<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ____________________
Commission File Number 1-6098
DANIEL INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 74-1547355
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9753 Pine Lake Drive, Houston, Texas 77055
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
713-467-6000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _________
On May 3, 1996, there were outstanding 12,103,506 shares of Common
Stock, $1.25 par value, of the registrant.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DANIEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands of dollars, except per share data and number of shares)
(Unaudited)
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
------------ -------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,573 $ 3,895
Receivables, net of reserve of $310 and $98 35,845 34,807
Costs in excess 3,581 941
Inventories 41,398 35,889
Deferred taxes on income 8,139 7,982
Net assets held for sale 22,838
Other 6,341 2,427
----------- ---------
Total current assets 99,877 108,779
Property, plant and equipment at cost, net 51,782 52,677
Other assets 13,069 3,012
---------- ---------
$ 164,728 $ 164,468
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 10,200 $ 10,000
Current maturities of long-term debt 2,857 2,857
Accounts payable 10,538 11,702
Accrued expenses 16,937 18,834
---------- ----------
Total current liabilities 40,532 43,393
Long-term debt 5,715 8,572
Deferred taxes on income 6,693 3,183
---------- ----------
Total liabilities 52,940 55,148
---------- ----------
Stockholders' equity:
Preferred stock, $1.00 par value,
1,000,000 shares authorized, 150,000 shares
designated as Series A junior participating
preferred stock, no shares issued or outstanding
Common stock, $1.25 par value, 20,000,000 shares
authorized, 12,103,506 and 12,083,485 shares issued 15,129 15,104
Capital in excess of par value 90,498 90,247
Translation component (1,975) (295)
Retained earnings 8,136 4,264
---------- ----------
Total stockholders' equity 111,788 109,320
---------- ----------
$ 164,728 $ 164,468
========== ==========
</TABLE>
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 3
DANIEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands of dollars, except per share data and number of shares)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 42,500 $ 38,737 $ 83,138 $ 81,035
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 24,608 27,460 48,451 53,679
Depreciation and
amortization 1,615 1,950 3,360 4,184
Selling and administrative
expenses 10,809 10,405 21,391 22,067
Research and develop-
ment expenses 348 750 731 1,544
Unusual items 12,330 12,330
Interest expense 436 502 907 1,027
---------- ---------- ---------- ----------
Total expenses 37,816 53,397 74,840 94,831
---------- ---------- ---------- ----------
Income (loss) before
income tax expense
(benefit) 4,684 (14,660) 8,298 (13,796)
Income tax expense (benefit) 1,898 (4,955) 3,337 (4,692)
---------- ---------- ---------- ----------
Net income (loss) $ 2,786 $ (9,705) $ 4,961 $ (9,104)
========== ========== ========== ==========
Earnings (loss) per
common share $ .23 $ (.81) $ .41 $ (.76)
========== ========== ========== ==========
Cash dividends per
common share $ .045 $ .045 $ .09 $ .09
========== ========== ========== ==========
Average number of shares
outstanding 12,090,745 12,033,377 12,087,095 12,032,918
========== ========== ========== ==========
</TABLE>
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 4
DANIEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
---------------------------------
1996 1995
---------- ----------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,961 $ (9,104)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Non-cash portion of restructurings and other items 11,124
Depreciation and amortization 3,360 4,184
Changes in operating assets and liabilities (10,167) 1,759
--------- ---------
Net cash provided by (used in) operating activities (1,846) 7,963
--------- ---------
Cash flows from investing activities:
Acquisitions (2,733) (4,177)
Capital expenditures (2,274) (2,404)
Proceeds from sales of investment securities 2,039
Proceeds from sales of assets 11,062(a) 57
--------- ---------
Net cash provided by (used in) investing activities 6,055 (4,485)
--------- ---------
Cash flows from financing activities:
Net borrowings on lines of credit 200 3,300
Payments on long-term debt (2,857) (2,858)
Cash dividends paid (1,089) (1,083)
Activity under stock option and stock award plans 276 14
-------- ---------
Net cash used in financing activities (3,470) (627)
-------- ---------
Effect of exchange rate changes on cash (61) 116
--------- ---------
Increase in cash and cash equivalents 678 2,967
Cash and cash equivalents, beginning of period 3,895 2,520
--------- ---------
Cash and cash equivalents, end of period $ 4,573 $ 5,487
========= =========
</TABLE>
(a) Includes proceeds from the divestiture of certain product lines. See Note
3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
<PAGE> 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 - General
The foregoing financial statements have been prepared from the books
and records of the Company without audit. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair statement of the results for the interim periods presented, are reflected
in such financial statements.
These condensed statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1995.
As a result of the divestiture of certain product lines, the Company
evaluated its remaining product lines and determined that it has one business
segment, fluid measurement and flow control products and systems.
The Company has not elected early adoption of Financial Accounting
Standards Board Statement No. 123, "Accounting for Stock-Based Compensation",
effective for fiscal years beginning after December 15, 1995, which is the
Company's year ending September 30, 1997. The Company believes adoption of
this statement will not materially affect the Company's financial statements.
Note 2 - Acquisitions
In February 1996, the Company acquired all of the outstanding stock of
a valve manufacturer and refurbisher. Acquisition costs of $2,733,000 were
paid in cash. The operations related to this acquisition, which was accounted
for under the purchase method, are not material to the Company's results of
operations.
As previously reported in the Company's Annual Report on Form 10-K for
the year ended September 30, 1995, the Company acquired the orifice metering
product line assets of another company. Acquisition and related costs of
$4,177,000 were paid in cash. The operations related to this acquisition,
which was accounted for under the purchase method, are not material to the
Company's results of operations.
Note 3 - Divestitures
As previously reported in the Company's Annual Report on Form 10-K for
the year ended September 30, 1995, the Company sold, effective November 1995,
the net assets of its fastener subsidiary, Daniel Industrial, Inc., to an
investor group for $8,000,000 cash and $9,500,000 in notes, discounted to
$8,600,000. The charge to operations from this transaction was recorded in
fiscal 1995. Notes receivable include:
<TABLE>
<CAPTION>
March 31, 1996
--------------
(in thousands)
<S> <C>
Note receivable; interest of 8.5% for the first five years
and 12.5% thereafter; interest payable quarterly;
principal due November 29, 2002 $6,000
Note receivable; collaterized by certain inventory; discounted
at an effective rate of 11%; annual principal payments with
the last payment due December 31, 1999 2,600
------
8,600
Less current portion (included in other current assets) (357)
------
Long-term portion (included in intangibles and other assets) $8,243
======
</TABLE>
Minimum annual principal payments on these notes receivable are as
follows: 1996 - $357,000, 1997 - $422,000, 1998 - $469,000, 1999 and thereafter
- - $7,352,000.
