<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CRSS INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
TIMOTHY R. DUNNE
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
- - --------------------------------------------------------------------------------
(4) Date filed:
- - --------------------------------------------------------------------------------
- - ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
CRSS INC.
1177 WEST LOOP SOUTH, SUITE 800
HOUSTON, TEXAS 77027-9096
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 27, 1994
To Our Stockholders:
The Annual Meeting of Stockholders of CRSS Inc. will be held in the
Company's offices at 1177 West Loop South, Lobby Level, Houston, Texas on
Thursday, October 27, 1994, at 9:30 A.M., Houston, Texas time, for the following
purpose:
(1) To elect a Board of Directors of seven (7) members.
(2) To adopt amendments to the 1990 Long-Term Incentive Compensation
Plan.
(3) To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on September 7,
1994, as the record date for the determination of stockholders entitled to
receive notice of, and to vote at, the Annual Meeting of Stockholders or any
adjournment thereof, and only stockholders of record at said time and on said
date are entitled to notice of, and to vote at, the annual meeting or any
adjournment thereof. The presence at the meeting in person or by proxy of the
holders of record of a majority of the outstanding shares of Common Stock
entitled to vote is required for a quorum.
Management sincerely desires your presence at the meeting. However, so that
we may be sure that your vote will be included, please sign and return the
enclosed Proxy promptly. If you attend the meeting, you may revoke your Proxy
and vote in person.
By Order of the Board of Directors,
Timothy R. Dunne, Secretary
Dated: September 21, 1994
Houston, Texas
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU INTEND TO BE PRESENT
AT THE MEETING. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
<PAGE> 3
CRSS INC.
1177 WEST LOOP SOUTH, SUITE 800
HOUSTON, TEXAS 77027-9096
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying proxy card are furnished by CRSS
Inc. (hereinafter called "CRSS" or "the Company") in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders, or any adjournment thereof, to be held at the
time and place and for the purposes set forth in the foregoing Notice of Annual
Meeting of Stockholders. The cost of solicitation of proxies will be paid by the
Company and will include reimbursement paid to brokerage firms and other
custodians, nominees and fiduciaries for their expenses in forwarding
solicitation material regarding the meeting to beneficial owners. The Company
has retained D. F. King & Co., Inc. to assist in the solicitation of proxies for
a fee of $4,000 plus reimbursement of expenses. Solicitation will be by mail,
and proxy material will be mailed to stockholders on or about September 21,
1994.
The enclosed proxy card, even though executed and returned, may be revoked
at any time prior to the voting of the proxy card by written notice to the
Company's Secretary at the address shown above. A stockholder may also revoke a
proxy card by attending the meeting and voting in person by ballot. A
stockholder may also revoke a proxy card by executing a proxy card bearing a
later date, in which case the later proxy card shall supersede the prior proxy
card. Proxy cards properly executed and received prior to the meeting will be
voted in accordance with the specifications made thereon, or, if no
specifications are made, in favor of the nominees listed in "Election of
Directors" and in favor of the Proposal described under "Proposal to Adopt
Amendments to the 1990 Long-Term Incentive Compensation Plan", and otherwise in
accordance with the judgment of the persons designated as proxies on the
enclosed proxy card (the "Proxies").
Abstentions may be specified on all proposals to be voted on except the
election of directors and will be counted as present for the purposes of the
item on which the abstention is noted. Abstentions will have the effect of a
negative vote on the proposal to adopt certain amendments described under
"Proposal to Adopt Amendments to the 1990 Long-Term Incentive Compensation
Plan." Broker non-votes will have no effect on the outcome of any of the matters
to be voted on by the stockholders at the Annual Meeting. Except in these two
circumstances, or unless otherwise instructed, the enclosed proxy will be voted
in favor of the nominees listed in "Election of Directors" and in favor of the
Proposal described under "Proposal to Adopt Amendments to the 1990 Long-Term
Incentive Compensation Plan."
VOTING SECURITIES AND RECORD DATE
Holders of record of Common Stock, $1 par value ("Common Stock"), of the
Company at the close of business on September 7, 1994, the record date for those
entitled to notice of the meeting, will be entitled to vote at such meeting. On
such date, the Company had outstanding and entitled to vote 12,965,663 shares of
Common Stock. The holders of Common Stock as of the record date will be entitled
to one vote per share. Other than the Common Stock, the Company has no class of
voting securities outstanding. The presence at the meeting in person or by proxy
of the holders of record of a majority of the outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum.
<PAGE> 4
The following table sets forth information as of September 7, 1994, with
respect to any person who is known to the Company to be the beneficial owner of
more than five percent (5%) of the Company's Common Stock, which is the only
class of voting securities. Except as otherwise indicated, such persons have
sole voting and investment power with respect to their shares.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
------------------------------------ ------------ ---------
<S> <C> <C>
State of Wisconsin Investment Board........................... 1,123,500 8.66%
P. O. Box 7842
Madison, WI 53707
Brinson Partners, Inc......................................... 978,282 7.54%
209 South LaSalle Street
Chicago, IL 60604
Capital Research and Management Company....................... 720,000 5.55%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of Directors is to be elected. Each director will hold office until
the next Annual Meeting of Stockholders, or until his successor shall be elected
and qualified.
The By-Laws of the Company provide that the number of directors elected
shall be set by the incumbent Board or by the stockholders, but shall not be
less than three. The present Board has resolved that seven (7) directors will
comprise the Board, and it is the intention of the Proxies to vote for the
election of the nominees listed in the table below, each of which is a nominee
for director of the Board. Each of the nominees is a member of the present Board
and was elected at the Annual Meeting of Stockholders on October 28, 1993 to
serve until the next Annual Meeting of Stockholders, or until his successor
shall be sooner elected and qualified, except for Larry E. Temple who was
elected to the Board by the Board of Directors on January 27, 1994. Although
management of the Company does not contemplate that any of the nominees will be
unable to serve, if such a situation arises prior to the meeting, the Proxies
will vote the proxies in accordance with their best judgment. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve if elected to office, and to the knowledge of the Board of Directors, each
nominee intends to serve his entire term.
A plurality vote of the holders of Common Stock represented at the Annual
Meeting in person or by proxy and entitled to vote is required to elect each
director. Consistent with Delaware law, the Company permits stockholders
entitled to vote for the election of directors to withhold authority to vote for
all nominees for directors or to withhold authority to vote for certain nominees
for directors.
2
<PAGE> 5
The names, ages and principal occupations of the present directors, all of
whom are nominees for election as directors, together with the number of shares
of Common Stock of the Company beneficially owned directly or indirectly by each
of them at September 7, 1994, are as follows. Unless otherwise indicated, such
persons have held the principal occupations reflected below for more than the
past five years. Such persons have sole voting and investment power with respect
to their shares.
<TABLE>
<CAPTION>
SHARES PERCENT OF
PRESENT PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY OUTSTANDING
NOMINEE AND (AGE) AND POSITIONS WITH THE COMPANY SINCE OWNED(1) SHARES
----------------- ------------------------------ ----- ------- ------
<S> <C> <C> <C> <C>
Bruce W. Wilkinson (50)......... Chairman of the Board of the Company 1981 350,495 2.70%
since 1989; President of the
Company from 1992 to 1994;
Chairman of the Nominating
Committee of the Company since
1994; Chief Executive Officer
since 1982; President of the
Company from 1982 until 1989;
Senior Vice President/Finance and
Treasurer of the Company from 1981
to 1982; Vice President/Finance
upon joining the Company in 1978.
Member, Board of Directors, of
Triten Corporation since 1990.
Thomas A. Bullock (71).......... Chairman of the Executive Committee 1971 43,130 *
of the Company since 1989; Chairman
of the Nominating Committee of the
Company from 1989 to 1994; Chair-
man of the Board of the Company
from 1971 until 1989; Company
Founder; Officer of the Company or
its predecessors from 1950 until
November 1, 1987; and Adjunct
Professor at Texas A&M University
since December 1991.
C. Herbert Paseur (68).......... Chairman of the Executive Committee 1971 82,288 *
from 1981 until 1989; Consultant
to the Company; Private Investor;
Company Founder; Officer of the
Company or its predecessors from
1961 until 1971; President and
Chief Executive Officer of the
Company from 1971 to 1981.
Mike A. Myers (58).............. Chairman of the Audit Committee of 1983 5,000 *
the Company since 1982; Chairman of
Myers Development Corporation (a
real estate development company)
since its formation in 1972;
Chairman of Myers Bancshares, Inc.
since 1981.
</TABLE>
(Table continued on following page)
3
<PAGE> 6
<TABLE>
<CAPTION>
SHARES PERCENT OF
PRESENT PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY OUTSTANDING
NOMINEE AND (AGE) AND POSITIONS WITH THE COMPANY SINCE OWNED(1) SHARES
----------------- ------------------------------ ----- -------- ------
<S> <C> <C> <C> <C>
John M. Seidl (55).............. Chairman of the Compensation Commit- 1988 1,500 *
tee of the Company since August
1993; Member of the Board of
Directors, President and CEO of
Cellnet Data Systems, Inc. (a
wireless communications company)
since 1994; Chairman of the Board
and Chief Executive Officer of
Kaiser Aluminum Corporation (a
fully integrated international
aluminum company listed on the New
York Stock Exchange) from January
1989 to January 1993; President of
MAXXAM Inc. (a natural resources
company listed on the American
Stock Exchange) from September
1990 to January 1993; President,
Chief Operating Officer and
Director of Enron Corp. (a
publicly-held integrated oil and
gas production and transmission
company) from May 1986 until
January 1989; Executive Vice
President of Enron Corp. from 1985
to 1986; Member of the Board of
Directors of J. B. Poindexter &
Co. since 1994; Member of the
Board of Directors of St. Mary
Land and Exploration Company since
1994.
Ben R. Stuart (59).............. President and Chief Executive 1993 1,000 *
Officer of Dresser-Rand Company (a
manufacturer of compressors,
turbines and electric motors)
since March 1992. Since 1988,
Senior Vice President -- Opera-
tions of Dresser Industries, Inc.
(a manufacturer of drilling,
mining and energy processing
equipment). Mr. Stuart joined
Dresser Industries in 1957 and has
held several positions, including
the President's position of four
(4) different operating divisions.
</TABLE>
(Table continued on following page)
4
<PAGE> 7
<TABLE>
<CAPTION>
SHARES PERCENT OF
PRESENT PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY OUTSTANDING
NOMINEE AND (AGE) AND POSITIONS WITH THE COMPANY SINCE OWNED(1) SHARES
----------------- ------------------------------ ----- ------- ------
<S> <C> <C> <C> <C>
Larry E. Temple (59)............ Attorney in private practice since 1994 5,000 *
1986; Member of the Board of
Directors of Temple-Inland, Inc.
(a publicly held forest products
company); Member of the Board of
Directors of Guaranty Federal
Bank, F.S.B; served as Chairman of
the Texas Select Committee on
Higher Education; member of the
Texas Guaranteed Student Loan Cor-
poration. Mr. Temple also serves
on several boards of the
University of Texas, and as a
member of the Board of the Lyndon
B. Johnson Foundation. Mr. Temple
formerly served as Special Counsel
to President Lyndon B. Johnson
from 1967 to 1969, and as an Exec-
utive Assistant to Texas Governor
John Connally from 1963 to 1967.
All Directors and Executive Officers (12 individuals) as a Group(2)(3).............. 774,247 5.97%
</TABLE>
- - ---------------
* Owns less than 1.00% of outstanding shares.
(1) The above information as to the number of shares beneficially owned as of
September 7, 1994, has been furnished by the respective directors and
executive officers. It includes shares and/or options held directly or in
the names of spouses, children, or trusts, as to which beneficial ownership
is disclaimed. Under the regulations of the Securities and Exchange
Commission, shares listed include those which the individuals have the
right to acquire through the exercise of stock options within 60 days
following September 7, 1994.
(2) At September 7, 1994, Mr. Wilkinson had the right to acquire 296,964 shares
and all other directors and executive officers of the Company had the right
to acquire 241,779 shares through the exercise of stock options within 60
days following September 7, 1994. Executive officer shares includes Messrs.
Martin and Perrone who were executive officers of the Company as of June
30, 1994 but resigned from their positions effective July 29, 1994.
(3) Set forth below is the beneficial ownership, as of September 7, 1994 of
individuals who were executive officers of the Company as of June 30, 1994:
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
EXECUTIVE OFFICER OWNED(1) SHARES
----------------- -------- ------
<S> <C> <C>
James T. Stewart............................................... 75,148 *
Craig L. Martin................................................ 76,554 *
William J. Gardiner............................................ 43,850 *
Frank A. Perrone............................................... 72,178 *
</TABLE>
Messrs. Stewart, Martin, Gardiner and Perrone had the right to acquire upon
exercise of stock options within 60 days following September 7, 1994,
65,436, 66,139, 36,100 and 56,000 shares, respectively.
5
<PAGE> 8
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six (6) meetings during the fiscal year ended
June 30, 1994. The Board has appointed and there now exist the following
standing Board Committees: Executive, Audit, Compensation and Nominating.
Messrs. Bullock (Chairman), Wilkinson, Paseur and Seidl comprise the
Executive Committee. The Executive Committee held eight (8) meetings in fiscal
year 1994. The function of the Executive Committee is to exercise the authority
of the Board of Directors in the management of the business of the Company
between regular meetings of the Board.
The Audit Committee was comprised of Messrs. Myers (Chairman), Denman and
Stuart. The Audit Committee's principal responsibilities are to review the scope
and results of audits by the Company's independent auditors, the scope of other
services performed by the independent auditors and the cost of such services.
Additionally, the Audit Committee reviews reports prepared by the internal audit
department relating to specific audit programs and internal accounting controls.
The Audit Committee recommends to the Board, for its appointment, independent
certified public accountants to audit the Company's books, records and accounts.
During fiscal year 1994, the Audit Committee held four (4) meetings.
The Compensation Committee was comprised of Messrs. Seidl (Chairman),
Bullock and Stuart. The Compensation Committee has as its function the review
and approval of compensation for senior management of the Company and the
approval of various incentive plans developed by Management. This Committee held
four (4) meetings during fiscal year 1994.
The Nominating Committee is comprised of Messrs. Wilkinson (Chairman),
Bullock, Denman and Seidl. The Nominating Committee's principal function is to
select and propose individuals for nomination to the Company's Board of
Directors. This Committee held one (1) meeting during fiscal year 1994.
