.1(d), 6.2(b), 6.3(d) and
6.4, the Committee may at any time prior to or after a Change in Control
accelerate the exercisability of any Options and Stock Appreciation Rights and
may waive restrictions, limitations and conditions on Restricted Stock, Deferred
Stock, Performance Awards, Supplemental Grants, and Other Stock-based Awards to
the extent it shall in its sole discretion determine.
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7.3.2 Certain Corporate Transactions.
(a) In the event of a consolidation or merger in which the Company is
not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of
the complete liquidation of the Company or the sale or transfer of substantially
all of the Company's assets (a "Covered Transaction"), all outstanding Options
will terminate as of the effective date of the Covered Transaction, provided
that at least twenty (20) days prior to the effective date of any such merger,
consolidation, liquidation or sale of assets, but subject to Paragraphs (c) and
(d) below, the Committee shall make all outstanding Options exercisable
immediately prior to consummation of such Covered Transaction (to the extent
that such Options are not exercisable immediately prior to the consummation of
the Covered Transaction pursuant to Section 7.3.1).
(b) Subject to Paragraphs (c) and (d) below, the Committee may, in its
sole discretion, prior to the effective date of the Covered Transaction, (1)
remove the restrictions from each outstanding share of Restricted Stock, (2)
cause the Company to make any payment and provide any benefit under each
outstanding Deferred Stock Award, Performance Award, and Supplemental Grant
which would have been made or provided with the passage of time had the
transaction not occurred and the Participant remained an employee, and (3)
forgive all or any portion of the principal of or interest on a loan.
(c) If an outstanding Option or Other Award is subject to performance
or other conditions (other than conditions relating to the mere passage of time
and continued employment) which will not have been satisfied at the time of the
Covered Transaction, the Committee may, in its sole discretion, remove such
conditions. If it does not do so however, such Option or Other Award will
terminate, because the conditions have not been satisfied, as of the date of the
Covered Transaction notwithstanding Paragraph (a) and (b) above.
(d) With respect to an outstanding Option or Other Award held by the
participant who, following the Covered Transaction, will be employed by a
corporation which is a surviving or acquiring corporation in such transaction or
an affiliate of such a corporation, the Committee may, in lieu of the action of
the Committee described in Paragraphs (a) or (b) above or in addition to any
Option being exercisable immediately prior to consummation of the Covered
Transaction pursuant to Section 7.3.1 above, arrange to have such surviving or
acquiring corporation or affiliate assume the Option or Other Award or grant to
the Participant a replacement Option or other Award which, in the judgment of
the Committee, is substantially equivalent to the Option or Other Award. In the
case of an assumed or substitute Option intended to be an Incentive Stock
Option, the requirements of Section 424 (a) of the Code shall be satisfied
except as otherwise provided by the Committee.
7.3.3 Change in Control and Related Definitions.
A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(b) during any period of not more than two consecutive years (not
including any period prior to January 1, 1997), individuals who at the beginning
of such period constitute the Board and any new
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director (other than a director designated by a Person who has entered into an
agreement with the Company to effect a transaction described in Clause (a), (b),
or (c) of Section 7.3.3) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or
(c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) 65% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation, or
(2) a merger or consolidation effected to implement a re-
capitalization of the Company (or similar transaction) in which no
person acquires 30% or more of the combined voting power of the
Company's then outstanding securities; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets; or
(e) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided, however, that
if such agreement requires approval by the Company's shareholders of the
agreement or transaction or the satisfaction of other conditions, a Change in
Control shall not be deemed to have taken place unless and until such approval
is secured and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction, a
Change in Control shall be deemed to have occurred on the date of execution of
such agreement); or
(f) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a Change
in Control, provided that a Change in Control will not be deemed to have taken
place unless and until actions are taken that constitute a Change in Control
(but upon the taking of any such actions a Change in Control shall be deemed to
have occurred on the date of such announcement); or
(g) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of certain action
provided that the Change in Control shall not be deemed to have taken place
unless and until such action is taken (but upon the taking of such action, a
Change in Control shall be deemed to have occurred on the date of such
resolution of the Board).
"Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as modified and used in Sections 13(d) and
14(d) thereof, and shall also include its Affiliates and Associates (as such
terms are used in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934); however, a Person shall not include
(1) the Company, or any wholly owned or controlled subsidiary of
the Company,
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(2) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or
(3) a corporation or other entity owned, directly or indirectly, by
the shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company.
"Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the
Securities Exchange Act of 1934 as amended from time to time.
8. GENERAL PROVISIONS
8.1 Documentation of Awards.
Awards will be evidenced by such written instruments, if any, as may
be prescribed by the Committee from time to time. Such instruments may be in
the form of agreements to be executed by both the Participant and the Company,
or certificates, letters or similar instruments, which need not be executed by
the Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2 Rights as a Stockholder, Dividend Equivalents.
Except as specifically provided by the Plan, the receipt of an Award
will not give a Participant rights as a stockholder; the Participant will obtain
such rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, only upon the issuance of Stock. However, the Committee
may, on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Stock subject to the Participant's Award had such Stock been outstanding.