In December 1995, the Company sold its manufacturing facility in
Matamoros, Mexico for approximately book value. The sales proceeds of
$1,824,000 were received in cash.
<PAGE> 6
During the six months ended March 31, 1996, the Company sold certain
non-manufacturing properties in Germany for approximately $4,000,000 and
recorded a pretax gain of $2,684,000.
Note 4 - Inventories
Major components of inventories include:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
----------- -------------
(in thousands)
<S> <C> <C>
Raw materials $16,599 $14,527
Work-in-process 10,238 10,752
Finished goods 19,910 15,751
------- -------
46,747 41,030
Less LIFO reserve 5,349 5,141
------- -------
$41,398 $35,889
======= =======
</TABLE>
Note 5 - Accrued Expenses
Accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
----------- -------------
(in thousands)
<S> <C> <C>
Other accrued expenses $14,165 $14,382
Accrued taxes other than on income 1,141 2,325
Salaries and wages 1,631 2,127
------- -------
$16,937 $18,834
======= =======
</TABLE>
Substantially all of the planned terminations associated with the
Company's restructuring program announced in fiscal 1995 had occurred as of
December 31, 1995.
Note 6 - Notes Payable
At March 31, 1996, the Company had uncommitted short-term lines of
credit aggregating approximately $45,000,000. One of these lines contains
restrictions regarding the amount of the line available for short-term
borrowings and the amount available for issuance of letters of credit. The
other lines are available for either short-term borrowings or the issuance of
letters of credit. Loans under these lines may be made in such amounts and at
such maturities and interest rates as may be offered by the banks and accepted
by the Company at the time of each borrowing. At March 31, 1996, borrowings
under these lines were $10,200,000, and $22,600,000 was available for
additional short-term borrowings. These borrowings were at a weighted average
interest rate of 6.16% and were due at varying dates through April 10, 1996.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Six Months Ended March 31, 1996 vs. Six Months Ended March 31, 1995
As a result of the divestiture of certain product lines, the Company
evaluated its remaining product lines and determined that it has one business
segment, fluid measurement and flow control products and systems.
Consolidated revenues for the six months ended March 31, 1996 were
$83,138,000 compared to $81,035,000 for the same period last year, inclusive of
revenues from divested product lines of $4,815,000 and $15,887,000,
respectively. Revenues from sales of fluid measurement and flow control
products increased from the prior year reflecting improved demand for the
Company's products, particularly valves. This trend is expected to continue
through the remainder of fiscal 1996. Revenues in the current period include
pretax gains of $2,684,000 from the sales of certain non-manufacturing
properties in Germany. The Company's backlog at March 31, 1996, was
$42,176,000, an increase of 8% from the balance at March 31, 1995, reflecting a
significant improvement in orders for valve products and a modest improvement
in orders for measurement products.
The consolidated gross profit margin for the six months ended March
31, 1996, inclusive of the pretax gains on the sales of the properties
mentioned above, improved to 42% of revenues compared to 34% of revenues last
year primarily due to the current year divestiture of the low-margin, fastener
product line and the $3,785,000 charge for inventory writedowns recorded in
fiscal 1995.
Consolidated selling and administrative expenses, as a percentage of
revenues, declined slightly to 26% of revenues in the current period. This
decline is primarily attributed to the realization of benefits from the
restructuring program, which was adopted in fiscal 1995, and from the pretax
gains on sales of properties mentioned above.
Consolidated depreciation and amortization expense decreased 20% to
$3,360,000 for the six months ended March 31, 1996 primarily due to the current
year divestiture of the fastener product line.
Consolidated interest expense decreased 12% to $907,000 in the current
period due to both lower short-term and long-term debt levels.
The Company has not elected early adoption of Financial Accounting
Standards Board Statement No. 123, "Accounting for Stock-Based Compensation",
effective for fiscal years beginning after December 15, 1995, which is the
Company's year ending September 30, 1997. The Company believes adoption of
this statement will not materially affect the Company's financial statements.
Quarter Ended March 31, 1996 vs. Quarter Ended March 31, 1995
Consolidated revenues for the quarter ended March 31, 1996 were
$42,500,000 compared to $38,737,000 last year, inclusive of revenues from
divested product lines of $8,850,000 last year. Revenues from sales of fluid
measurement and flow control products increased from the prior year reflecting
improved demand for the Company's products, particularly valves. This trend is
expected to continue through the remainder of fiscal 1996. Revenues in the
current period include a pretax gain of $1,499,000 from the sale of certain
non-manufacturing property in Germany.
The consolidated gross profit margin for the quarter ended March 31,
1996, inclusive of the pretax gain on the sale of the property mentioned above,
improved to 42% of revenues compared to 29% of revenues last year primarily due
to the current year divestiture of the low- margin, fastener product line, the
gain on sale of property mentioned above and the $3,785,000 charge for
inventory writedowns recorded in fiscal 1995.
<PAGE> 8
Consolidated selling and administrative expenses, as a percentage of
revenues, declined two percentage points to 25% of revenues in the current
period. This decline is primarily attributed to the realization of benefits
from the restructuring program, which was adopted in fiscal 1995, and from the
pretax gain on the sale of property mentioned above.
Consolidated depreciation and amortization expense decreased 17% to
$1,615,000 for the quarter ended March 31, 1996 primarily due to the current
year divestiture of the non-core fastener product line.
Consolidated interest expense decreased 13% to $436,000 in the current
period due to both lower short-term and long-term debt levels.
Liquidity and Capital Resources
The primary sources of the Company's liquidity for the six months
ended March 31, 1996, were proceeds from the divesture of certain product lines
(see Note 3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS), and cash
and cash equivalents available at the beginning of the year. These funds were
used primarily for capital expenditures, acquisition of a business, funding of
operations, payments on short-term and long-term debt, and the payments of
dividends.
Working capital decreased $6,041,000 from the balance at September 30,
1995 to $59,345,000 at March 31, 1996, primarily due to the receipt of
long-term notes in partial consideration for the net assets of the fastener
business, which was held for sale and included in current assets. The
Company considers its financial position to be strong, with debt to total
capitalization of 14%. The Company's working capital ratio at March 31, 1996,
of 2.5 to 1.0 is adequate to meet the Company's needs.