All directors who are not employees of the Company were paid directors'
fees at an annual rate of $18,000 (in quarterly payments), plus $1,000 for each
Board meeting and $750 for each Committee meeting attended in fiscal year 1994.
There are no family relationships among any of the directors and officers
of the Company.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table shows, for the fiscal years ended June 30, 1994, 1993,
and 1992, the cash compensation paid by the Company, as well as certain other
compensation awarded, paid or accrued for those years, to each of the Chief
Executive Officer and the four other most highly paid executive officers of the
Company serving as such as of the end of fiscal year 1994 that received
compensation from the Company. In the event an individual did not serve as an
executive officer of the Company for the entire three (3) year period,
information is only provided for the year(s) in which the individual served as
an executive officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION
----------------------------- AWARDS PAYOUTS
OTHER ----------------------- ------- ALL
ANNUAL RESTRICTED SECURITIES LTIC OTHER
COMPEN- STOCK UNDERLYING PLAN COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS(D) OPTIONS/ PAYOUTS SATION(F)
POSITION YEAR ($) ($) ($) ($) SARS(#) ($) ($)
------------------ ---- ------- ------- ------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce W. Wilkinson
Chairman, President and Chief
Executive Officer(g).............. 1994 325,000 175,000 -- -- 10,000 -- 4,559
1993 300,000 150,000 -- -- -- -- 4,498
1992 300,000 1,986 -- 134,875 50,000 -- 4,364
James T. Stewart
President and Chief Executive
Officer of CRSS Capital,
Inc.(g)........................... 1994 195,000 124,800 -- -- 41,636 749,600(e) 4,559
Craig L. Martin
Senior Vice
President/Operations(a)........... 1994 172,500 86,250 -- -- 6,139 121,972(e) 4,559
1993 172,500 86,250 -- -- -- -- 3,733
1992 143,500 65,590 -- 103,750 70,000 40,076 4,356
William J. Gardiner
Senior Vice President, Chief
Financial Officer and
Treasurer(b)...................... 1994 150,000 75,000 -- -- 27,100 398,380(e) 4,500
1993 140,000 101,000(c) -- -- 22,500 -- 3,790
Frank A. Perrone
Vice President, General Counsel
and Corporate Secretary(a)........ 1994 115,000 32,200 -- -- -- -- 4,559
1993 115,000 25,000 -- -- -- -- 3,450
1992 109,500 24,145 -- 15,563 5,000 -- 3,328
</TABLE>
- - ------------
(a) Messrs. Martin and Perrone resigned from their positions shown above on July
29, 1994.
(b) Mr. Gardiner became an executive officer of the Company on August 25, 1992.
The amounts disclosed represent all of Mr. Gardiner's compensation paid by
the Company during fiscal year 1993.
(c) Includes a $45,000 project bonus for Mr. Gardiner related to completion of
project development activities and term financing for the Appomattox
Cogeneration facility in October 1992.
(d) Twenty percent (20%) of the restricted stock award vests on the date of
award (January 29, 1992) and twenty percent (20%) vests each year
thereafter. Dividends are paid on restricted stock awards. The aggregate
values of the restricted stock holdings at June 30, 1994 for Messrs.
Wilkinson, Stewart, Martin, Gardiner and Perrone are $55,900, $0, $43,000,
$0, and $6,450, respectively.
(e) In August, 1993, the Performance Grant Units issued pursuant to the
Company's 1990 Long Term Incentive Compensation Plan and related to the
performance of CRSS Capital, Inc. were redeemed. In conjunction with this
redemption, $333,139, $52,935 and $176,993 was paid to Messrs. Stewart,
Martin and Gardiner, respectively. The remaining $416,461, $69,037 and
$221,387 due to Messrs. Stewart, Martin and Gardiner, respectively, will be
paid by December 30, 1994.
(f) Other compensation amounts represent the Company match contribution to the
Company's 401(k) Savings and Investment Plan.
(g) Mr. Wilkinson resigned as President of the Company on August 25, 1994. On
that same date, Mr. Stewart was named to that position.
7
<PAGE> 10
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options made during fiscal year 1994 under the Company's Long-Term Incentive
Compensation Program to the named executive officers of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS GRANT
OPTIONS/ GRANTED TO EXERCISE OR DATE
SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE VALUE
- - ---- ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Bruce W. Wilkinson............. 10,000(a) 4 9.00 7/29/04 45,700(b)
James T. Stewart............... 41,636(a) 18 9.00 7/29/04 190,277(b)
Craig L. Martin................ 6,139(a) 3 9.00 7/29/04 28,055(b)
William J. Gardiner............ 27,100(a) 11 9.00 7/29/04 123,847(b)
Frank A. Perrone............... -- -- -- -- --
</TABLE>
- - ---------------
(a) All share options were granted July 29, 1993 and vest one year from date of
grant, or July 29, 1994, and expire ten years from vesting date.
(b) Grant date present value is based upon the Black-Scholes option pricing
model. The Black-Scholes option value was based upon the following
assumptions: (i) a dividend yield of 1.23%, (ii) a volatility factor of
0.3986, (iii) a 6.10% risk free rate of return, (iv) options exercised 10
years from vesting date, and (v) a discount rate of 3% per year during the
1-year vesting period to reflect the risk of forfeiture on unvested stock
options. These assumptions were based upon 3 years of historical monthly
trading data and typical executive turnover rates in the market.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers, concerning the exercise of options during the fiscal year
1994 and unexercised options held as of June, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT
SHARES AT FY-END(#) FY-END($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce W. Wilkinson...... 30,000 172,500 286,964 30,000 398,200 21,500
James T. Stewart........ -- -- 23,800 55,636 20,800 104,063
Craig L. Martin......... -- -- 60,000 34,139 164,025 65,343
William J. Gardiner..... -- -- 9,000 40,600 23,400 58,725
Frank A. Perrone........ -- -- 56,000 2,000 14,288 400
</TABLE>
8
<PAGE> 11
DESCRIPTION OF COMPANY'S EXECUTIVE COMPENSATION POLICY
AND THE FACTORS AND CRITERIA IN ESTABLISHING
THE COMPANY'S EXECUTIVE OFFICER COMPENSATION
The Company's policy concerning executive officer compensation is based on
the necessity of retaining officers displaying the following attributes: (i)
versatility in responding to the changing conditions of several distinct
markets, of which all but CRSS Capital's market are highly cyclical; (ii)
ability, experience and background to maintain a high level of credibility with
CRSS Services' and CRSS Capital's clients; and (iii) commitment and discipline
to perform a variety of executive functions due to the relatively small number
of Company executive officers.
The Company's operating and financial performance is the major executive
officer compensation criterion. In order to achieve an executive officer
compensation program that is performance based, overall executive officer
compensation is made up of three (3) major components: base salary, annual bonus
and long-term incentive compensation, with the latter two (2) components tied,
directly or indirectly, to the Company's operating and financial performance. It
is the Compensation Committee's intention to establish executive officer base
salaries at levels which are generally competitive (i.e. at or near the median
level of those of comparable companies). Although the Company's chief executive
officer and other executive officers base salaries are believed to be
competitive, the Compensation Committee believes the fiscal year 1994 base
salaries fall somewhat below the median salaries for chief executive officers
and other executive officers of comparably sized companies in the general
industry, engineering and construction, and independent power categories.
The second major component of executive officer compensation consists of an
annual bonus from the Senior Management Incentive Award Plan. The annual Senior
Management Incentive Award Plan bonus for each individual executive officer is
calculated as the product of the individual officer's target bonus amount
multiplied by the ratio of the Company's, or CRSS Capital, Inc.'s in the case of
Mr. Stewart, actual performance for the year end as compared to the Operating
and Financial Plan ("Plan") for the same fiscal year. The Compensation Committee
establishes the target bonuses at the beginning of each fiscal year. The fiscal
year 1994 bonus targets were 50%, 50%, 50%, 40% and 35% of base salary for
Messrs. Wilkinson, Stewart, Martin, Gardiner and Perrone, respectively, and are
redetermined each year by the Compensation Committee based on the individual's
ability to impact the financial results for the Company. The Board of Directors
approves the Company's Plan at the beginning of each fiscal year. The actual
bonus varies linearly with actual Company performance between 50% and 150% of
Plan. For Company performance below 75% of Plan, bonus payments are only made at
the discretion of the Compensation Committee. For Company performance below 50%
of Plan, no bonus is paid. The annual bonus is capped at the amount established
when Company performance is 150% of the Plan.
Each year, the Compensation Committee also authorizes the Chief Executive
Officer to distribute certain amounts from the Discretionary Bonus Plan. Bonuses
from this plan reward employees for unusual effort benefiting the Company when
circumstances are such that normal compensation is inadequate in the opinion of
the Chief Executive Officer. All Company employees are eligible for this Plan.
No Discretionary Bonus Plan bonuses were paid in fiscal year 1994 to executive
officers.
Based on fiscal year 1994 results, the five most highly compensated
executive officers' overall cash compensation (base salary plus bonus) for
fiscal year 1994 was believed to be somewhat below the median amounts for
comparably sized general industry, engineering and construction, and independent
power companies.
The third major component of executive officer compensation consists of
long term incentive awards, which may include restricted stock, stock options,
and performance awards issued pursuant to the Company's 1990 Long Term Incentive
Compensation Plan. Awards, which generally vest over 4-5 years, are issued at
the discretion of the Compensation Committee and are typically issued to
executive officers at a frequency of every 2-4 years. Due to recent Company
stock prices, the annualized present value of executive officer long term
incentive compensation calculated pursuant to the Black Scholes Option Pricing
Model is also believed
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to be somewhat below the median amounts for comparably sized general industry,
engineering and construction, and independent power companies.
We believe the Company and its shareholders received significant value for
the services of its executive officers in fiscal year 1994. We also believe that
executive officer compensation for fiscal year 1994 was reasonable and in
accordance with the overall objective of retaining highly skilled and motivated
executive officers at reasonable compensation levels which reflect both the
individual's contribution to the Company's performance and actual Company
performance itself.
In July 1994, the Company sold substantially all of CRSS Services, Inc.,
its design, engineering and construction management subsidiaries, leaving the
independent power subsidiary, CRSS Capital, Inc., as the sole operating unit of
the Company. Consistent with the Company's decision to focus exclusively on the
independent power industry in the future, the Company's compensation policy
focus will shift to that of a company operating solely in that industry.
Respectfully submitted by the Compensation
Committee:
John M. Seidl, Chairman
Thomas A. Bullock
Ben R. Stuart
September 1, 1994
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Seidl, Bullock and Stuart are the only persons who have served on
the Compensation Committee of the Board of Directors at any time during the 1994
fiscal year. No member of the Compensation Committee was, during the 1994 fiscal
year, an officer or employee of the Company or any of its subsidiaries, or was
formerly an officer of the Company or any of its subsidiaries, except that Mr.
Bullock served as an officer of the Company and its predecessors as set forth
under "Proposal No. 1 -- Election of Directors," or had any relationships with
the Company requiring disclosure by the Company under Item 404 of Regulation
S-K.
During the Company's 1994 fiscal year, no executive officer of the Company
served as (i) a member of the Compensation Committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the
entire board of directors) of another entity, one of whose executive officers
served on the Company's Compensation Committee, (ii) a director of another
entity, one of whose executive officers served on the Company's Compensation
Committee, or (iii) a member of the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served as a director of the Company.
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PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
Among CRSS Inc., S&P 500 Index, S&P Engineering (ENG) and
Construction (CONSTR) Index and Independent Power Companies (IPC):
(VELOX)
In July 1994, the Company sold its design, engineering and construction
management subsidiaries, leaving the independent power subsidiary, CRSS Capital,
Inc., as the sole operating subsidiary of the Company. Consistent with the
Company's decision to focus exclusively on the independent power industry,
beginning next year the Company will change its performance graph comparison to
include only the IPC peer group. The selected IPC peer group consists of
publicly-traded, non-utility companies in the independent power and cogeneration
industry: AES Corporation, California Energy, Destec Energy, Magma Power and
Sithe Energies. In this year of transition, the S&P ENG and CONSTR index is
provided for comparison purposes.
The comparison of total return on investment (change in year-end stock
price plus reinvested dividends) for each of the periods assumes that $100 was
invested June 30, 1989 in CRSS Inc., S&P 500, S&P ENG and CONSTR and the IPC
Peer Group with investment weighted on the basis of market capitalization.
EMPLOYMENT AGREEMENTS
Mr. Bruce W. Wilkinson is a party to an employment agreement as amended on
July 27, 1989, with the Company for a term ending June 30, 1995, which term is
automatically extended an additional year on June 30 of each year if the Company
or the executive has not otherwise notified the other.
Under the terms of the above employment agreement, if the Company
terminates the executive's employment other than for cause, or the executive
terminates his employment for good reason (as hereinafter defined), then the
Company shall continue to pay the executive his salary for the duration of the
term of his Employment Agreement (but in no event for less than twelve months
following the date of such termination)
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and shall maintain the executive's participation for such period in all employee
benefit plans in which the executive was entitled to participate at the time of
his termination. If within three years after a change in control, the Company
terminates the executive's employment (other than for cause) or the executive
terminates employment with the Company for good reason, the Company shall pay to
the executive a cash amount equal to 2.5 multiplied by the sum of the
executive's annual base salary and aggregate bonus for the 12-month period prior
to the change in control or prior to such termination (whichever is greater). If
the payments and benefits that the executive has a right to receive would result
in "excess parachute payments" (as defined in the Internal Revenue Code of 1986,
as amended), and the executive would be required to pay an excise tax pursuant
to the Code in respect of such payments and benefits, the Company shall also pay
the executive an additional amount such that the executive would retain the
amount of such payments and benefits as if such excise tax had not been payable
thereon. Termination for good reason includes termination or resignation after
certain events, such as a demotion, the assignment to the executive of any
duties or responsibilities that are inconsistent with the executive's position,
layoff or involuntary termination (except for cause or as a result of the
executive's retirement, disability or death), a reduction in compensation or
benefits, the failure of any acquiror of the Company to assume the employment
contract and a breach of the Company's obligations under the employment
contract. If the executive terminates employment with the Company for reasons
other than good reason, as defined above, the Company shall pay the executive
compensation accrued through the date of termination and the Company shall then
have no further obligations to the executive under the agreement.