Without limitation, the Committee may provide for payment to the Participant of
amounts representing such dividends, either currently or in the future, or for
the investment of such amounts on behalf of the Participant.
8.3 Conditions on Delivery of Stock.
The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove restriction from shares previously delivered
under the Plan (a) until all conditions of the Award have been satisfied or
removed, (b) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange or The Nasdaq
National Market, until the shares to be delivered have been listed or authorized
to be listed on such exchange or market upon official notice of issuance, and
(d) until all other legal matters in connection with the issuance and delivery
of such shares have been approved by the Company's counsel. If the sale of
Stock has not been registered under the Securities Act of 1933, as amended, the
Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting transfer.
If an Award is exercised by the Participant's legal representative,
the Company will be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.
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8.4 Tax Withholding.
The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").
In the case of an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any Stock
or removal of restrictions thereon. If and to the extent that such withholding
is required, the Committee may permit the Participant or such other person to
elect at such time and in such manner as the Committee provides to have the
Company hold back from the shares to be delivered, or to deliver to the Company,
Stock having a value calculated to satisfy the withholding requirement. The
Committee may make such share withholding mandatory with respect to any Award at
the time such Award is made to a Participant. The Committee may also, but need
not, permit a Participant to tender previously owned shares of Stock in
satisfaction of tax withholding requirements on any Award.
If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to the
exercise or with respect to a disposition of the Stock received upon exercise,
the Committee may require as a condition of exercise that the person exercising
the ISO agree (a) to provide for withholding under the preceding paragraph of
this Section 8.4, if the Committee determines that a withholding responsibility
may arise in connection with the exercise, (b) to inform the Company promptly of
any disposition (within the meaning of Section 424(c) of the Code) of Stock
received upon exercise, and (c) to give such security as the Committee deems
adequate to meet the potential liability of the Company for other withholding
requirements and to augment such security from time to time in any amount
reasonably deemed necessary by the Committee to preserve the adequacy of such
security.
8.5 Transferability of Awards.
Unless otherwise permitted by the Committee, no Award (other than an
Award in the form of an outright transfer of cash or Unrestricted Stock) may be
transferred other than by will or by the laws of descent and distribution, and
during a Participant's lifetime, an Award requiring exercise may be exercised
only by the Participant (or in the event of the Participant's incapacity, the
person or persons legally appointed to act on the Participant's behalf).
8.6 Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or combination of
shares, re-capitalization or other change in the Company's capitalization, or
other distribution to holders of Stock other than normal cash dividends, after
the effective date of the Plan, the Committee will make any appropriate
adjustments to the maximum number of shares that may be delivered under the Plan
under Section 4(a), Section 4(b), and Section 6.5.
(b) In any event referred to in paragraph (a), the Committee will
also make any appropriate adjustments to the number and kind of shares of Stock
or securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change. The Committee may also make such adjustments to take into account
material
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changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan.
(c) In the case of ISOs or Awards intended to qualify for the
"performance-based compensation" exception under Section 162(m)(4)(C) of the
Code, the adjustments described in (a) and (b) will be made only to the extent
consistent with continued qualification of the Option or other Award under
Section 422 of the Code or Section 162(m) of the Code, as the case may be.
8.7 Employment or Other Rights, Etc.
Neither the adoption of the Plan nor the grant of Awards will confer
upon any person any right to continued retention by the Company or any
subsidiary as an Employee or otherwise, or affect in any way the right of the
Company or subsidiary to terminate an employment, service or similar
relationship at any time. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in Awards granted
under the Plan will not constitute an element of damages in the event of
termination of an employment, service or similar relationship even if the
termination is in violation of an obligation of the Company or any of its
subsidiaries to the Participant.
8.8 Deferral of Payments.
The Committee may agree at any time, upon request of the Participant,
to defer the date on which any payment under an Award will be made.
8.9 Past Services as Consideration.
Where a Participant purchases Stock under an Award for a price equal
to the par value of the Stock the Committee may determine that such price has
been satisfied by past services rendered by the Participant.
9. EFFECT, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant
will affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
Employees or other persons.
The Committee may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by law, or
may at any time terminate the Plan as to any further grants of Awards, provided
that (except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify for the award of ISOs under Section 422 of the Code
or for the award of performance-based compensation under Section 162(m) of the
Code, where the compensation is intended by the Committee to so comply.
10. GOVERNING LAW
The Plan shall be construed in accordance with the General Corporation
Law of the State of Delaware.
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Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-______) pertaining to the 1999 Equity Incentive Plan of Brown &
Sharpe Manufacturing Company of our reports (a) dated February 5, 1999, with
respect to the consolidated financial statements and schedule of Brown & Sharpe
Manufacturing Company incorporated by reference in its Annual Report (Form 10-K)
and (b) dated June 22, 1999 with respect to the financial statements and
schedules of The Brown & Sharpe Savings and Retirement Plan and The Brown &
Sharpe Savings and Retirement Plan for Management Employees included in the
Plans' Annual Report (Form 11-K), all for the year ended December 31, 1998,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Providence, Rhode Island
November 16, 1999