In the first six months of fiscal years 1996 and 1995, the Company
relied upon short-term borrowings under its bank lines of credit to supplement
its working capital and other cash requirements. At March 31, 1996, the
Company had uncommitted short-term lines of credit aggregating approximately
$45,000,000. At March 31, 1996 and May 3, 1996, borrowings under these lines
were $10,200,000 and $8,200,000, respectively, at weighted average interest
rates of 6.16% and 5.89%, respectively. While the Company expects its
borrowings requirements to generally decrease during the remainder of fiscal
1996 from current levels, the timing of one or several major expenditures or
receipts may affect the level of borrowings at a particular time.
The Company anticipates capital expenditures, exclusive of business
acquisitions, in fiscal 1996 of approximately $4,000,000. Capital expenditures
for the six months ended March 31, 1996 were $2,274,000. In February 1996, the
Company acquired all of the outstanding stock of a valve manufacturer and
refurbisher for $2,733,000 in cash. The Company continues to seek acquisitions
that would build upon its expertise in the manufacturing and marketing of fluid
measurement and flow control products and systems.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position of the Company.
<PAGE> 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on February 1,
1996, the following proposals were approved:
<TABLE>
<CAPTION>
Affirmative Negative Votes
Votes Votes Withheld
----------- -------- --------
<S> <C> <C> <C>
1. Amendment to the 1977 Stock Option Plan
reserving an additional 300,000 shares of
common stock for issuance upon the
exercise of options granted thereunder. 8,662,697 2,219,664 36,756
2. The 1995 Non-Employee Directors' Stock
Option Plan which allows an aggregate
of 170,000 shares of common stock to
be issued to non-employee directors of
the Company. 10,294,859 588,199 36,059
3. The Daniel Industries, Inc. Stock Award Plan which
makes 100,000 shares of common stock
available for issuance as a part of the
incentive compensation paid to the
Company's executive officers and
operating officers. 9,927,020 919,594 72,503
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 - 1977 Stock Option Plan, as amended and restated on
December 8, 1995.
10.10 - 1995 Non-Employee Directors' Stock Option Plan dated
as of December 8, 1995.
10.11 - Stock Award Plan dated as of December 8, 1995.
27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 10-Q to be signed on its
behalf by Henry G. Schopfer, III, thereunto duly authorized to sign on behalf
of the registrant and as the principal financial officer thereof.
DANIEL INDUSTRIES, INC.
-----------------------------
(Registrant)
Date May 14, 1996 By /s/ Henry G. Schopfer, III
---------------------------- -----------------------------------
Henry G. Schopfer, III
Vice President and
Chief Financial Officer
<PAGE> 11
INDEX TO EXHIBITS
10.1 - 1977 Stock Option Plan, as amended and restated on
December 8, 1995.
10.10 - 1995 Non-Employee Directors' Stock Option Plan dated
as of December 8, 1995.
10.11 - Stock Award Plan dated as of December 8, 1995.
27 - Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
DANIEL INDUSTRIES, INC.
1977 STOCK OPTION PLAN
(As Amended and Restated on December 8, 1995)
1. Purpose. This 1977 Stock Option Plan (this "Plan")
of Daniel Industries, Inc. (the "Company"), for executive officers and other
key employees of the Company, is intended to advance the best interests of the
Company by providing those individuals who have substantial responsibility for
its management and growth with additional incentive and by increasing their
proprietary interest in the success of the Company, thereby encouraging them to
remain in its employ.
2. Administration. This Plan shall be administered by
a committee (the "Committee") designated by the Board of Directors of the
Company in accordance with the provisions of Article III of the by-laws of the
Company. The Committee shall consist of three directors of the Company, each
of whom shall be a disinterested person.
For purposes of this Paragraph 2, "disinterested person" means
a person who is not, at any time during such person's service as a member of
the Committee or at any time during one year prior to such service, granted
Options (as hereinafter defined) or granted or awarded other equity securities
pursuant to any other plan of the Company or any of its affiliates.
All action by the Committee shall be taken in accordance with
the provisions of Article III of the by-laws of the Company. The Committee
shall designate a chairman from among its members, who shall preside at all of
its meetings, and shall designate a secretary, without regard to whether that
person is a member of the Committee, who shall keep the minutes of the
proceedings of the Committee and all records, documents and data pertaining to
the administration of this Plan.
All questions of interpretation and application of this Plan,
or of options granted or to be granted hereunder ("Options"), shall be subject
to the determination, which shall be final, binding and conclusive, of the
Committee.
3. Option Shares. Subject to the provisions of
Paragraph 17 hereof, the shares of stock issuable upon the exercise of Options
shall be shares of Common Stock, $1.25 par value ("Stock"), of the Company.
The aggregate number of shares of Stock that may be issued upon the exercise of
Options shall not exceed 1,287,363, consisting of (i) 100,000 shares provided
for under this Plan on the date this Plan became effective, (ii) 250,000
additional shares provided for under this Plan on August 22, 1989, (iii)
400,000 additional shares provided for under this Plan on December 16, 1993,
(iv) 300,000 additional shares provided for under this Plan on December 8,
1995, and (v) 237,363 shares that, after the date the Plan became effective but
prior to December 9, 1995, became available for issuance upon the exercise of
Options by reason of Paragraph 17 hereof. 215,908 shares have been issued in
accordance with the terms of the Plan after the date the Plan became effective
but prior to December 9, 1995, such that 1,071,455 of such aggregate number of
shares, and the class thereof, shall be subject to adjustment in accordance
with the provisions of Paragraph 17 hereof in respect of any event referred to
in Paragraph 17 hereof that occurs on or after December 9, 1995. Such shares
of Stock may be treasury shares or authorized but unissued shares.
<PAGE> 2
In the event that any outstanding Option for any reason shall
expire or terminate or be forfeited or canceled, whether by reason of the death
or severance of employment of the individual to whom such Option was granted,
the relinquishment of such Option, or any other cause, the shares of Stock
allocable to the unexercised portion of such Option may be made the subject of
one or more other Options granted on or after the date of the expiration,
termination, forfeiture or cancellation of such first-mentioned Option.
4. Authority to Grant Options. The Committee may grant
from time to time to such eligible individuals as it shall from time to time
determine one or more Options to purchase a stated number of shares of Stock
subject to the terms and conditions of this Plan and the terms and conditions
of the agreement evidencing such Option. The number of shares of Stock
issuable upon the exercise of any Option shall be determined by the Committee
at the time such Option is granted, provided that such number of shares of
Stock shall be subject to adjustment in accordance with the provisions of
Paragraph 17 hereof.