If a change in control had occurred on September 7, 1994, and if Mr.
Wilkinson had been terminated without cause or terminated his employment for
good reason on such date, he would have been entitled to receive (assuming no
excise tax were payable) approximately $1,250,000.
Mr. James T. Stewart is a party to an employment agreement with CRSS
Capital, Inc. dated July 1, 1989.
Under the terms of this employment agreement, if the Company terminates the
executive's employment other than for cause, or the executive terminates his
employment for good reason (as hereinafter defined), then the Company shall
continue to pay the executive his salary for twelve months and shall maintain
the executive's participation for such period in all employee benefit plans in
which the executive was entitled to participate at the time of his termination.
Termination for good reason includes termination or resignation after certain
events, such as a demotion, the assignment to the executive of any duties or
responsibilities that are inconsistent with the executive's position, layoff or
involuntary termination (except for cause or as a result of the executive's
retirement, disability or death), a reduction in compensation or benefits, the
failure of any acquiror of the Company to assume the employment contract and a
breach of the Company's obligations under the employment contract. If the
executive terminates his employment with the Company for reasons other than good
reason, as defined above, the Company shall pay the executive for compensation
accrued through the date of termination and the Company shall then have no
further obligations to the executive under the agreement.
If Mr. Stewart had been terminated without cause or terminated his
employment for good reason on September 7, 1994, he would have been entitled to
receive approximately $195,000 plus the amount of aggregate annual bonus Mr.
Stewart would have earned had he been employed with CRSS Capital, Inc. through
June 30, 1995.
Messrs. Craig L. Martin and Frank A. Perrone were each parties to
employment agreements dated March 1, 1992 and July 1, 1990, respectively.
Messrs. Martin and Perrone resigned from their positions on July 29, 1994 and
the Company's obligations thereunder were terminated.
CERTAIN TRANSACTIONS
Mr. Thomas A. Bullock and Mr. C. Herbert Paseur, both members of the
Company's Board of Directors, received $78,390 and $37,759, respectively, in
fiscal year 1994 from the Company's terminated defined benefit Retirement Plan.
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Messrs. Bullock and Paseur were paid $38,409 and $88,545, respectively, in
fiscal year 1994 pursuant to the terms of the Senior Executive Officer Early
Retirement Plan.
There are certain indemnification agreements in effect between the Company
and its directors as approved by the Company's stockholders at the 1986 Annual
Meeting. At the 1989 Annual Meeting, the Company's stockholders approved
amendments to the Company's Certificate of Incorporation and By-Laws further
expanding the indemnification of the Company's directors and officers as
permitted by Delaware law.
EXISTING BENEFIT PLANS
Set forth below is certain information with respect to the Company's other
existing benefit plans and the participation of certain individuals in such
plans. Stockholders are not being asked to take any action with respect to these
existing plans, with the exception of the 1990 Long Term Incentive Compensation
Plan.
SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN
The Senior Management Deferred Compensation Plan (the "Deferred
Compensation Plan") was adopted in 1987 pursuant to stockholder approval to
offer to certain key employees of the Company, its subsidiaries and affiliates
the opportunity to participate in a savings plan on a tax-deferred basis. Only
management employees who have an annual salary of $90,000 or more (subject to
annual adjustment for cost-of-living increases), exclusive of bonuses and
incentive compensation, are eligible to participate in the Deferred Compensation
Plan.
Each participant is entitled to defer from one percent (1%) to one hundred
percent (100%) of his total annual compensation (including bonuses and incentive
compensation). The amount of compensation deferred is credited to a deferral
account. Accruals to a participant's deferral account are based on the
performance of one or more investment vehicles selected by each participant from
among a group of investment vehicles designated by the Administrative Committee
of the Deferred Compensation Plan to serve as indices for determining the value
of such accruals.
A participant may also elect to defer awards made under the 1990 Long-Term
Incentive Compensation Plan. In the case of restricted stock Awards or other
Awards involving property, the number of shares in the deferred Award is
credited to a share account for the participant. An amount equal to any cash
dividends that would have been paid on such shares had they been delivered to
the participant is credited to a dividend account for the participant (together
with interest on the dividend account at a rate designated by the Administrative
Committee), and the amount of any dividends paid in Common Stock is credited to
his or her dividend account. At the time that the accounts are distributable to
the participant, the dividend account will be distributed in cash and the share
account will be distributed in Common Stock.
Distributions under the Deferred Compensation Plan are made only in the
event of termination of the participant's employment with the Company, or in the
event of a change of control, or with the consent of the Administrative
Committee on an earlier future date or dates, and in limited cases of severe
hardship. All distributions in respect of deferral accounts are made in cash,
except that amounts credited to share accounts are distributed in Common Stock.
All distributions with respect to matching accounts (for the twenty percent
(20%) Company matching contributions made through January 1, 1990, at which time
all further Company matching was terminated) are made, at the sole discretion of
the Administrative Committee, in either cash or Common Stock.
As indicated above, no Company matching contributions have been made since
January 1, 1990.
COMPANY 401(K) SAVINGS AND INVESTMENT PLAN
The 401(k) Plan is a Company-sponsored savings and investment plan. The
purpose of the 401(k) Plan is to enable employees of the Company to accumulate
savings on a tax-deferred basis and also to acquire an equity interest in the
Company through the investment of the Company's matching contributions in Common
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Stock. All employees of the Company are eligible to participate in the 401(k)
Plan after one (1) month of employment.
Under the 401(k) Plan, eligible employees may contribute from one percent
(1%) to fifteen percent (15%) of base salary in increments of one-half percent
( 1/2%) and the Company makes a matching contribution equal to fifty percent
(50%) of the employee's contribution, up to six percent (6%) of eligible
compensation.
The 401(k) Plan allows the Plan trustee to invest Company matching
contributions in Company Common Stock.
SENIOR MANAGEMENT INCENTIVE AWARD AND DISCRETIONARY BONUS PLAN
The Company presently has in effect a Senior Management Incentive Award and
Discretionary Bonus Plan which provides for payment of cash bonuses. Pursuant to
this compensation program, officers, inside directors and other key management
personnel have received bonuses based upon the profitability of each of the
operating units and the Company on a consolidated basis and for other specific
goal oriented achievements. However, directors who are not otherwise employed by
the Company or an operating unit are not eligible to receive bonuses under such
Plan. All determinations of amounts of bonuses pursuant to this Plan are made by
the Compensation Committee.
SENIOR EXECUTIVE OFFICER EARLY RETIREMENT PLAN
The Senior Executive Officer Early Retirement Plan ("Early Retirement
Plan") was established to provide special supplemental retirement benefits to
senior executive officers who have been employed by the Company for at least 25
years and have held such rank for at least ten years. The Early Retirement Plan
provides that eligible senior executive officers who retire after age 55 and
before reaching age 65 receive 1/2 of their final salary for life; however, as
they become eligible to collect benefits under the terminated CRS Sirrine, Inc.
Retirement Plan or Social Security retirement benefits, their benefits under
this Early Retirement Plan will be reduced by such amounts. There are six (6)
participants receiving benefits under this Early Retirement Plan.
Presently, no further participation in the Early Retirement Plan is
allowed.
The only officers or directors presently receiving benefits under this Plan
are Messrs. Thomas A. Bullock and C. Herbert Paseur. Such amounts are listed
elsewhere in this Proxy Statement under the caption "Certain Transactions".
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan (the "Supplemental Retirement
Plan") was adopted in 1987 to assist the Company in attracting and retaining
highly qualified employees by providing for supplemental retirement and death
benefits for senior management of the Company who perform duties which are
essential for the successful operation of the Company. Participants in the
Supplemental Retirement Plan consist of employees approved for participation by
the Board of Directors and the Compensation Committee who are either senior
executive officers of the Company or chief executive officers of a subsidiary or
division and who occupy a position essential to the successful operation of the
Company and have completed five years of service (unless waived by the
Compensation Committee and the Board).
The Supplemental Retirement Plan provides that each participant, upon
retirement on or after age 55, shall receive for 120 months a monthly
supplemental retirement payment equal to 1/12th of the participant's average
compensation multiplied by a percentage which varies linearly from a maximum
twenty percent (20%) for a participant whose retirement occurs on or after age
65 to ten percent (10%) for a participant whose retirement occurs at age 55. The
Supplemental Retirement Plan further provides that a participant, or his
designated beneficiary in the event of death, whose employment terminates by
reason of disability or death occurring on or after age 55 shall for 120 months
receive a monthly supplemental payment. In the case of disability, such monthly
supplemental disability payment shall equal 1/12th of the participant's average
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compensation multiplied by a percentage which varies linearly from a maximum of
twenty percent (20%) for a participant whose disability occurs on or after age
65 to ten percent (10%) for a participant whose disability occurs at age 55. In
the case of death, such monthly supplemental death payment shall be 1/12th of
the participants average compensation multiplied by 20%. In the event of a
change in control, any participant to whom a benefit becomes payable shall
receive in a single lump sum cash payment the present value of the payments due
under the Supplemental Retirement Plan.
No benefit is payable if the participant's employment is terminated for any
reason prior to age 55 or if the participant is terminated for Cause (as defined
in the Supplemental Retirement Plan) after age 55. In addition, any participant
whose employment is terminated by the Company within three years after a change
in control (other than for Cause), or who terminates his employment with the
Company for good reason (as defined in the Supplemental Retirement Plan) within
three years after a change in control, shall receive in a single lump sum cash
payment the present value of the supplemental retirement payments, calculated as
if such participant had retired at age 65. As of September 7, 1994, a total of
six (6) employees were participants in the Plan, including Mr. Wilkinson.
EMPLOYEE PROFIT SHARE PLAN
Effective July 1, 1987, the Company instituted an incentive-based Employee
Bonus Plan. This Employee Bonus Plan is a performance-based compensation plan
that binds employees of the Company and the Company's design and construction
and independent power subsidiaries to the objectives of profitability,
productivity and performance. Payment under the Employee Bonus Plan is
re-evaluated annually and made only at the discretion of management based upon
current year Company profitability. Effective July 1, 1991, the Employee Bonus
Plan was converted to a profit-share contribution to the CRSS 401(k) Savings and
Investment Plan. All payments pursuant to this Plan are paid into the individual
employee's 401(k) Savings and Investment Plan account. The amount paid into the
individual employee's 401(k) Savings and Investment Plan account is based on a
formula which takes into account the individual employee's fiscal year base
salary.
STOCK OPTION PLANS
There are currently non-qualified stock options ("NQSOs") outstanding under
the Non-Qualified Stock Option Plan approved by stockholders in 1984 and
terminated in 1989, except for options then outstanding, as well as incentive
stock options ("ISOs") outstanding under the Incentive Stock Option Plan
approved by stockholders in 1981 and also terminated in 1989, except for options
then outstanding. In 1989, stockholders approved the Company's 1990 Long-Term
Incentive Compensation Plan, under which 1,338,524 shares of Company Common
Stock are reserved for distribution.
SUMMARY OF 1990 LONG-TERM INCENTIVE COMPENSATION PLAN
The following summary of the 1990 Long-Term Incentive Compensation Plan
(the "1990 LTIC Plan") does not purport to be complete and is qualified in its
entirety by reference to the 1990 LTIC Plan attached hereto as Appendix A.
Appendix A includes all proposed amendments to the 1990 LTIC Plan, the approval
of which is being solicited pursuant to this Proxy Statement.
The purpose of the 1990 LTIC Plan is to provide incentives to key employees
of the Company and its affiliates and to other key individuals who perform
services for these entities, including persons who contribute significantly to
the strategic and long-term performance objectives and growth of the Company and
its affiliates (the "Participants"). The 1990 LTIC Plan is administered by the
Long-Term Incentive Plan Administrative Committee or any successor thereto,
which may delegate administrative responsibilities regarding Participants to
persons who are not subject to Section 16 of the Exchange Act if so permitted by
applicable law (together with any such delegate, the "LTIPA Committee"). The
1990 LTIC Plan provides for the granting of stock options (NQSOs and ISOs),
stock appreciation rights ("SARs"), restricted stock awards, performance grants
and other awards deemed by the LTIPA Committee to be consistent with the
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purposes of the 1990 LTIC Plan (collectively, "Awards," or individually,
"Award"). Such Awards may be granted alone, or in conjunction with one or more
other Awards, as determined by the LTIPA Committee.
A maximum of 1,838,524 shares of Common Stock of the Company (which
includes 500,000 shares subject to stockholder approval, see "Proposal
2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment to Increase
the Number of Shares Authorized for Issuance") may be issued under the 1990 LTIC
Plan in the form, or upon the payment, of Awards, subject to appropriate
adjustment by the LTIPA Committee in the event of a stock split, stock dividend,
combination, subdivision or exchange of shares, recapitalization, merger,
consolidation, reorganization or other extraordinary or unusual event. 1,156,376
of these shares already have been issued or are reserved for issuance in
connection with the payment of Awards. Common Stock shares issued under the 1990
LTIC Plan have been and may be either newly issued shares, treasury shares,
reacquired shares or any combination thereof. If any Common Stock shares issued
under the 1990 LTIC Plan as unvested restricted stock or as stock subject to
repurchase or forfeiture rights are retained or reacquired by the Company
pursuant to such terms or rights, or if any Award terminates, expires
unexercised, or is canceled, the Common Stock shares which would otherwise have
been issuable pursuant thereto will be available for issuance pursuant to the
grant of new Awards.
The LTIPA Committee has exclusive discretion (a) to select the Participants
to whom Awards will be granted and to determine the type, size and terms of each
Award, (b) to modify within certain limits the terms of any Award which has been
granted, (c) to determine the time when Awards will be granted, (d) to establish
or (subject to any required shareholder approval) modify performance goals, (e)
to make any adjustments necessary or desirable as a result of the granting of
Awards to Participants located outside the United States, and (f) to make all
other determinations which it deems necessary or desirable in the interpretation
and administration of the 1990 LTIC Plan. The LTIPA Committee has the authority
to administer, construe and interpret the 1990 LTIC Plan, and its decisions are
final, binding and conclusive. Persons eligible to receive Awards are key
employees, as determined by the LTIPA Committee. The Company estimates that
approximately 15 key employees are eligible to receive Awards under the 1990
LTIC Plan.