5. Eligibility. The individuals who shall be eligible
to be granted Options shall be those executive officers and other key employees
(including officers who may be directors of the Company, but excluding any
officer or other key employee who shall have been designated by the Board of
Directors of the Company as ineligible for the grant of Options) of the
Company, or of any parent or subsidiary corporation of the Company, as the
Committee shall determine from time to time.
6. Option Price. The price at which shares of Stock may
be purchased upon the exercise of an Option (the "Option Price") shall be
determined by the Committee at the time such Option is granted and shall be
expressed in United Sates dollars. The Option Price with respect to any Option
may be less than, equal to, or greater than the fair market value on the date
such Option is granted of the shares of Stock that may be purchased upon the
exercise of such Option. In no event, however, shall the Option Price with
respect to any Option be less than the greater of (i) 50% of the fair market
value on the date such Option is granted of the shares of Stock that may be
purchased upon the exercise of such Option or (ii) the aggregate par value of
the shares of Stock that may be purchased upon the exercise of such Option.
7. Duration of Options. The Committee, in its
discretion, may provide that an Option shall be exercisable during any period
of time from the date such Option is granted, provided that no Option may be
exercised until the expiration of six months following the date such Option was
granted.
8. Amount Exercisable. Each outstanding Option may be
exercised, either with respect to all or less than all of the number of shares
of Stock subject to such Option, subject to such conditions as the Committee,
in its discretion, may provide in the agreement evidencing such Option.
9. Exercise of Options. The individual to whom an
Option is granted (an "Optionee") may exercise such Option by delivering to the
Company a written notice stating (i) that
2
<PAGE> 3
such Optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of Stock with respect to which such Option
is to be exercised and (iii) the address to which the certificate representing
such shares of Stock should be mailed.
In order to be effective, such written notice shall be
accompanied by (i) payment of the Option Price of such shares of Stock and (ii)
payment of an amount of money necessary to satisfy any withholding tax
liability that may result from the exercise of such Option. Each such payment
shall be made to the Company in United States dollars.
In its discretion, the Committee may require, as an additional
condition to the issuance of shares of Stock upon the exercise of an Option,
that the Optionee to whom such Option was granted execute and deliver to the
Company a stock purchase agreement, in such form as may be required by the
Committee, within three business days after such form of agreement is presented
to such Optionee.
As promptly as practicable after the receipt by the Company of
(i) such written notice from the Optionee, (ii) payment, in the form required
by the foregoing provisions of this Paragraph 9, of the Option Price of the
shares of Stock with respect to which such Option is to be exercised, (iii)
payment, in the form required by the foregoing provisions of this Paragraph 9,
of an amount of money necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, and (iv) an executed stock
purchase agreement in the form required by the Committee, if any is so
required, the Company shall cause to be delivered to such Optionee (or to a
specified escrow agent, if so required under the terms of such stock purchase
agreement) a certificate representing the number of shares of Stock with
respect to which such Option has been so exercised, such certificate to be
registered in the name of such Optionee, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such Optionee at the address specified for such purpose in
such written notice from the Optionee to the Company.
10. Transferability of Options. An Option shall not be
transferable by the Optionee to whom such Option was granted otherwise than by
will or under the laws of descent and distribution or pursuant to a qualified
domestic relations order, as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. The designation by an Optionee of a beneficiary shall not
constitute a transfer of an Option for purposes of this Plan.
11. Termination of Employment or Death of Optionee. All
Options granted to an Optionee shall terminate immediately upon severance of
the employment relationship between the Company and such Optionee for any
reason, for or without cause, other than death. Whether authorized leave of
absence, or absence on military or government service, shall constitute
severance of the employment relationship between the Company and any Optionee
shall be determined by the Committee at the time thereof.
3
<PAGE> 4
In the event of the death of an Optionee while in the employ
of the Company and before the date of expiration of any Option granted to such
Optionee, such Option shall terminate on the earlier of such date of expiration
or one year following the date of such Optionee's death. After the death of
such Optionee, the Optionee's executors or administrators, or the person to
whom such Optionee's Option shall have been transferred by will or under the
laws of descent and distribution, shall have the right, at any time prior to
such termination, to exercise such Option, as a whole (without regard to any
limitations set forth in or imposed pursuant to the first sentence of Paragraph
8 hereof) or in part.
For the purpose of determining the employment relationship
between the Company and an Optionee, employment by any parent or subsidiary
corporation of the Company shall be considered employment by the Company.
12. Requirements of Law. The Company shall not be
required to issue any shares of Stock upon the exercise of any Option if the
issuance of such shares of Stock would constitute or result in a violation by
the Company, or by the Optionee to whom such Option was granted, of any
provision of any applicable law, statute or regulation of any governmental
authority.
Upon the exercise of any Option, the Company shall not be
required to issue any shares of Stock unless the Committee shall have received
evidence satisfactory to it that the Optionee to whom such Option was granted
will not transfer such shares of Stock until a registration statement with
respect to such shares of Stock shall have become effective under the
Securities Act of 1933 or until an opinion of counsel satisfactory to the
Company shall have been received by the Company to the effect that such
registration is not required. Any determination in this connection by the
Committee shall be final, binding and conclusive.
The Company may, but shall in no event be obligated to,
register under the Securities Act of 1933, or register or otherwise qualify for
sale under the securities laws of any state, the shares of Stock issuable upon
the exercise of one or more Options. In the event that any shares of Stock
issuable upon the exercise of an Option are not registered under the Securities
Act of 1933, the Company may imprint on the certificates representing such
shares of Stock the following legend or any other legend that counsel for the
Company considers necessary or advisable to comply with the Securities Act of
1933:
The shares of stock represented by this certificate
have not been registered under the Securities Act of 1933 or
under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by
the Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or
transfer.
The Company shall not be obligated to take any other
affirmative action to cause the exercise of any Option, or the issuance of
shares of Stock upon the exercise of any Option, to comply
4
<PAGE> 5
with any law, statute or regulation of any governmental authority.
13. No Rights as Shareholder. No Optionee shall have
any right as a shareholder with respect to any shares of Stock issuable upon
the exercise of any Option granted to such Optionee until the date of issuance
to such Optionee of a certificate representing such shares of Stock. Except as
otherwise provided in Paragraph 17 hereof, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
14. Employment Obligation. The granting of any Option
shall not impose upon the Company, or upon any parent or subsidiary corporation
of the Company, any obligation to employ or continue to employ any Optionee.
The right of the Company, or of any parent or subsidiary corporation of the
Company, to terminate the employment of any person shall not be diminished or
otherwise affected by reason of the fact that an Option has been granted to
him.
15. Forfeiture for Competition. If the Committee finds
that the holder of any outstanding Option, at any time following the date upon
which such Option was granted, directly or indirectly owned, operated, managed
or controlled, or participated in the ownership, management, operation or
control of, or was employed or was paid as a consultant or as an independent
contractor by, a business that competed at any time after that date with the
Company or with any parent or subsidiary corporation of the Company, then such
holder shall thereupon forfeit all outstanding Options granted to him, provided
that such holder shall not forfeit any outstanding Option solely on account of
such holder's ownership of shares or other securities issued by any corporation
so long as such ownership does not result in the direct or indirect control by
such holder of such corporation.
16. Forfeiture for Dishonesty. If the Committee finds
that an Optionee has engaged in fraud, embezzlement, theft, commission of a
felony, or proven dishonesty in the course of such Optionee's employment by the
Company or by any parent or subsidiary corporation of the Company and that such
action has damaged the Company or such parent or subsidiary corporation, or if
the Committee finds that an Optionee has disclosed trade secrets of the Company
or of any parent or subsidiary corporation of the Company, then such Optionee
shall thereupon forfeit all outstanding Options granted to such Optionee.
17. Changes in the Capital Structure of the Company. The
existence of outstanding Options shall not affect in any manner the right of
the Company (i) to make any change in the Company's capital structure or its
business, (ii) to effect any merger or consolidation of the Company, (iii) to
issue any bonds, debentures or other evidences of indebtedness, (iv) to issue
any preferred stock or any other securities affecting the Stock or the rights
of the holders thereof, (v) to cause the dissolution of the Company or any sale
or transfer of all or any part of the assets or business of the Company, or
(vi) to take any other corporate action or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a reclassification of shares of
Stock, the payment of a stock dividend to holders of shares of Stock, or some
other increase or reduction in the number of
5
<PAGE> 6
shares of Stock outstanding without receiving compensation therefor in money,
services or property, then (i) the number, class and per share price of shares
of Stock issuable upon the exercise of any outstanding Option shall be
appropriately adjusted so that the Optionee to whom such Option was granted
shall be entitled upon the exercise of such Option to receive, for the same
aggregate consideration, the same number and class of shares that such Optionee
would have received had such Optionee exercised such Option immediately prior
to the occurrence of the event requiring such adjustment and (ii) the aggregate
number of shares of Stock, and the class thereof, that may be issued upon the
exercise of Options that are not at the time outstanding shall be adjusted by
substituting for such number and class that number and class of shares that
would have been received by the holder of record of any equal number of
outstanding shares of Stock as the result of the occurrence of the event
requiring such adjustments.
After a merger of one or more corporations into the Company,
or after a consolidation of the Company and one or more corporations under
circumstances in which the Company is the surviving corporation, each holder of
an outstanding Option shall be entitled upon the exercise of such Option to
receive (subject to any required action by shareholders), in lieu of the number
of shares of Stock issuable upon the exercise of such Option, the number and
class of shares or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Stock equal to the number of shares
of Stock issuable upon the exercise of such Option.
If the Company is merged into or consolidated with another
corporation under circumstances in which the Company is not the surviving
corporation, or if the Company dissolves, (i) subject to the provisions of
Clause (iii) of this grammatical paragraph, after the effective date of such
merger or consolidation, as the case may be, each holder of an outstanding
Option shall be entitled upon the exercise of such Option to receive, in lieu
of shares of Stock, such shares or other securities as the holders of shares of
Stock received pursuant to the terms of such merger or consolidation; (ii) the
Board of Directors of the Company, in its discretion, may waive any limitations
set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof
so that all outstanding Options shall be exercisable in full from and after a
date prior to the effective date of such merger, consolidation or dissolution,
as the case may be; and (iii) all outstanding Options may be canceled by the
Board of Directors as of the effective date of such merger, consolidation or
dissolution, provided that (x) notice of such cancellation shall be given to
each holder of an outstanding Option and (y) such holder shall have the right
to exercise such Option in full (without regard to any limitations set forth in
or imposed pursuant to the first sentence of Paragraph 8 hereof) during the
30-day period immediately preceding the effective date of such merger,
consolidation or dissolution.
Except as in this Paragraph 17 expressly provided, the issue
by the Company of shares of any class, or securities convertible into shares of
any class, for money or services or property, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class
6
<PAGE> 7
or Option Price of any shares issuable upon the exercise of any outstanding
Option.
18. Substitute Options. Options may be granted from time
to time in substitution for options held by employees of other corporations who
concurrently become employees of the Company as the result of a merger or
consolidation of such other corporation with or into the Company, the
acquisition by the Company of assets of such other corporation, or the
acquisition by the Company of stock of such other corporation. The terms and
conditions of such substitute Options may vary from the terms and conditions
set forth herein to such extent as the Board of Directors of the Company may
deem appropriate to conform, in whole or in part, to the provisions of the
options in substitution for which such substitute Options are granted.
19. Amendment or Termination of Plan. The Board of
Directors of the Company may modify, revise or terminate this Plan at any time
and from time to time, provided that without the further approval of the
holders of a majority of the outstanding shares of Stock, the Board of
Directors of the Company may not (i) materially increase the benefits accruing
to participants under this Plan, (ii) change the aggregate number of shares of
Stock that may be issued upon the exercise of Options (except to the extent
that the actions of the Board of Directors may require adjustment of such
number pursuant to the provisions of Paragraph 17), or (iii) change the class
of employees to whom Options may be granted.
20. Option Agreements. Each Option shall be evidenced by
a written agreement that shall be subject to the terms and conditions of this
Plan and shall be executed by the Optionee to whom such Option is granted and
by the Company. Each such agreement shall contain such other provisions as the
Committee, in its discretion, shall deem advisable.
21. Effective Date of Plan. This Plan shall become
effective and shall be deemed to have been adopted on January 1, 1977, subject
only to approval by the holders of a majority of the outstanding shares of
Stock within 12 months after such date. This Plan shall terminate (i) when the
total number of shares of Stock with respect to which Options may be granted
shall have been issued upon the exercise of Options or (ii) by action of the
Board of Directors of the Company pursuant to Paragraph 19 hereof.
7
<PAGE> 1
EXHIBIT 10.10
DANIEL INDUSTRIES, INC.
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE.