AWARDS UNDER THE 1990 LTIC PLAN
Stock Options. Options are not transferable during the Participant's
lifetime, with ISOs generally expiring not later than ten (10) years after the
date on which they are granted and NQSOs expiring at such time as determined by
the LTIPA Committee. See "Proposal 2 -- Proposal to Adopt Amendments to the 1990
LTIC Plan -- Amendment Authorizing Greater Flexibility in Exercisability Periods
for NQSOs." Options shall become exercisable at such times and in such
installments as the LTIPA Committee shall determine. The exercise price of an
option may be less than, equal to or greater than the fair market value of the
Common Stock shares subject to such option on the date of grant, as determined
by the LTIPA Committee, but in no event will the exercise price be less than
fifty percent (50%) (or one hundred percent (100%) with respect to ISOs) of the
fair market value of the underlying Common Stock shares on the date of grant.
Payment of the exercise price must be made in full at the time of exercise in
cash, by tendering to the Company shares of Common Stock having a fair market
value equal to the exercise price, by a combination thereof or by any other
means that the LTIPA Committee deems appropriate (including, without limitation,
the relinquishment of rights in one or more outstanding Awards). The 1990 LTIC
Plan sets forth the maximum number of shares of Common Stock for which options
may be granted to certain key employees during any fiscal year. See "Proposal
2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment to Comply
with Internal Revenue Code Section 162(m)."
No option may be exercised unless the holder has been, at all times during
the period from the date of grant through the date of exercise, employed by or
performing services for the Company or one of its affiliates, provided that the
LTIPA Committee may determine, subject to certain limitations required with
respect to ISOs, that such exercise may be made for certain periods following
the date on which a Participant ceases to be employed by or performing services
for the Company or one of its affiliates by reason of a period of Related
Employment (as defined in the 1990 LTIC Plan), retirement, disability, death or
otherwise in the LTIPA Committee's discretion.
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Stock Appreciation Rights. A SAR may be granted alone, or in tandem with an
option or other Award. A SAR that is related to another Award is exercisable
only to the extent that such other Award is exercisable and then only during
such period or periods as the LTIPA Committee may determine in its discretion.
The 1990 LTIC Plan sets forth the maximum number of shares of Common Stock for
which SARs may be granted to certain key employees during any fiscal year. See
"Proposal 2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment
to Comply with Internal Revenue Code Section 162(m)."
Upon exercise of a SAR, the holder must surrender the SAR and surrender
unexercised any related option or other Award. At the election of the LTIPA
Committee, the holder will receive in exchange cash or shares of Common Stock or
other consideration, or any combination thereof, equal in value to the
difference between the exercise price per share of the SAR, the related option
or Award, as the case may be, and the fair market value per share on the last
business day preceding the date of exercise, for each share subject to the SAR
or option or other Award, or portion thereof, which is exercised.
A Participant to whom an Award of an option or SAR is made shall have no
rights as a stockholder with respect to any shares of Common Stock issuable
pursuant to any such option or SAR until the date of issuance of the stock
certificate for such shares upon payment of the exercise price or settlement of
the SAR.
Restricted Stock Award. A restricted stock award is an award of a given
number of shares of Common Stock that may not be sold, pledged or otherwise
disposed of, except by will or the laws of descent and distribution, for a
period and in accordance with such other terms as may be specified by the LTIPA
Committee (the "Restricted Period") unless otherwise determined by the LTIPA
Committee. The Company generally has the option to repurchase or regain by
forfeiture all or a portion of the shares, at such price as the LTIPA Committee
shall have fixed, in cases where any applicable term has not been met, including
cases where the Participant's continuous employment with or performance of
services for the Company and its affiliates has terminated (except by reason of
a period of Related Employment, as defined in the 1990 LTIC Plan).
Prior to the expiration of the Restricted Period and the satisfaction of
applicable terms, a Participant who has received a restricted stock award will
have many of the rights of ownership of the shares of Common Stock included
therein, including the right to vote and to receive dividends, subject, however,
to the limitations imposed under the 1990 LTIC Plan during the Restricted
Period.
Performance Grants. At the time a performance grant is made, the LTIPA
Committee will establish performance goals to be achieved during a specified
period (the "Award Period"). The final value, if any, of a performance grant
will be determined by the degree to which the performance goals have been
achieved during the Award Period, subject to such adjustments as the LTIPA
Committee may approve based on relevant factors. The LTIPA Committee may, in its
discretion, make such adjustments in the computation of any performance goal as
it may deem appropriate. The maximum value of an award may be established by the
LTIPA Committee and may be a fixed dollar amount, an amount that varies from
time to time based on the value of a share of Common Stock, or an amount that is
determinable from other criteria specified by the LTIPA Committee. Performance
grants may be issued in different classes or series, having different names,
terms and conditions. The final value of an Award may vest over a period of time
determined by the LTIPA Committee after the final value is determined.
Notwithstanding the foregoing, the LTIPA Committee may limit its discretion with
respect to specific performance grants, or impose other requirements with
respect to specific performance grants, in order to take advantage of certain
tax benefits related to compensation in the form of performance grants. See
"Proposal 2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment
to Comply with Internal Revenue Code Section 162(m)."
The rights of a Participant in a performance grant will be provisional and
may be canceled or paid in whole or in part, as determined by the LTIPA
Committee, if the Participant's continuous employment with or performance of
services for the Company and its affiliates terminates during the Award Period,
except by reason of a period of Related Employment.
The LTIPA Committee generally will determine the value of a performance
grant as soon as practicable after the end of the Award Period or upon the
earlier termination of the Participant's employment or
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performance of services including by reason of death, disability or retirement.
The LTIPA Committee may, however, determine the value of the performance grant
and pay it out at any time during the Award Period.
Payment. Payment of an Award such as a performance grant may be made in
cash, shares of Common Stock or other consideration (for example, Company
securities or securities of Company affiliates, such as debentures, preferred
stock, warrants, securities convertible into shares of Common Stock or other
property, or a combination thereof), and in accordance with such terms as are
determined by the LTIPA Committee. Deferred payments may be made in installments
with a return calculated on the basis of one or more investment equivalents, as
determined by the LTIPA Committee in its discretion. In addition, a Participant
may elect to defer receipt of shares under a restricted stock award or of
amounts payable under a performance grant award under the Senior Management
Deferred Compensation Plan.
Market Value. On September 7, 1994, the closing sale price of the Company's
Common Stock, as reported on the New York Stock Exchange Composite Tape, was
$10.75 per share.
ADDITIONAL INFORMATION
Under the 1990 LTIC Plan, if there is any change in the outstanding shares
of Common Stock by reason of any stock split, stock dividend, combination,
subdivision or exchange of shares, recapitalization, merger, consolidation,
reorganization or other extraordinary or unusual event, the LTIPA Committee may
direct appropriate changes in the number or kind of securities that may be
issued under the 1990 LTIC Plan, in the number or kind of securities subject to,
or the exercise price under, any outstanding option, in the number or kind of
securities which have been awarded as restricted stock or in the repurchase
option price relating thereto, in the number or value of performance grants, in
the number or value of any other Award, or in any measure of performance of any
Award. In addition, the LTIPA Committee has the discretion to make appropriate
changes in some or all Awards, consistent with the purposes of the 1990 LTIC
Plan, including replacement or exchanges of Awards and the relinquishment of one
Award for another Award, and to make appropriate upward or downward adjustments
in Awards (for example, based upon job changes or transfers between units of the
Company), without the consent of Award holders under certain circumstances.
The LTIPA Committee also may determine to grant an Award in conjunction
with deferral of a Participant's compensation, and in such case, the LTIPA
Committee may provide that amounts be (a) forfeited to the Company and/or to
other holders of Awards under certain circumstances (including, without
limitation, certain types of termination of employment or performance of
services), (b) subject to increase or decrease in value based upon specified
performance measures and/or (c) credited with income equivalents until the date
or dates of payment of the Award.
The LTIPA Committee may permit a Participant to elect to pay taxes required
to be withheld with respect to an Award in any appropriate manner (including,
without limitation, by the surrender to the Company of shares of Common Stock
owned by such person or that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such Award).
Generally, a Participant's rights and interest under the 1990 LTIC Plan may
not be assigned or transferred in whole or in part, either directly or by
operation of law or otherwise (except in the event of a Participant's death, or
pursuant to a qualified domestic relations order), including, without
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner.
The 1990 LTIC Plan was adopted and approved by the Company's stockholders
on October 26, 1989 and was made effective as of the date of such adoption and
approval and will terminate on October 29, 1999, unless extended for up to an
additional five (5) years by action of the Board of Directors of the Company.
The Board of Directors may amend the 1990 LTIC Plan at any time and from time to
time for any purpose consistent with the goals of the 1990 LTIC Plan, but no
such amendment shall be effective unless and until the same is approved by the
stockholders of the Company where the absence of stockholder approval would
adversely affect the compliance of the 1990 LTIC Plan with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or other applicable law or regulation.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND SARS
Tax counsel for the Company has advised that under current law the
principal federal income tax consequences to Participants and their employers of
options granted under the 1990 LTIC Plan should generally be as set forth in the
following summary. (For purposes of this discussion, the term "employer" shall
be deemed to include the employer of an employee optionee and the taxpayer for
whom a non-employee optionee performs services.)
An individual to whom a NQSO (which is treated as an option for federal
income tax purposes) is granted will recognize no income at the time of the
grant of such option. When such optionee exercises such NQSO, he will recognize
ordinary compensation income equal to the difference, if any, between the fair
market value of the shares of Common Stock he receives upon exercise and the
exercise price for such shares. If, however, such shares are subject to a
substantial risk of forfeiture and transfer restrictions, as will be the case in
respect of such shares issued to persons who are subject to liability under
Section 16(b) of the Exchange Act, income will not be recognized until such time
as the substantial risks of forfeiture and restrictions (such as Section 16(b)
restrictions) terminate and the amount of such income will be based upon the
fair market value of such shares at such time. In addition, any dividends paid
on such shares that are subject to Section 16(b) restrictions will be taxable as
ordinary compensation income. By filing an election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), no later than thirty (30) days after the date of transfer of such
shares (a "Section 83(b) election"), a person subject to liability under Section
16(b) of the Exchange Act or whose shares are subject to other substantial risks
of forfeiture and transferability restrictions may elect to be taxed at the time
of exercise of such option.
The tax basis of such shares to such optionee will be equal to the exercise
price paid plus the amount includable in his gross income under the foregoing
notes, and his holding period for such shares will commence on the day on which
he recognizes taxable income with respect to such shares or, if he has made a
Section 83(b) election, on the date after such shares are transferred.
Subject to the applicable provisions of the Code and regulations
thereunder, the employer of such optionee will be entitled to a federal income
tax deduction in respect of NQSOs in an amount equal to the ordinary income
recognized by such optionee and in such employer's taxable year in which ends
the taxable year for which the optionee recognizes such income. Any compensation
includable in the gross income of an employee in respect of a NQSO will be
subject to appropriate federal income and employment taxes and withholding.
An employee to whom an ISO which qualifies under Section 422A of the Code
is granted should recognize no income at the time of grant or at the time of
exercise of such option. No federal income tax deduction will be allowable to
such optionee's employer upon the grant or exercise of such option. However,
upon the exercise of an ISO, the excess of the fair market value of the shares
of Common Stock received over the exercise price will be treated as an "item of
tax preference" to such optionee, includable in the alternative minimum taxable
income of such optionee in the year of exercise, and such amount will be added
to the tax basis of such shares for purposes of determining alternative minimum
taxable income in the year or years such shares are sold. When such optionee
sells such shares more than one (1) year after the date of transfer of such
shares and more than two (2) years after the date of grant of such ISO, he will
normally recognize a long-term capital gain or loss equal to the difference, if
any, between the sales price of such shares and the exercise price. If such
optionee does not hold such shares for this period, when he sells such shares he
will recognize ordinary compensation income equal to the lesser of the
difference, if any, between (a) the fair market value of such shares on the date
of exercise and the exercise price, or (b) the sales price and the exercise
price. In addition, such optionee will recognize capital gain or loss, short or
long-term, as the case may be, in an amount equal to the difference, if any,
between the amount recognized by such optionee upon the sale of such shares and
the sum of the exercise price plus the amount of ordinary compensation income,
if any, recognized by such optionee. Subject to applicable provisions of the
Code and regulations thereunder, such optionee's employer will be entitled to a
federal income tax deduction in the amount of such ordinary compensation income
and in such employer's taxable year in which ends the taxable year for which the
optionee recognizes such income.
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An individual to whom an SAR is granted, whether alone or in tandem with an
option or other Award, will recognize no income at the time of the grant.
Further, no federal income tax deduction will be allowable to the individual's
employer upon the grant of the SAR.
Upon the exercise of an SAR by an individual not subject to Section 16(b)
of the Exchange Act, the fair market value of cash, shares of Common Stock, or
other consideration received will be considered compensation income to the
individual subject to the appropriate federal income and employment taxes and
withholding, and the individual's employer will be entitled to a federal income
tax deduction in an equal amount similar to the notes set forth above in
connection with NQSOs.
An individual who is subject to Section 16(b) of the Exchange Act and who
receives cash or property on exercise of an SAR other than Common Stock or other
property subject to Section 16(b) is taxable at the same time and in the same
amount as if he were not subject to Section 16(b). However, if the individual
receives Common Stock or other property subject to Section 16(b) upon the
exercise of an SAR, he will not be considered as having received compensation
until the six (6) month restriction on stock sales, mandated by Section 16(b),
lapses. Similarly, the individual's employer is not entitled to a corresponding
federal income tax deduction until the end of the six (6) month restriction (or
later). However, the individual may make a Section 83(b) election within thirty
(30) days after the transfer of the shares (as described above for options) to
treat the Common Stock subject to Section 16(b) as taxable upon receipt. If the
election is made, the tax treatment of the individual will be the same as the
tax treatment for an individual who is not subject to Section 16(b).
The discussion set forth above does not purport to be a complete analysis
of all potential tax effects relevant to recipients of options or their
employers and does not address Awards other than options. It is based on federal
income tax law and interpretational authorities as of the date of this Proxy
Statement, which are subject to change at any time.