This 1995 Non-Employee Directors' Stock Option Plan (this "Plan") of
Daniel Industries, Inc., a Delaware corporation (the "Company"), is adopted,
subject to stockholder approval to the extent required by Section 15 hereof,
for the benefit of the directors of the Company, including advisory directors
and directors who are full-time consultants to the Company, who at the time of
their service are not employees of the Company or any of its subsidiaries
("Non-Employee Directors"), and is intended to advance the interests of the
Company by providing the Non-Employee Directors with additional incentive to
serve the Company by increasing their proprietary interest in the success of
the Company.
2. ADMINISTRATION.
This Plan shall be administered by the Board of Directors of the
Company. All questions of interpretation and application of this Plan, or as
to options granted hereunder (the "Options"), shall be subject to the
determination by the Board of Directors, which determination shall be final and
binding. Notwithstanding the above, the selection of Non-Employee Directors to
whom Options are to be granted, the number of shares subject to any Option, the
exercise price of any Option and the term of any Option shall be as hereinafter
provided and the Board of Directors shall have no discretion as to such
matters.
<PAGE> 2
3. OPTION SHARES.
The stock subject to the Options and other provisions of this Plan
shall be shares of the Company's Common Stock, $1.25 par value per share (or
such other par value as may be designated by act of the Company's stockholders,
the "Common Stock"). The total amount of the Common Stock with respect to
which Options may be granted shall not exceed 170,000 shares in the aggregate;
provided, that the class and aggregate number of shares which may be subject to
the Options granted hereunder shall be subject to adjustment in accordance with
the provisions of Section 12 hereof. Such shares may be treasury shares or
authorized but unissued shares.
If any outstanding Option for any reason shall expire or terminate by
reason of the death of the optionee, the surrender of any such Option, or any
other cause, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option under this Plan.
4. GRANT OF OPTIONS.
Subject to the provisions of Section 5 hereof, there shall be granted
to each person who is a Non-Employee Director following the annual meeting of
stockholders of the Company on February 1, 1996, an Option to purchase 15,000
shares of the Common Stock at an Option Price equal to the closing sale price
per share, as reported on the New York Stock Exchange on such date.
For so long as this Plan is in effect and shares are available for the
grant of Options hereunder, each person who shall become a Non-Employee
Director after the February 1, 1996 annual meeting of stockholders shall be
granted, on the date of his initial election, an Option to purchase 15,000
shares of Common Stock at an Option Price equal to the closing sale price of a
share of Common Stock on that date as reported on the New York Stock Exchange;
provided that, if no sale of the Common Stock was reported on such date, then
the fair market value shall mean the closing sale price of a share of the
Common Stock as of the first preceding date for which such prices were
reported;
<PAGE> 3
and provided further that if the Common Stock is no longer traded on the New
York Stock Exchange, the Board of Directors may provide for another means for
determining the fair market value of a share of Common Stock on the date of
grant.
5. DURATION OF OPTIONS.
Subject to the vesting provisions of Section 6 hereof, each Option
granted under this Plan shall be exercisable for a term of ten years from the
date of grant, subject to earlier termination as provided in Section 9 hereof.
6. AMOUNT EXERCISABLE.
Each Option will be exercisable as follows:
(a) Beginning on the day after the first anniversary of the date
of grant, an Option may be exercised for up to 1/3 of the
shares subject to the Option;
(b) After the expiration of each succeeding anniversary date of
the date of grant, an Option may be exercised for up to an
additional 1/3 of the shares initially subject to the Option,
so that after the expiration of the third anniversary of the
date of grant, the Option shall be exercisable in full;
(c) To the extent not exercised, installments shall be cumulative,
and an Option may be exercised in whole or in part until it
expires on the tenth anniversary of the date of grant.
7. EXERCISE OF OPTIONS.
An optionee may exercise such optionee's Option by delivering to the
Company a written notice stating (i) that such optionee wishes to exercise such
Option on the date such notice is so
<PAGE> 4
delivered, (ii) the number of shares of stock with respect to which such Option
is to be exercised and (iii) the address to which the certificate representing
such shares of stock should be mailed. To be effective, such written notice
shall be accompanied by payment of the Option Price of each of such shares of
stock, together with the amount of any required withholding tax.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the optionee, (ii) payment of the Option Price of the
shares of stock with respect to which such Option is to be exercised and (iii)
payment of an amount necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, a certificate representing the
number of shares of stock with respect to which such Option has been so
exercised, such certificate to be registered in the name of such optionee,
shall be delivered to such optionee, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such optionee at the address specified for such purpose in
such written notice from the optionee to the Company.
8. TRANSFERABILITY OF OPTIONS.
Options shall not be transferable by the optionee otherwise than by
will or under the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended (the "Code"), and shall be exercisable, during his lifetime, only by
the optionee.
9. TERMINATION OF SERVICE, DEATH AND CHANGE IN CONTROL.
In the event an optionee gives notice of his resignation from the
Board of Directors before the expiration of the Option, the Option shall
terminate on the earlier of the 30th day following the effective date of such
resignation or the expiration date of the Option.
<PAGE> 5
In the event an optionee gives notice that he does not intend to stand
for reelection or is given notice that he will be asked to retire from the
Board of Directors, then, notwithstanding Article 6 hereof, the Option shall
become exercisable with respect to all shares subject thereto, and the Option
shall terminate on the earlier of one year from the effective date of his
retirement from the Board or the date of expiration of the Option.
In the event of the death or disability of an optionee while a member
of the Board of Directors, then, notwithstanding Article 6 hereof, the Option
shall become exercisable with respect to all shares subject thereto and the
Option shall terminate on the earlier of one year from the date of such death
or disability or the date of expiration of the Option. After the death of the
optionee, his executors or administrators, or any person or persons to whom the
option may be transferred by will or by the laws of descent and distribution
shall have the right, at any time prior to the Option's termination, to
exercise the Option pursuant to the terms of the Plan.
If there shall occur a change in the control of the Company while any
shares of Common Stock remain subject to an outstanding Option, then the Option
shall terminate only upon the expiration of the Option without regard to the
other provisions of this Section 9. For purposes of this Plan, a "change in
control" of the Company shall mean a change in control of a nature that would
be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act") as in effect on the date hereof; provided, that, without
limitation, such a change in control shall be deemed to have occurred if (i)
any person, including a "person" as defined in Sections 13(d)(3) and 14(d)(2)
of the Exchange Act, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities or (ii)
during any period of two consecutive years, individuals who at the beginning
of such period constitute the Company's Board of Directors cease for any reason
to constitute at least a majority thereof.