BENEFIT TRUST
The Company has authorized the establishment of a trust in order to secure
payment of certain obligations of the Company to the participants in the Senior
Management Deferred Compensation Plan, the Supplemental Executive Retirement
Plan and the Senior Executive Officer Early Retirement Plan, the Non-Qualified
Stock Option and Incentive Stock Option Plans, and to Mr. Wilkinson with respect
to his employment agreement, in the event of a change in control or a potential
change in control. The Company is to deliver to a trustee an irrevocable letter
of credit in the initial amount of $1,000,000 in order to pay obligations due
under such plans and agreements and certain litigation costs in the event that
after a change in control the Company refuses to pay a claim.
PROPOSAL NO. 2
PROPOSAL TO ADOPT AMENDMENTS TO THE 1990 LTIC PLAN
AMENDMENT TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
The Board of Directors has approved an increase of 500,000 shares in the
number of shares of Common Stock authorized for issuance under the 1990 LTIC
Plan and is recommending this increase to stockholders for their approval. If
approved by the stockholders, the number of shares authorized for grant under
the 1990 LTIC Plan would be increased from 1,338,524 shares to 1,838,524 shares.
As of September 7, 1994, under the 1990 LTIC Plan, options to purchase
1,029,856 shares of Common Stock were outstanding, 143,710 shares had been
issued previously pursuant to grants or exercises of options, and 17,190 shares
had lapsed, and thus, before giving effect to the proposed increase recommended
for approval at this Annual Meeting, only 182,148 shares of Common Stock
remained as authorized and available for issuance under the 1990 LTIC Plan.
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The Board of Directors believes that the number of shares currently
authorized and available for grant under the 1990 LTIC Plan is not sufficient to
meet the needs of the Company's long-term incentive compensation program. The
1990 LTIC Plan, by providing stock options and other Awards, is the principal
incentive compensation tool used by the Company to motivate key individuals to
create long-term value for stockholders. The Plan is also essential in
attracting and retaining experienced officers and employees. The Board believes
that providing key individuals with the opportunity to participate in an
increase in stock value is in the best interest of the Company because it
encourages equity ownership by management, and therefore more closely aligns
management's interests with those of all stockholders.
AMENDMENT AUTHORIZING GREATER FLEXIBILITY IN EXERCISABILITY PERIODS FOR NQSOS
The Board of Directors has approved and recommends to the stockholders
their approval of, an amendment to the 1990 LTIC Plan conferring upon the
Long-Term Incentive Plan Administrative Committee (the "LTIPA Committee") the
flexibility to determine without limitation the period of exercisability for
NQSOs issued under the 1990 LTIC Plan. Currently, the exercisability period for
NQSOs is limited to ten (10) years or less.
Among the various awards which may be granted under the 1990 LTIC Plan are
NQSOs and ISOs. NQSOs do not offer the tax advantages to employees associated
with ISOs and, accordingly, are not subject to certain limitations that apply to
ISOs. One such limitation upon ISOs is the requirement that the exercisability
period must be ten (10) years or less. This limitation does not apply to NQSOs.
The proposed amendment is part of an effort by the Board to remove limitations
from NQSOs that are only required to be applied to ISOs. This effort clarifies
the distinction between NQSOs and ISOs and thus enables the Company to take
advantage of, to the fullest extent possible, the opportunities afforded by each
type of stock option.
AMENDMENT TO COMPLY WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, as amended (the "Code"), added
by the Revenue Reconciliation Act of 1993, prevents a publicly held corporation
from deducting against its income compensation paid either to its chief
executive officer or any one of its four other highest paid officers in excess
of $1,000,000 ("Key Officers"), subject to certain specified exceptions. One
such exception from the deduction limit set by Section 162(m) is available for
certain performance-based compensation. The specific proposed requirements of
the performance-based compensation exception are set forth in the proposed
regulations under Section 162(m). Certain amendments to the 1990 LTIC Plan are
needed to conform the Plan to those requirements.
The LTIPA Committee, which administers the LTIC Plan, is currently composed
of three (3) outside directors. Section 162(m) requires that performance goals
be determined by a committee composed solely of two (2) or more outside
directors. Accordingly, the Board of Directors has approved, and recommends to
the stockholders, an amendment to the 1990 LTIC Plan requiring that all members
of the LTIPA Committee be outside directors.
Under the 1990 LTIC Plan, the LTIPA Committee may award a performance
grant, which is an award that entitles the participant to a specified amount,
determined by the LTIPA Committee, if certain terms and conditions specified in
the Plan or the award are satisfied. The Board of Directors has approved, and
recommends to the stockholders, an amendment providing that the LTIPA Committee,
in its discretion, shall establish performance goals applicable to performance
grants granted to participants who, in the judgment of the LTIPA Committee, are
Key Officers, in such a manner as is intended to cause the performance grants to
be excluded from the deduction limit, and that the LTIPA Committee shall, in its
discretion, otherwise satisfy any other requirements necessary to permit such
performance grants to be excluded from the deduction limit.
NQSOs, ISOs and SARs also may be awarded by the LTIPA Committee pursuant to
the 1990 LTIC Plan. In order that such awards will be deemed to fall within the
performance-based compensation exception to the deduction limit, the Board of
Directors has approved, and recommends to the stockholders, that the 1990 LTIC
Plan be amended to provide that no Key Officer shall receive NQSOs, ISOs or SARs
with respect to more than 100,000 shares of Common Stock in any fiscal year.
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AMENDMENT TO PROVIDE FOR REIMBURSEMENT OF CERTAIN EXCISE TAXES
Section 4999 of the Code imposes a twenty percent (20%) excise tax (the
"Excise Tax") on amounts in the nature of compensation received by certain
employees as a result of a change in the ownership or effective control of a
company, or a change in the ownership of a substantial portion of the assets of
a company (defined in Section 280G(b) of the Code as "parachute payments"). This
Excise Tax is imposed if a parachute payment exceeds three (3) times the
applicable person's "base amount" (defined in Section 280G(b) of the Code as
annualized compensation over the previous five years.)
The LTIC Plan provides for the acceleration of vesting of all Awards
granted under the 1990 LTIC Plan upon any Change in Control (as defined in the
1990 LTIC Plan). Certain Changes in Control would constitute a change in the
ownership or effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company, for purposes of the Code's
definition of a parachute payment. In such cases, the resulting acceleration of
vesting of an Award may, under some circumstances, result in an "excess
parachute payment" (defined in Section 280G(b) of the Code), which is subject to
the Excise Tax. The Board of Directors believes that the imposition of an Excise
Tax in this situation unfairly prevents the applicable participant in the 1990
LTIC Plan from receiving the full benefits to which he is entitled under the
1990 LTIC Plan. Accordingly, the Board has approved, and recommends to the
stockholders, an amendment to the 1990 LTIC Plan requiring the Company to
reimburse any participant in the 1990 LTIC Plan for any Excise Taxes imposed on
such participant as the result of a Change in Control.
GENERAL
Each of the executive officers of the Company is eligible to participate in
the 1990 LTIC Plan.
A majority vote of the holders of common stock represented at the Annual
Meeting in person or by proxy and entitled to vote is required to adopt the
proposed amendments to the 1990 LTIC Plan. For the reasons set forth above, the
Board recommends to the stockholders the adoption of all of the proposed
amendments.
SELECTION OF AUDITORS
During the past fiscal year, the Audit Committee recommended and the Board
of Directors selected the firm of Ernst & Young to serve as the independent
auditors of the Company for the year ended June 30, 1994.
It is the intention of the Board to select independent auditors during
fiscal year 1995. Since ratification of the appointment of auditors is not
required as a matter of state or federal law or by the rules of the New York
Stock Exchange, the Board will not request at this time, or subsequently during
fiscal year 1995, ratification by the Company's Stockholders of such selection.
So far as is known to Management of the Company, neither the firm of Ernst
& Young nor any of its members has any direct or material indirect financial
interest in the securities of the Company. Representatives of Ernst & Young will
be present at the annual meeting, with the opportunity to make a statement if
they so desire and also to be available to respond to appropriate questions.
STOCKHOLDERS PROPOSALS
Stockholders complying with Rule 14a-8, Securities Exchange Act of 1934,
desiring to present an appropriate resolution to the 1995 Annual Meeting of
Stockholders must furnish the proposed resolution at the Company no later than
May 24, 1995, for inclusion in the Company's Proxy Statement and form of proxy
relating to such meeting.
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OTHER BUSINESS
Management of the Company knows of no matters expected to be presented at
the annual meeting other than those described above; however, if other matters
are properly presented at the meeting for action, it is intended that the
persons named in the accompanying form of Proxy, and acting thereunder, will
vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
Timothy R. Dunne, Secretary
Houston, Texas
September 21, 1994
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1994, AS REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
SECURITIES AND EXCHANGE ACT OF 1934, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES, BUT EXCLUDING THE EXHIBITS THERETO. EXHIBITS WILL BE MADE AVAILABLE
UPON RECEIPT OF PAYMENT BY CRSS INC. FOR REIMBURSEMENT OF THE COMPANY'S
REASONABLE EXPENSES FOR FURNISHING SUCH EXHIBITS. WRITTEN REQUESTS FOR COPIES OF
THE REPORT SHOULD BE DIRECTED TO THE ATTENTION OF MR. TIMOTHY R. DUNNE,
SECRETARY, CRSS INC., 1177 WEST LOOP SOUTH, SUITE 800, HOUSTON, TEXAS
77027-9096.
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APPENDIX A
CRSS INC.
1990 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of the 1990 Long-Term Incentive Plan (the "Plan")
is to advance the interests of CRSS Inc. (the "Company") and its shareholders by
providing incentives to certain key employees of the Company and its affiliates
and to certain other key individuals who perform services for these entities,
including those who contribute significantly to the strategic and long-term
performance objectives and growth of the Company and its affiliates.
2. Administration. The Plan shall be administered solely by the Long-Term
Incentive Plan Administrative Committee (the "Committee") of the Board of
Directors (the "Board") of the Company, as such Committee is from time to time
constituted, or any successor committee the Board may designate to administer
the Plan; provided that if at any time Rule 16b-3 or any successor rule ("Rule
16b-3") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), so permits without adversely affecting the ability of the Plan to comply
with the conditions for exemption from Section 16 of the Exchange Act (or any
successor provision) provided by Rule 16b-3, the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions,
and to such person or persons as it may determine in its discretion, as it
relates to persons not subject to Section 16 of the Exchange Act (or any
successor provision). The membership of the Committee or such successor
committee shall be constituted so as to comply at all times with the applicable
requirements of Rule 16b-3. No member of the Committee shall be eligible or have
been eligible within one year prior to his appointment to receive awards under
the Plan ("Awards") or to receive awards under any other plan, program or
arrangement of the Company or any of its affiliates if such eligibility would
cause such member to cease to be a "disinterested person" under Rule 16b-3;
provided that if at any time Rule 16b-3 so permits without adversely affecting
the ability of the Plan to comply with the conditions for exemption from Section
16 of the Exchange Act (or any successor provision) provided by Rule 16b-3, one
or more members of the Committee may cease to be "disinterested persons."
The Committee has all the powers vested in it by the terms of the Plan set
forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size and
terms of the Award to be made to each individual selected, to modify the terms
of any Award that has been granted, to determine the time when Awards will be
granted, to establish performance objectives, to make any adjustments necessary
or desirable as a result of the granting of Awards to eligible individuals
located outside the United States and to prescribe the form of the instruments
embodying Awards made under the Plan. The Committee is authorized to interpret
the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determination, which it deems necessary or desirable for the administration of
the Plan. The Committee (or its delegate as permitted herein) may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Award in the manner and to the extent the Committee deems necessary or
desirable to carry it into effect. Any decision of the Committee (or its
delegate as permitted herein) in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their members or any officer of the
Company to execute and deliver documents or to take any other ministerial action
on behalf of the Committee with respect to Awards made or to be made to Plan
participants. No member of the Committee and no officer of the Company shall be
liable for anything done or omitted to be done by him, by any other member of
the Committee or by any officer of the Company in connection with the
performance of duties under the Plan, except for his own willful misconduct or
as expressly provided by statute. Determinations to be made by the Committee
under the Plan may be made by its delegates.
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3. Participation.
(a) Affiliates. If an Affiliate (as hereinafter defined) of the Company
wishes to participate in the Plan and its participation shall have been approved
by the Board upon the recommendation of the Committee, the board of directors or
other governing body of the Affiliate shall adopt a resolution in form and
substance satisfactory to the Committee authorizing participation by the
Affiliate in the Plan with respect to its key employees or other key individuals
performing services for it. As used herein, the term "Affiliate" means any
entity in which the Company has a substantial direct or indirect equity interest
or which has a substantial direct or indirect equity interest in the Company, as
determined by the Committee in its discretion.
An Affiliate participating in the Plan may cease to be a participating
company at any time by action of the Board or by action of the board of
directors or other governing body of such Affiliate, which latter action shall
be effective not earlier than the date of delivery to the Secretary of the
Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
the Plan of an Affiliate shall terminate, such termination shall not relieve it
of any obligations theretofore incurred by it, except as may be approved by the
Committee in its discretion.
(b) Participants. Consistent with the purposes of the Plan, the Committee
shall have exclusive power (except as may be delegated as permitted herein) to
select the key employees and other key individuals performing services for the
Company, including consultants or independent contractors and others who perform
services for the Company and its Affiliates, who may participate in the Plan and
be granted Awards under the Plan. Eligible individuals may be selected
individually or by groups or categories, as determined by the Committee in its
discretion. No director of the Company, unless he is an employee of the Company
or is an officer or director of an Affiliate, shall be eligible to receive an
Award under the Plan. In no event may a corporation be eligible to receive an
award under the Plan.
4. Awards under the Plan.
(a) Types of Awards. Awards under the Plan may include, but need not be
limited to, one or more of the following types, either alone or in any
combination thereof: (i) "Stock Options," (ii) "Stock Appreciation Rights,"
(iii) "Restricted Stock," (iv) "Performance Grants" and (v) any other type of
Award deemed by the Committee in its discretion to be consistent with the
purposes of the Plan (including but not limited to, Awards of or options or
similar rights granted with respect to unbundled stock units or components
thereof, and Awards to be made to participants who are foreign nationals or are
employed or performing services outside the United States). Stock Options, which
include "Non-Qualified Stock Options" and "Incentive Stock Options" or
combinations thereof, are rights to purchase common shares of the Company and
stock of any other class into which such shares may thereafter be changed (the
"Common Shares"). Non-Qualified Stock Options and Incentive Stock Options are
subject to the terms, conditions and restrictions specified in Paragraph 5.
Stock Appreciation Rights are rights to receive (without payment to the Company)
cash, Common Shares, other Company securities (which may include, but need not
be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other
property, and other types of securities including, but not limited to, those of
the Company or an Affiliate, or any combination thereof ("Other Company
Securities")) or property, or other forms of payment, or any combination
thereof, as determined by the Committee, based on the increase in the value of
the number of Common Shares specified in the Stock Appreciation Right. Stock
Appreciation Rights are subject to the terms, conditions and restrictions
specified in Paragraph 6. Shares of Restricted Stock are Common Shares which are
issued subject to certain restrictions pursuant to Paragraph 7. Performance
Grants are contingent awards subject to the terms, conditions and restrictions
described in Paragraph 8, pursuant to which the participant may become entitled
to receive cash, Common Shares, Other Company Securities or property, or other
forms of payment, or any combination thereof, as determined by the Committee.
Without limiting the generality of the foregoing, the Committee is authorized to
grant Awards that do not comply with the requirements of Rule 16b-3, except to
the extent the grant of such Awards adversely affects the compliance of the Plan
with Rule 16b-3.
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(b) Maximum Number of Shares that May be Issued. There may be issued under
the Plan (as Restricted Stock, in payment of Performance Grants, pursuant to the
exercise of Stock Options or Stock Appreciation Rights, or in payment of or
pursuant to the exercise of such other Awards as the Committee, in its
discretion, may determine) an aggregate of not more than 1,838,524 Common
Shares, subject to adjustment as provided in Paragraph 15. Common Shares issued
pursuant to the Plan may be either authorized but unissued shares, treasury
shares, reacquired shares, or any combination thereof. If any Common Shares
issued as Restricted Stock or otherwise subject to repurchase or forfeiture
rights are reacquired by the Company pursuant to such rights, or if any Award is
canceled, terminates or expires unexercised, any Common Shares that would
otherwise have been issuable pursuant thereto will be available for issuance
under new Awards to the extent permitted by Rule 16b-3.
(c) Rights with respect to Common Shares and Other Securities.
(i) Unless otherwise determined by the Committee in its discretion, a
participant to whom an Award of Restricted Stock has been made (and any
person succeeding to such a participant's rights pursuant to the Plan)
shall have, after issuance of a certificate or copy thereof for the number
of Common Shares awarded and prior to the expiration of the Restricted
Period or the earlier repurchase of such Common Shares as herein provided,
ownership of such Common Shares, including the right to vote the same and
to receive dividends or other distributions made or paid with respect to
such Common Shares (provided that such Common Shares, and any new,
additional or different shares, or Other Company Securities or property, or
other forms of consideration which the participant may be entitled to
receive with respect to such Common Shares as a result of a stock split,
stock dividend or any other event of the kind described in Paragraph 15,
shall be subject to the restrictions hereinafter described as determined by
the Committee in its discretion), subject, however, to the options,
restrictions and limitations imposed thereon pursuant to the Plan.
Notwithstanding the foregoing, unless otherwise determined by the Committee
in its discretion, a participant with whom an Award agreement is made to
issue Common Shares in the future, shall have no rights as a shareholder
with respect to Common Shares related to such agreement until issuance of a
certificate to him.
(ii) Unless otherwise determined by the Committee in its discretion, a
participant to whom a grant of Stock Options, Stock Appreciation Rights,
Performance Grants or any other Award is made (and any person succeeding to
such a participant's rights pursuant to the Plan) shall have no rights as a
stockholder with respect to any Common Shares or as a holder with respect
to other securities, if any, issuable pursuant to any such Award until the
date of the issuance of a stock certificate to him for such Common Shares
or other instrument of ownership, if any. Except as provided in Paragraph
15, no adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in cash, securities,
other property or other forms of consideration, or any combination thereof)
for which the record date is prior to the date such stock certificate or
other instrument of ownership, if any, is issued.
(iii) For purposes of the Plan, and only with respect to Common
Shares, the term "fair market value" on any date shall mean (A) if the
Common Shares are listed or admitted to trade on a national securities
exchange or national market system, the closing price of the Common Shares,
as published in the "Wall Street Journal" or, if there is no trading of the
Common Shares on such date, then the closing price of the Common Shares on
the next preceding date on which there was trading in such shares; (B) if
the Common Shares are not listed or admitted to trade on a national
securities exchange or national market system, the mean between the bid and
asked price for the Common Shares on such date, as furnished by the
National Association of Securities Dealers, Inc., through NASDAQ or a
similar organization if NASDAQ is no longer reporting such information; or
(C) if the Common Shares are not listed or admitted to trade on a national
securities exchange or national market system and if bid and asked prices
for the Common Shares are not so furnished through NASDAQ or a similar
organization, the value established by the Committee for purposes of
granting stock options under the Plan. In addition to the above rules, fair
market value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.
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5. Stock Options. The Committee may grant Stock Options either alone, or in
conjunction with Stock Appreciation Rights, Performance Grants or other Awards,
either at the time of grant or by amendment thereafter, provided that an
Incentive Stock Option may be granted only to an eligible employee of the
Company or its parent or subsidiary corporation. Each Stock Option (referred to
herein as an "Option") granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not limited
to, restrictions upon the Option or the Common Shares issuable upon exercise
thereof, as the Committee, in its discretion, shall establish:
(a) The option price may be less than, equal to, or greater than, the fair
market value of the Common Shares subject to such Option at the time the Option
is granted, as determined by the Committee, but in no event will such option
price be less than 50% of the fair market value of the underlying Common Shares
at the time the Option is granted; provided, however, that in the case of an
Option granted retroactively in tandem with or as a substitution for another
Award, the option price shall be not less than 50% of the fair market value of
the underlying Common Shares on the date of such other Award; and provided
further that in the case of an Incentive Stock Option granted to an eligible
employee of the Company, the option price shall not be less than the fair market
value of the Common Shares subject to such Option at the time the Option is
granted, or if granted to such an employee who owns stock representing more than
ten percent of the voting power of all classes of stock of the Company or of its
parent or subsidiary (a "Ten Percent Employee"), such option price shall not be
less than 110% of such fair market value at the time the Option is granted.
(b) The Committee shall determine the number of Common Shares to be subject
to each Option. The number of Common Shares subject to an outstanding Option may
be reduced on a share-for-share or other appropriate basis, as determined by the
Committee, to the extent that Common Shares under such Option are used to
calculate the cash, Common Shares, Other Company securities or property, or
other forms of payment, or any combination thereof, received pursuant to
exercise of a Stock Appreciation Right attached to such Option, or to the extent
that any other Award granted in conjunction with such Option is paid.
(c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, or (with respect to Non-Qualified Stock Options) pursuant to a
qualified domestic relations order, and shall be exercisable during the
grantee's lifetime only by him. Unless the Committee determines otherwise, the
Option shall not be exercisable for at least six months after the date of grant,
unless the grantee ceases employment or performance of services before the
expiration of such six-month period by reason of his death.
(d) The Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten Percent
Employee, after the expiration of five years from the date it is granted,
and, in the case of any other Incentive Stock Option, after the expiration
of ten years from the date it is granted. Any Option may be exercised
during its term only at such time or times and in such installments as the
Committee may establish.
(ii) unless payment in full is made for the shares being acquired
thereunder at the time of exercise; such payment shall be made in such form
(including, but not limited to, cash, Common Shares, or the surrender of
another outstanding Award under the Plan, or any combination thereof) as
the Committee may determine in its discretion; and
(iii) unless the person exercising the Option has been, at all times
during the period beginning with the date of the grant of the Option and
ending on the day 3 months before the date of such exercise, employed by or
otherwise performing services for the Company or an Affiliate, or a
corporation or a parent or subsidiary of such corporation issuing or
assuming the Option in a transaction to which Section 424(a) of the
Internal Revenue Code of 1986, as amended or any successor statutory
provision thereto (the "Code"), is applicable, except that
(A) in the case of any Non-Qualified Stock Option, if such person
shall cease to be employed by or otherwise performing services for the
Company or an Affiliate solely by reason of a period of Related
Employment as defined in Paragraph 14, he may, during such period of
Related Employ-
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ment, exercise the Non-Qualified Stock Option as if he continued such
employment or performance of service; or
(B) in the case of any Non-Qualified Stock Option, if such person
shall cease such employment or performance of services by reason of his
disability as defined in Paragraph 12 or early, normal or deferred
retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose) while holding an Option
which has not expired and has not been fully exercised, such person, at
any time within three years (or such other period determined by the
Committee) after the date he ceased such employment or performance of
services (but in no event after the Option has expired), may exercise
the Option with respect to any shares as to which he could have
exercised the Option on the date he ceased such employment or
performance of services, or with respect to such greater number of
shares as determined by the Committee; or
(C) in the case of any Non-Qualified Stock Option, if such person
shall cease such employment or performance of services for reasons other
than Related Employment, disability, early, normal or deferred
retirement or death (as provided elsewhere) while holding an Option
which has not expired and has not been fully exercised, such person or
his executors, administrators, heirs, or distributees, as the case may
be, may exercise the Option at any time during the period, if any, which
the Committee approves (but not beyond the expiration of the Option)
following the date he (or the decedent, as applicable) ceased such
employment or performance of services with respect to any shares as to
which he (or the decedent, as applicable) could have exercised the
Option on the date he ceased such employment or performance of services,
or with respect to such greater number of shares as determined by the
Committee; or
(D) if any person to whom an Incentive Stock Option has been
granted shall die or shall cease his employment or performance of
services by reason of disability (as defined in Paragraph 12) while
holding such an Option which has not expired and has not been fully
exercised, he or his executors, administrators, heirs or distributees,
as the case may be, may, at any time within one year (or such shorter
period determined by the Committee) after the date of death or cessation
of employment due to disability (but in no event after such Option has
expired), exercise such Option with respect to any shares as to which he
(or the decedent if applicable) could have exercised such Option at the
time of his death or cessation of employment due to disability, or with
respect to such greater number of shares as determined by the Committee.
(e) In the case of an Incentive Stock Option, the amount of aggregate fair
market value of Common Shares (determined at the time of grant of the Option
pursuant to Subparagraph 5(a) of the Plan) with respect to which incentive stock
options are exercisable for the first time by an employee during any calendar
year (under all such plans of his employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
(f) It is the intent of the Company that Non-Qualified Stock Options
granted under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and contain or
be deemed to contain all provisions required under Section 422 and the other
appropriate provisions of the Code and any implementing regulations (and any
successor provisions thereof), and that any ambiguities in construction shall be
interpreted in order to effectuate such intent. The Agreements providing
Non-Qualified Stock Options shall provide that such Options are not "incentive
stock options" for the purposes of Section 422 of the Code.
(g) No person shall receive Stock Options under this Plan with respect to
more than 100,000 shares of Common Stock in any fiscal year.
(h) Upon the exercise of an outstanding Option, the Committee may require
that the grantee receive cash or other property, as opposed to Common Shares;
provided, however, that the cash or other property must be of equivalent value
of the Common Shares subject to such Option.
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6. Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights either alone, or in conjunction with Stock Options, Performance Grants or
other Awards, either at the time of grant or by amendment thereafter. Each Award
of Stock Appreciation Rights granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not limited
to, restrictions upon the Award of Stock Appreciation Rights or the Common
Shares issuable upon exercise thereof, as the Committee, in its discretion,
shall establish.
(a) The Committee shall determine the number of Common Shares to be subject
to each Award of Stock Appreciation Rights. The number of Common Shares subject
to an outstanding Award of Stock Appreciation Rights may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Common Shares under such Award of Stock Appreciation Rights are
used to calculate the cash, Common Shares, Other Company Securities or property,
or other forms of payment, or any combination thereof, received pursuant to
exercise of an Option attached to such Award of Stock Appreciation Rights, or to
the extent that any other Award granted in conjunction with such Award of Stock
Appreciation Rights is paid.
(b) The Award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, or pursuant to a qualified domestic
relations order, and shall be exercisable during the grantee's lifetime only by
him. Unless the Committee determines otherwise, the Award of Stock Appreciation
Rights shall not be exercisable for at least six months after the date of grant,
unless the grantee ceases employment or performance of services before the
expiration of such six-month period by reason of his death.
(c) The Award of Stock Appreciation Rights shall not be exercisable:
(i) in the case of any Award of Stock Appreciation Rights that are
attached to an Incentive Stock Option granted to a Ten Percent Employee,
after the expiration of five years from the date it is granted, and, in the
case of any other Award of Stock Appreciation Rights that are attached to
an Incentive Stock Option, after the expiration of ten years from the date
it is granted. Any Award of Stock Appreciation Rights may be exercised
during its term only at such time or times and in such installments as the
Committee may establish;
(ii) unless (and then only to the extent) the Option or other Award to
which the Award of Stock Appreciation Rights is attached, if any, is at the
time exercisable; and
(iii) unless the person exercising the Award of Stock Appreciation
Rights has been, at all times during the period beginning with the date of
the grant thereof and ending on the day 3 months before the date of such
exercise, employed by or otherwise performing services for the Company or
an Affiliate, or a corporation or a parent or subsidiary of such
corporation issuing or assuming the Award of Stock Appreciation Right in a
transaction to which Section 424(a) of the Code is applicable, except that
(A) in the case of any Award of Stock Appreciation Rights (other
than those attached to an Incentive Stock Option), if such person shall
cease to be employed by or otherwise performing services for the Company
or an Affiliate solely by reason of a period of Related Employment as
defined in Paragraph 14, he may, during such period of Related
Employment, exercise the Award of Stock Appreciation Rights as if he
continued such employment or performance of services; or
(B) in the case of any Award of Stock Appreciation Rights (other
than those attached to an Incentive Stock Option), if such person shall
cease such employment or performance of services by reason of his
disability as defined in Paragraph 12 or early, normal or deferred
retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose) while holding an Award
of Stock Appreciation Rights which has not expired and has not been
fully exercised, such person may, at any time within three years (or
such other period determined by the Committee) after the date he ceased
such employment or performance of services (but in no event after the
Award of Stock Appreciation Rights has expired), exercise the Award of
Stock Appreciation Rights with respect to
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any shares as to which he could have exercised the Award of Stock
Appreciation Rights on the date he ceased such employment or performance
of services, or with respect to such greater number of shares as
determined by the Committee; or
(C) in the case of any Award of Stock Appreciation Rights (other
than those attached to an Incentive Stock Option), if such person shall
cease such employment or performance of services for reasons other than
Related Employment, disability, early, normal or deferred retirement or
death (as provided elsewhere) while holding an Award of Stock
Appreciation Rights which has not expired and has not been fully
exercised, such person or his executors, administrators, heirs or
distributees, as the case may be, may exercise the Award of Stock
Appreciation Rights at any time during the period, if any, which the
Committee approves (but in no event after the Award of Stock
Appreciation Rights expires) following the date he (or the decedent, if
applicable) ceased such employment or performance of services with
respect to any shares as to which he (or the decedent, if applicable)
could have exercised the Award of Stock Appreciation Rights on the date
he ceased such employment or performance of services, or with respect to
such greater number of shares as determined by the Committee; or
(D) if any person to whom an Award of Stock Appreciation Rights
that is attached to an Incentive Stock Option has been granted shall die
or shall cease his employment or performance of services by reason of
disability (as defined in Paragraph 12) while holding such an Award of
Stock Appreciation Rights which has not expired and has not been fully
exercised, he or his executors, administrators, heirs or distributees,
as the case may be, may, at any time within one year (or such shorter
period determined by the Committee) after the date of death or cessation
of employment due to disability (but in no event after such Award of
Stock Appreciation Rights has expired), exercise such Award of Stock
Appreciation Rights with respect to any shares as to which he (or the
decedent, if applicable) could have exercised such Award of Stock
Appreciation Rights at the time of his death or cessation of employment
due to disability, or with respect to such greater number of shares as
determined by the Committee.