<PAGE> 6
10. REQUIREMENTS OF LAW.
The Company shall not be required to sell or issue any shares under
any Option if the issuance of such shares shall constitute a violation by the
optionee or the Company of any provisions of any law or regulation of any
governmental authority. Each Option granted under this Plan shall be subject
to the requirements that, if at any time the Board of Directors of the Company
shall determine that the listing, registration or qualification of the shares
subject thereto upon any securities exchange or under any state or federal law
of the United States or of any other country or governmental subdivision
thereof, or the consent or approval of any governmental regulatory body, or
investment or other representations, are necessary or desirable in connection
with the issue or purchase of shares subject thereto, no such Option may be
exercised in whole or in part unless such listing, registration, qualification,
consent, approval or representation shall have been effected or obtained free
of any conditions not acceptable to the Board of Directors. If required at any
time by the Board of Directors, an Option may not be exercised until the
optionee has delivered an investment letter to the Company. In addition,
specifically in connection with the Securities Act of 1933 (as now in effect or
hereafter amended), upon exercise of any Option, the Company shall not be
required to issue the underlying shares unless the Board of Directors has
received evidence satisfactory to it to the effect that the holder of such
Option will not transfer such shares except pursuant to a registration
statement in effect under such Act or unless an opinion of counsel satisfactory
to the Company has been received by the Company to the effect that such
registration is not required. Any determination in this connection by the
Board of Directors shall be final, binding and conclusive. If the shares
issuable on exercise of an Option are not registered under the Securities Act
of 1933, the Company may imprint on the certificate for such shares the
following legend or any other legend which counsel for the Company considers
necessary or advisable to comply with the Securities Act of 1933:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF
<PAGE> 7
ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH
REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER."
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) and, if any shares are so registered, the Company may remove
any legend on certificates representing such shares. The Company shall not be
obligated to take any other affirmative action to cause the exercise of an
Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
11. NO RIGHTS AS STOCKHOLDER.
No optionee shall have rights as a stockholder with respect to shares
covered by his Option until the date of issuance of a stock certificate for
such shares; and, except as otherwise provided in Section 12 hereof, no
adjustment for dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such certificate.
12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
The existence of outstanding Options shall not affect in any manner
the right of the Company (i) to make any change in the Company's capital
structure or its business, (ii) to effect any merger or consolidation of the
Company, (iii) to issue any bonds, debentures or other evidences of
indebtedness, (iv) to issue any preferred stock or any other securities
affecting the Common Stock or the rights of the holders thereof, (v) to cause
the dissolution of the Company or any sale or transfer of all or any part of
the assets or business of the Company, or (vi) to take any other corporate
action or proceeding, whether of a similar character or otherwise.
<PAGE> 8
If the Company shall effect a reclassification of shares of Common
Stock, the payment of a stock dividend to holders of shares of Common Stock, or
some other increase or reduction in the number of shares of Common Stock
outstanding without receiving compensation therefor in money, services or
property, then (i) the number, class and per share price of shares of Common
Stock issuable upon the exercise of any outstanding Option shall be
appropriately adjusted so that the optionee to whom such Option was granted
shall be entitled upon the exercise of such Option to receive, for the same
aggregate consideration, the same number and class of shares that such optionee
would have received had such optionee exercised such Option immediately prior
to the occurrence of the event requiring such adjustment and (ii) the aggregate
number of shares of Common Stock, and the class thereof, that may be issued
upon the exercise of Options that are not at the time outstanding shall be
adjusted by substituting for such number and class that number and class of
shares that would have been received by the holder of record of an equal number
of outstanding shares of Common Stock as the result of the occurrence of the
event requiring such adjustment.
After a merger of one or more corporations into the Company, or after
a consolidation of the Company and one or more corporations under circumstances
in which the Company is the surviving corporation, each holder of an
outstanding Option shall be entitled upon the exercise of such Option to
receive (subject to any required action by shareholders), in lieu of the number
of shares of Common Stock issuable upon the exercise of such Option, the number
and class of shares or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon the exercise of such Option.
If the Company is merged into or consolidated with another corporation
under circumstances in which the Company is not the surviving corporation, or
if the Company dissolves, (i) subject to the provisions of clause (iii) of this
grammatical paragraph, after the effective date of such merger or
<PAGE> 9
consolidation, as the case my be, each holder of any outstanding Option shall
be entitled upon the exercise of such Option to receive, in lieu of shares of
Common Stock, such shares or other securities as the holders of shares of
Common Stock received pursuant to the terms of such merger or consolidation;
(ii) the Board of Directors of the Company, in its discretion, may waive any
limitations set forth in or imposed pursuant to Section 6 hereof so that all
outstanding Options shall be exercisable in full from and after a date prior to
the effective date of such merger, consolidation or dissolution, as the case
may be; and (iii) all outstanding Options may be canceled by the Board of
Directors as of the effective date of such merger, consolidation or
dissolution, provided that (x) notice of such cancellation shall be given to
each holder of an outstanding Option and (y) such holder shall have the right
to exercise such Option in full (without regard to any limitations set forth in
or imposed pursuant to Section 6 hereof) during the 30-day period immediately
preceding the effective date of such merger, consolidation or dissolution.
Except as in this Paragraph 12 expressly provided, the issue by the
Company of shares of any class, or securities convertible into shares of any
class, for money or services or property, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class or Option Price of any shares issuable upon
the exercise of any outstanding Option.
13. AMENDMENT OR TERMINATION OF PLAN.
The Board of Directors may modify, revise or terminate this Plan at
any time and from time to time; provided, however, that without the further
approval of the stockholders of the Company, the Board of Directors may not (a)
change the aggregate number of shares which may be issued under Options
pursuant to the provisions of this Plan; (b) reduce the Option Price permitted
for the Options; or (c) extend the term during which an Option may be exercised
or the termination date of this Plan unless, in each such case, the Board of
Directors of the Company shall have obtained an opinion of
<PAGE> 10
legal counsel to the effect that stockholder approval of the amendment is not
required (i) by law, (ii) by the rules and regulations of, or any agreement
with, the New York Stock Exchange or (iii) to make available to the optionee
with respect to any option granted under this Plan, the benefits of Rule 16b-3
of the Rules and Regulations under the Securities Exchange Act of 1934 (the
"1934 Act"), or any similar or successor rule. In addition, this Plan may not
be amended more than once every six months with respect to the plan provisions
referred to in Rule 16b-3(c)(2)(ii)(A) of the Rules and Regulations under
the 1934 Act other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder.