(d) An Award of Stock Appreciation Rights shall entitle the holder (or any
person entitled to act under the provisions of Subparagraph 6(c)(iii)(D) hereof)
to exercise such Award or to surrender unexercised the Option (or other Award)
to which the Stock Appreciation Right is attached (or any portion of such Option
or other Award) to the Company and to receive from the Company in exchange
therefor, without payment to the Company, that number of Common Shares having an
aggregate value equal to the excess of the fair market value of one share, at
the time of such exercise, over the exercise price (or Option Price, as the case
may be) per share, times the number of shares subject to the Award of Stock
Appreciation Rights or the Option (or other Award), or portion thereof, which is
so exercised or surrendered, as the case may be. The Committee shall be entitled
in its discretion to elect to settle the obligation arising out of the exercise
of a Stock Appreciation Right or the surrender of the unexercised Option (or
other Award) to which the Stock Appreciation Right is attached, by the payment
of cash or Other Company Securities or property, or other forms of payment, or
any combination thereof, as determined by the Committee, equal to the aggregate
value of the Common Shares it would otherwise be obligated to deliver. Any such
election by the Committee shall be made as soon as practicable after the receipt
by the Committee of written notice of the exercise of the Stock Appreciation
Right. The value of a Common Share, Other Company Securities or property, or
other forms of payment determined by the Committee for this purpose shall be the
fair market value thereof on the last business day next preceding the date of
the election to exercise the Stock Appreciation Right, unless the Committee, in
its discretion, determines otherwise.
(e) A Stock Appreciation Right may provide that it shall be deemed to have
been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall
be settled or paid in the same manner as a regular exercise thereof as provided
in Subparagraph 6(d) hereof.
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(f) No fractional shares may be delivered under this Paragraph 6, but in
lieu thereof, a cash or other adjustment shall be made as determined by the
Committee in its discretion.
(g) No person shall receive Stock Appreciation Rights with respect to more
than 100,000 shares of Common Stock in any fiscal year.
7. Restricted Stock. Each Award of Restricted Stock under the Plan shall be
evidenced by an instrument in such form as the Committee shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions, and with such other terms and conditions as the Committee,
in its discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be issued
to a participant pursuant to the Award, and the extent, if any, to which they
shall be issued in exchange for cash, other consideration, or both.
(b) Common Shares issued to a participant in accordance with the Award may
not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order, or as otherwise determined by the Committee,
for such period as the Committee shall determine, from the date on which the
Award is granted (the "Restricted Period"). The Company will have the option, at
the Committee's discretion, to repurchase the shares subject to the Award at
such price as the Committee shall have fixed or to provide for forfeiture to the
Company of the shares subject to the Award, which option or forfeiture may be
exercisable (i) if the participant's continuous employment or performance of
services for the Company and its Affiliates shall terminate for any reason,
except solely by reason of a period of Related Employment as defined in
Paragraph 14, or except as otherwise provided in Subparagraph 7(c), prior to the
expiration of the Restricted Period, (ii) if, on or prior to the expiration of
the Restricted Period or the earlier lapse of such forfeiture option, the
participant has not paid to the Company an amount equal to any federal, state,
local or foreign income or other taxes which the Company determines is required
to be withheld in respect of such shares, or (iii) under such other
circumstances as determined by the Committee in its discretion. Such repurchase
option or forfeiture shall be exercisable on such terms, in such manner and
during such period as shall be determined by the Committee when the Award is
made or as amended thereafter, except as otherwise determined in the Committee's
discretion. Each certificate for Common Shares issued pursuant to a Restricted
Stock Award shall bear an appropriate legend referring to the foregoing
repurchase option or forfeiture and other restrictions and to the fact that the
shares are partly paid, shall be deposited by the award holder with the Company,
together with a stock power endorsed in blank, or shall be evidenced in such
other manner permitted by applicable law as determined by the Committee in its
discretion. Any attempt to dispose of any such Common Shares in contravention of
the foregoing repurchase and forfeiture options and other restrictions shall be
null and void and without effect. If Common Shares issued pursuant to a
Restricted Stock Award shall be repurchased or forfeited pursuant to the
repurchase option described above, the participant, or in the event of his
death, his personal representative, shall forthwith deliver to the Secretary of
the Company the certificates for the Common Shares awarded to the participant,
accompanied by such instrument of transfer, if any, as may reasonably be
required by the Secretary of the Company. All certificates for shares of Common
Shares delivered under the Plan also shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which Common Shares are then listed and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
(c) If a participant who has been in continuous employment or performance
of services for the Company or an Affiliate since the date on which a Restricted
Stock Award was granted to him shall, while in such employment or performance of
services, die, or terminate such employment or performance of services by reason
of disability as defined in Paragraph 12 or by reason of early, normal or
deferred retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the Committee
in its discretion, for this purpose) and any of such events shall occur after
the date on which the Award was granted to him and prior to the end of the
Restricted Period of such Award, the
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<PAGE> 34
Committee may determine to cancel the repurchase option or forfeiture (and any
and all other restrictions) on any or all of the Common Shares subject to such
Award; and the repurchase option or forfeiture shall become exercisable at such
time as to the remaining shares, if any.
8. Performance Grants. The Award of a Performance Grant ("Performance
Grant") to a participant will entitle him to receive a specified amount
determined by the Committee (the "Actual Value"), if the terms and conditions
specified herein and in the Award are satisfied. The Committee may grant
Performance Grants either alone, or in conjunction with an Award of Stock
Appreciation Rights, Restricted Stock, Options or other Awards. Each Award of a
Performance Grant shall be subject to the following terms and conditions, and to
such other terms and conditions, including but not limited to, restrictions upon
any cash, Common Shares, other Company Securities or property, or other forms of
payment, or any combination thereof, issued in respect of the Performance Grant,
as the Committee, in its discretion, shall establish, and shall be embodied in
an instrument in such form and substance as is determined by the Committee:
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an Award and
whether or not such a Performance Grant is granted in conjunction with an Award
of Options, Stock Appreciation Rights, Restricted Stock or other Award, or any
combination thereof, under the Plan (which may include, but need not be limited
to, deferred Awards) concurrently or subsequently granted to the participant
(the "Associated Award"). As determined by the Committee, the maximum value of
each Performance Grant (the "Maximum Value") shall be: (i) an amount fixed by
the Committee at the time the Award is made or amended thereafter, (ii) an
amount which varies from time to time based in whole or in part on the then
current value of a Common Share, Other Company Securities or property, or other
securities or property, or any combination thereof or (iii) an amount that is
determinable from criteria specified by the Committee. Performance Grants may be
issued in different classes or series having different names, terms and
conditions. In the case of a Performance Grant awarded in conjunction with an
Associated Award, the Performance Grant may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or otherwise
received by the participant, as determined by the Committee.
(b) The award period ("Award Period") in respect of any Performance Grant
shall be a period determined by the Committee. At the time each Award is made,
the Committee shall establish performance objectives to be attained within the
Award Period as the means of determining the Actual Value of such a Performance
Grant. The performance objectives shall be based on such measure or measures of
performance, which may include, but need not be limited to, the performance of
the participant, the Company, one or more of its subsidiaries or one or more of
their divisions or units, or any combination of the foregoing, as the Committee
shall determine, and may be applied on an absolute basis or be relative to
industry or other indices, or any combination thereof. Without limiting the
generality of the foregoing, it is intended that the Committee, in its
discretion, shall establish performance goals applicable to Performance Grants
granted to participants who, in the judgment of the Committee, may be Covered
Employees (within the meaning of Section 162(m)(3) of the Code), in such a
manner as shall permit payments with respect thereto to qualify as
"Performance-Based Compensation" as described in Section 162(m)(4)(C) of the
Code, and that the Committee shall otherwise satisfy any other requirements
necessary to permit such payments to qualify as "Performance-Based
Compensation."
(c) The Actual Value of a Performance Grant shall be equal to its Maximum
Value only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants shall
be determined if the performance objectives are met in part. Such performance
measures, the Actual Value or the Maximum Value, or any combination thereof, may
be adjusted in any manner by the Committee in its discretion at any time and
from time to time during or as soon as practicable after the Award Period, if it
determines that such performance measures, the Actual Value or the Maximum
Value, or any combination thereof, are not appropriate under the circumstances.
(d) The rights of a participant in Performance Grants awarded to him shall
be provisional and may be canceled or paid in whole or in part, all as
determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its Affiliate shall terminate for
any reason prior
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to the end of the Award Period, except solely by reason of a period of Related
Employment as defined in Paragraph 14.
(e) The Committee shall determine whether the conditions of Subparagraph
8(a) or 8(b) hereof have been met and, if so, shall ascertain the Actual Value
of the Performance Grants. If the Performance Grants have no Actual Value, the
Award and such Performance Grants shall be deemed to have been canceled and the
Associated Award, if any, may be canceled or permitted to continue in effect in
accordance with its terms. If the Performance Grants have any Actual Value and:
(i) were not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the Actual Value of the
Performance Grants earned by the participant to be paid to him or his
beneficiary as provided below; or
(ii) were awarded in conjunction with an Associated Award, the
Committee shall determine, in accordance with criteria specified by the
Committee (A) to cancel the Performance Grants, in which event no amount in
respect thereof shall be paid to the participant or his beneficiary, and
the Associated Award may be permitted to continue in effect in accordance
with its terms, (B) to pay the Actual Value of the Performance Grants to
the participant or his beneficiary as provided below, in which event the
Associated Award may be canceled or (C) to pay to the participant or his
beneficiary as provided below, the Actual Value of only a portion of the
Performance Grants, in which event a complementary portion of the
Associated Award may be permitted to continue in effect in accordance with
its terms, as determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and may be made in cash, Common Shares,
Other Company Securities or property, or other forms of payment, or any
combination thereof or in such other manner, as determined by the Committee in
its discretion. Notwithstanding anything in this Paragraph 8 to the contrary,
the Committee may, in its discretion, determine and pay out the Actual Value of
the Performance Grants at any time during the Award Period.
9. Deferral of Compensation. The Committee shall determine whether or not
an Award shall be made in conjunction with deferral of the participant's salary,
bonus or other compensation, or any combination thereof, and whether or not,
among other determinations as the Committee deems appropriate, such deferred
amounts may be:
(i) forfeited to the Company or to other participants, or any
combination thereof, under certain circumstances (which may include, but
need not be limited to, certain types of termination of employment or
performance of services for the Company and its Affiliates),
(ii) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures and/or
(iii) credited with income equivalents (which may include, but need
not be limited to, interest, dividends or other rates of return) until the
date or dates of payment of the Award, if any.
10. Deferred Payment of Awards. The Committee may specify that the payment
of all or any portion of cash, Common Shares, Other Company Securities or
property, or any other form of payment, or any combination thereof, under an
Award shall be deferred until a later date. Deferrals shall be for such periods
or until the occurrence of such events, and upon such terms, as the Committee
shall determine in its discretion. Deferred payments of Awards may be made by
undertaking to make payment in the future based upon the performance of certain
investment equivalents (which may include, but need not be limited to,
government
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securities, Common Shares, other securities, property or consideration, or any
combination thereof), together with such additional amounts of income
equivalents (which may be compounded and may include, but need not be limited
to, interest, dividends or other rates of return, or any combination thereof) as
may accrue thereon until the date or dates of payment, such investment
equivalents and such additional amounts of income equivalents to be determined
by the Committee in its discretion. In addition, a participant may elect to
defer payment of all or any portion of the amounts or property payable under an
Award pursuant to the provisions of the Senior Management Deferred Compensation
Plan.
11. Amendment or Substitution of Awards under the Plan. The terms of any
outstanding Award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate (including,
but not limited to, acceleration of the date of exercise of any Award and/or
payments thereunder, or reduction of the Option Price of an Option or exercise
price of an Award of Stock Appreciation Rights); provided that no such amendment
shall adversely affect in a material manner any right of a participant under the
Award without his written consent, unless the Committee determines in its
discretion that there have occurred or are about to occur significant changes in
the participant's position, duties or responsibilities, or significant changes
in economic, legislative, regulatory, tax, accounting or cost/benefit conditions
which are determined by the Committee in its discretion to have or to be
expected to have a substantial effect on the performance of the Company, or any
subsidiary, affiliate, division or department thereof, on the Plan or on any
Award under the Plan. The Committee may, in its discretion, permit holders of
Awards under the Plan to surrender all or part of outstanding Awards in order to
exercise or realize the rights under other Awards, or to exchange for the grant
of new Awards, or require holders of Awards to surrender all or part of
outstanding Awards as a condition precedent to the grant of new Awards under the
Plan.
12. Disability. For the purposes of this Plan, a participant shall be
deemed to have terminated his employment or performance of services for the
Company and its Affiliates by reason of disability, if the Committee shall
determine that he is permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code.
13. Termination of a Participant. For all purposes under the Plan, the
Committee shall determine whether a participant has terminated employment by or
the performance of services for the Company or an Affiliate, provided that
transfers between the Company and an Affiliate or between Affiliates, and
approved leaves of absence, shall not be deemed such a termination.
14. Related Employment. For the purposes of this Plan, Related Employment
shall mean the employment or performance of services by an individual for an
employer that is neither the Company nor an Affiliate, provided that (i) such
employment or performance of services is undertaken by the individual at the
request of the Company or an Affiliate, (ii) immediately prior to undertaking
such employment or performance of services, the individual was employed by or
performing services for the Company or an Affiliate or was engaged in Related
Employment as herein defined and (iii) such employment or performance of
services is in the best interests of the Company and is recognized by the
Committee, in its discretion, as Related Employment for purposes of this
Paragraph 14. The death or disability of an individual during a period of
Related Employment as herein defined shall be treated, for purposes of this
Plan, as if the death or onset of disability had occurred while the individual
was employed by or performing services for the Company or an Affiliate.
15. Dilution and Other Adjustments. In the event of any change in the
outstanding Common Shares of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, liquidation, rights offering, share offering, reorganization,
combination or exchange of shares, a sale by the Company of all or part of its
assets, any distribution to stockholders other than a normal cash dividend, or
other extraordinary or unusual event, if the Committee shall determine, in its
discretion, that such change equitably requires an adjustment in the terms of
any Award or the number of Common Shares available for Awards, such adjustment
may be made by the Committee and shall be final, conclusive and binding for all
purposes of the Plan.
16. Designation of Beneficiary by Participant. A participant may name a
beneficiary to receive any payment to which he may be entitled in respect of any
Award under the Plan in the event of his death, on a
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<PAGE> 37
written form to be provided by and filed with the Committee, and in a manner
determined by the Committee in its discretion. The Committee reserves the right
to review and approve beneficiary designations. A participant may change his
beneficiary from time to time in the same manner, unless such participant has
made an irrevocable designation. Any designation of beneficiary under the Plan
(to the extent it is valid and enforceable under applicable law) shall be
controlling over any other disposition, testamentary or otherwise, as determined
by the Committee in its discretion. If no designated beneficiary survives the
participant and is living on the date on which any amount becomes payable to
such participant's beneficiary, such payment will be made to the legal
representatives of the participant's estate, and the term "beneficiary" as used
in the Plan shall be deemed to include such person or persons. If there is any
question as to the legal right of any beneficiary to receive a distribution
under the Plan, the Committee in its discretion may determine that the amount in
question be paid to the legal representatives of the estate of the participant,
in which event the Company, the Board and the Committee and the members thereof
will have no further liability to anyone with respect to such amount.
17. Change in Control.
(a) Upon any Change in Control:
(i) each Stock Option and Stock Appreciation Right that is outstanding
on the date of such Change in Control shall be exercisable in full
immediately:
(ii) except with respect to Subparagraph 7(b)(ii), all restrictions
with respect to Restricted Stock shall lapse immediately, and the Company's
right to repurchase or forfeit any Restricted Stock outstanding on the date
of such Change in Control shall thereupon terminate and the certificates
representing such Restricted Stock and the related stock powers shall be
promptly delivered to the participants entitled thereto; and
(iii) for Awards based primarily on the measure of performance of the
Company as a whole, all Award Periods for the purposes of determining the
amounts of Awards of Performance Grants shall end as of the end of the
calendar quarter immediately preceding the date of such Change in Control,
and the amount of the Award payable shall be the portion of the maximum
possible Award allocable to the portion of the Award Period that had
elapsed and the results achieved during such portion of the Award Period.
For Awards based primarily on the measure of performance of the participant
of one or more of the Company's subsidiaries, divisions, or units, but not
the Company as a whole, the effect on the Award Period and amount of Award
payments, if any, in the event of a Change in Control, shall be as
indicated by the terms of the Performance Grant Award.
(b) For this purpose, a Change in Control shall be deemed to occur when and
only when any of the following events first occurs:
(i) any person becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 25 percent or more of the
combined voting power of the Company's then outstanding voting securities;
or
(ii) three or more directors, whose election or nomination for
election is not approved by a majority of the Incumbent Board (as
hereinafter defined), are elected within any single 24-month period to
serve on the Board of Directors; or
(iii) members of the Incumbent Board cease to constitute a majority of
the Board of Directors without the approval of the remaining members of the
Incumbent Board; or
(iv) any merger (other than a merger where the Company is the survivor
and there is no accompanying Change in Control under subparts (i), (ii) or
(iii) of this Subparagraph 17(b)), consolidation, liquidation or
dissolution of the Company or the sale of all or substantially all of the
assets of the Company.
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<PAGE> 38
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to subpart (i) of this Subparagraph 17(b) solely because 25
percent or more of the combined voting power of the Company's outstanding
securities is acquired by one or more employee benefit plans maintained by the
Company or by any other employer the majority interest in which is held,
directly or indirectly, by the Company. For purposes of this Section 17, the
terms "person" and "beneficial owner" shall have the meaning set forth in
Sections 3(a) and 13(d) of the Exchange Act, and in the regulations promulgated
thereunder, as in effect on June 30, 1989; and the term "Incumbent Board" shall
mean (A) the members of the Board of Directors of the Company on November 1,
1989, to the extent that they continue to serve as members of the Board of
Directors, and (B) any individual who becomes a member of the Board of Directors
after November 1, 1989, if his election or nomination for election as a director
was approved by a vote of at least three-quarters of the then Incumbent Board.
(c) If, as a result of a Change in Control, a participant is no longer
employed by or performing services for the Company and Awards held by the
participant are deemed "excess parachute payments," as that term is defined in
Section 280G(b) of the Code, the Company will reimburse the participant for any
excise taxes imposed on such "excess parachute payments" pursuant to Section
4999 of the Code.
18. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or right to be granted
an Award under the Plan. Determinations made by the Committee under the Plan
need not be uniform and may be made selectively among eligible individuals under
the Plan, whether or not such eligible individuals are similarly situated.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee or other person any right to continue to be employed by or perform
services for the Company or any Affiliate, and the right to terminate the
employment of or performance of services by any participant at any time and for
any reason is specifically reserved.
(b) No participant or other person shall have any right with respect to the
Plan, the Common Shares reserved for issuance under the Plan or in any Award,
contingent or otherwise, until written evidence of the Award shall have been
delivered to the recipient and all the terms, conditions and provisions of the
Plan and the Award applicable to such recipient (and each person claiming under
or through him) have been met.
(c) Except as may be approved by the Committee where such approval shall
not adversely affect compliance of the Plan with Rule 16b-3 under the Exchange
Act (or, with respect to Incentive Stock Options, under Section 422 of the
Code), a participant's rights and interest under the Plan may not be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a participant's death)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, provided, however, that
any Option or similar right (including, but not limited to, a Stock Appreciation
Right) offered pursuant to the Plan shall not be transferable other than by will
or the laws of descent and distribution, or (with the exception of Incentive
Stock Options and Awards attached to an Incentive Stock Option) pursuant to a
qualified domestic relations order, and shall be exercisable during the
participant's lifetime only by him (except to the extent it is transferred
pursuant to a qualified domestic relations order).
(d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder with
respect to any Award unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal, state, local and foreign
legal, securities exchange and other, applicable requirements.
(e) It is the intent of the Company that the Plan comply in all respects
with Rule 16b-3 under the Exchange Act, that any ambiguities or inconsistencies
in construction of the Plan be interpreted to give effect to such intention and
that if any provision of the Plan is found not to be in compliance with Rule
16b-3, such provisions shall be deemed null and void to the extent required to
permit the Plan to comply with Rule 16b-3; provided, however, that nothing
herein shall prevent the Committee from amending an Award granted hereunder in a
manner that causes such Award not to comply with Rule 16b-3. Notwithstanding
anything in the Plan to the contrary, the Committee, in its absolute discretion,
may bifurcate the Plan so as to restrict,
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<PAGE> 39
limit or condition the use of any provision of the Plan to participants who are
officers and directors subject to Section 16 of the Exchange Act, without so
restricting, limiting or conditioning the Plan with respect to other
participants.
(f) The Company and its Affiliates shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or other
taxes required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue Common Shares, other Company
Securities or property, other securities or property, or other forms of payment,
or any combination thereof, upon exercise, settlement or payment of any Award
under the Plan, that the participant (or any beneficiary or person entitled to
act) pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal, state,
local or foreign income or other taxes. If the amount requested is not paid, the
Company may refuse to issue Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any combination
thereof. Notwithstanding anything in the Plan to the contrary, the Committee
may, in its discretion, permit an eligible participant (or any beneficiary or
person entitled to act) to elect to pay a portion or all of the amount requested
by the Company for such taxes with respect to such Award, at such time and in
such manner as the Committee shall deem to be appropriate including, but not
limited to, by authorizing the Company to withhold, or agreeing to surrender to
the Company on or about the date such tax liability is determinable, Common
Shares, Other Company Securities or property, other securities or property, or
other forms of payment, or any combination thereof, owned by such person or a
portion of such forms of payment that would otherwise be distributed, or have
been distributed, as the case may be, pursuant to such Award to such person,
having a fair market value equal to the amount of such taxes.
(g) The expenses of the Plan shall be borne by the Company. However, if an
Award is made to an individual employed by or performing services for an
Affiliate;
(i) if such Award results in payment of cash to the participant, such
Affiliate shall pay to the Company an amount equal to such cash payment
unless the Committee shall otherwise determine in its discretion;
(ii) if the Award results in the issuance by the Company to the
participant of Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment, or any combination
thereof, such Affiliate shall, unless the Committee shall otherwise
determine in its discretion, pay to the Company an amount equal to the fair
market value thereof, as determined by the Committee, on the date such
shares, other Company Securities or property, other securities or property,
or other forms of payment, or any combination thereof, are issued (or, in
the case of the issuance of Restricted Stock or of Common Shares, Other
Company Securities or property, or other securities or property, or other
forms of payment subject to transfer and forfeiture conditions, equal to
the fair market value thereof on the date on which they are no longer
subject to applicable restrictions), minus the amount, if any, received by
the Company in respect of the purchase of such Common Shares, Other Company
Securities or property, other securities or property or other forms of
payment, or any combination thereof, all as the Committee shall determine
in its discretion; and
(iii) the foregoing obligations of any such Affiliate entity shall
survive and remain in effect and binding on such entity even if its status
as an Affiliate of the Company should subsequently cease, except as
otherwise agreed by the Company and the entity.
(h) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and rights to the
payment of Awards shall be no greater than the rights of the Company's general
creditors.
(i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken by the Company, the Board or the Committee or its delegates.
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<PAGE> 40
(j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan, or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.
(k) The masculine pronoun includes the feminine and the singular includes
the plural wherever appropriate.
(l) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Awards hereunder or any Common
Shares issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act (or any successor provision) or any other applicable statute, rule
or regulation.
(m) The validity, construction, interpretation, administration and effect
of the Plan, and of its rules and regulations, and rights relating to the Plan
and to Awards granted under the Plan, shall be governed by the substantive laws,
but not the choice of law rules, of the State of Delaware.
19. Plan Amendment or Suspension. The Plan may be amended or suspended in
whole or in part at any time and from time to time by the Board, but no
amendment shall be effective unless and until the same is approved by
shareholders of the Company where the failure to obtain such approval would
adversely affect the compliance of the Plan with Rule 16b-3 under the Exchange
Act and with other applicable law. No amendment of the Plan shall adversely
affect in a material manner any right of any participant with respect to any
Award theretofore granted without such participant's written consent, except as
permitted under Paragraph 11.
20. Plan Termination. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan; or
(b) ten years from the date the Plan is initially approved and adopted by
the shareholders of the Company in accordance with Paragraph 21 hereof;
provided, however, that the Board may, prior to the expiration of such ten-year
period, extend the term of the Plan for an additional period of up to five years
for the grant of Awards other than Incentive Stock Options.
No termination of the Plan shall materially alter or impair any of the
rights or obligations of any person, without his consent, under any Award
theretofore granted under the Plan except that subsequent to termination of the
Plan, the Committee may make amendments permitted under Paragraph 11. After
termination of the Plan, no further Awards may be granted.
21. Shareholder Adoption. The Plan shall be submitted to the shareholders
of the Company for their approval and adoption at a meeting to be held on or
before November 1, 1990, or at any adjournment thereof. The Plan shall not be
effective and no Award shall be made hereunder unless and until the Plan has
been so approved and adopted. The shareholders shall be deemed to have approved
and adopted the Plan only if it is approved and adopted at a meeting of the
shareholders duly held by vote taken in the manner required by the laws of the
State of Delaware and the applicable Federal securities laws.
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<PAGE> 41
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CRSS INC. -- PROXY -- THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned hereby appoints Bruce W. Wilkinson and Thomas A.
Bullock, and each of them as proxies, with power of substitution, to
vote all Common Stock of CRSS Inc. (the "Company") that the
undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders of the Company to be held at the
Company's offices, 1177 West Loop South, Lobby Level, Houston, Texas
on October 27, 1994, at 9:30 a.m., Houston, Texas time, or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS YOUR VOTE FOR ALL PROPOSALS.
<TABLE>
<S> <C>
1. Election of Directors
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
</TABLE>
Bruce W. Wilkinson; Thomas A. Bullock; C. Herbert Paseur; Mike A. Myers;
John M. Seidl; Ben R. Stuart; and Larry E. Temple
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE
INDIVIDUAL NOMINEE(S) LISTED ABOVE, STRIKE A LINE THROUGH THE
SPECIFIC NAME OR NAMES IN THE LIST ABOVE.
2. Proposal to adopt amendments to the 1990 Long-Term Incentive
Compensation Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
(Continued on Reverse Side)
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<PAGE> 42
- - --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL TO ADOPT
AMENDMENTS TO THE 1990 LONG-TERM INCENTIVE COMPENSATION PLAN.
PLEASE DATE AND SIGN BELOW:
DATED:....................., 1994
................................
(Signature)
................................
(Signature)
(Please sign as your name appears
hereon. When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title.)
(PLEASE RETURN THIS SIGNED PROXY IN THE ACCOMPANYING ADDRESSED ENVELOPE.)
- - --------------------------------------------------------------------------------