14. WRITTEN AGREEMENT.
Each Option granted hereunder shall be embodied in a written option
agreement, which shall be subject to the terms and conditions prescribed above,
and shall be signed by the optionee and by the appropriate officer of the
Company for and in the name and on behalf of the Company. Such an option
agreement shall contain such other provisions as the Committee in its
discretion shall deem advisable.
15. EFFECTIVE DATE OF PLAN.
This Plan shall become effective and shall be deemed to have been
adopted on February 1, 1996, if within one year of that date either (i) it
shall have been approved by the stockholders of the Company or (ii) the Board
of Directors shall have received an opinion of legal counsel to the effect that
such approval is not required (a) by law, or (b) to make available to the
optionee with respect to the Option the benefits of Rule 16b-3 of the Rules and
Regulations under the 1934 Act. No Option shall be granted pursuant to this
Plan on or after February 1, 2006.
<PAGE> 1
EXHIBIT 10.11
DANIEL INDUSTRIES, INC.
STOCK AWARD PLAN
<PAGE> 2
DANIEL INDUSTRIES, INC.
STOCK AWARD PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
<S> <C>
ARTICLE I - PURPOSE
ARTICLE II - DEFINITIONS
Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Disinterested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13
ARTICLE III - ELIGIBILITY
ARTICLE IV - STOCK AWARDS
Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
Awards Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Award Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Grantee's Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Changes in the Company's Capital Structure . . . . . . . . . . . . . . . . . . . . 4.5
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
ARTICLE V - ADMINISTRATION
ARTICLE VI - TAX WITHHOLDING
General Method of Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Section 83(b) Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
ARTICLE VII - AMENDMENT OR TERMINATION OF PLAN
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VIII - MISCELLANEOUS
No Employment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3
Other Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
</TABLE>
<PAGE> 4
DANIEL INDUSTRIES, INC.
STOCK AWARD PLAN
ARTICLE I
PURPOSE
The purpose of the Daniel Industries, Inc. Stock Award Plan is
to promote the interests of Daniel Industries, Inc. (the "Company") and its
stockholders by providing the Company with a mechanism to enable the Company
and its subsidiaries to attract, retain and motivate their key employees with
compensatory arrangements and benefits that make use of the Company's stock so
as to provide for or increase the proprietary interests of such employees in
the Company.
ARTICLE II
DEFINITIONS
2.1 "AWARD" shall mean an award of Stock granted under this Plan.
2.2 "BOARD" shall mean the Board of Directors of the
Company.
2.3 "CODE" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
2.4 "COMMITTEE" shall mean the committee appointed by the
Board to administer this Plan.
2.5 "COMPANY" shall mean Daniel Industries, Inc.
2.6 "DISINTERESTED" shall mean disinterested within the
meaning of applicable regulatory requirements, including those promulgated
under Section 16 of the Exchange Act.
2.7 "EMPLOYEE" shall mean an officer or employee of the
Company or a Subsidiary.
<PAGE> 5
2.8 "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended.
2.9 "FAIR MARKET VALUE" shall mean the closing price of
the Stock on the date in question as reported in the New York Stock Exchange --
Composite Transactions listing or if, in the discretion of the Committee,
another means of determining the fair market value of a share of Stock at such
date shall be necessary or advisable, the Committee may provide for another
means of determining such fair market value.
2.10 "GRANTEE" shall mean an Employee to whom an Award is
granted pursuant to this Plan.
2.11 "PLAN" shall mean this Daniel Industries, Inc. Stock
Award Plan.
2.12 "STOCK" shall mean the Company's common stock, $1.25
par value (or such other par value as may be designated by act of the Company's
stockholders).
2.13 "SUBSIDIARY" shall mean any subsidiary of the Company.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to participate in the
Plan shall be those full-time key Employees as the Committee shall determine
during the term of this Plan.
ARTICLE IV
STOCK AWARDS
4.1 STOCK SUBJECT TO THE PLAN. The total amount of the
Stock with respect to which Awards may be granted shall not exceed in the
aggregate 100,000 shares. The class and aggregate number of shares which may
be subject to Awards granted under the Plan shall be subject to adjustment
under Section 4.5. Shares may be treasury shares or authorized but unissued
shares.
2
<PAGE> 6
4.2 AWARDS PROCEDURE. The Committee may make awards of
Stock to eligible Employees selected by it. The amount of each Award and the
vesting and/or transferability restrictions with respect to each Award shall be
determined by the Committee in its sole discretion. If the Committee imposes
vesting and/or transferability restrictions on the Grantee's rights with
respect to shares of Stock granted to him, the Committee may issue such
instructions to the Company's transfer agent in connection therewith as it
deems appropriate. The Committee may also cause the certificate for shares
issued pursuant to an Award to be imprinted with any legend which counsel for
the Company considers advisable with respect to the restrictions.
4.3 AWARD AGREEMENTS. Each Award shall be evidenced by a
written agreement between the Company and the Grantee containing the vesting
and/or transferability restrictions and other provisions not inconsistent with
the Plan as the Committee may require. Any Stock forfeited by a Grantee
pursuant to an Award Agreement shall again be available for use in future
Awards.
4.4 GRANTEE'S RIGHTS AS STOCKHOLDER.
(a) Commencing on the date of the transfer of shares of
stock to a Grantee on the books of the Company pursuant to an Award, the
Grantee shall have the right to receive all dividends or other distributions
paid or made with respect to the shares awarded.
(b) Commencing on the date of the transfer of shares of
Stock to a Grantee on the books of the Company pursuant to an Award, the
Grantee shall have the right to vote the shares.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The
existence of Awards shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights
3
<PAGE> 7
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a dividend in capital
stock or other equity securities of the Company on its Stock, or other increase
or reduction of the number of shares of Stock outstanding, without receiving
consideration therefor in money, services, or property, or the reclassification
of its Stock, in whole or in part, into other equity securities of the Company,
then the number and class of shares then reserved for issuance under the Plan
(or in the case of a dividend of, or reclassification into, other equity
securities, those other securities) shall be adjusted by substituting for the
total number and class of shares of stock then reserved, the number and class
or classes of shares of stock (or in the case of a dividend of, or
reclassification into, other equity securities, those other securities) that
would have been received by the owner of an equal number of outstanding shares
of Stock as a result of the event requiring the adjustment.
4.6 REQUIREMENTS OF LAW. The Company shall not be
required to issue or deliver any shares of Stock under any Award if such
issuance or delivery shall constitute a violation by the Grantee or the Company
of any provisions of any law or regulation of any governmental authority. Each
Award granted under this Plan shall be subject to the requirements that, if at
any time the Board or the Committee shall determine that the listing,
registration or qualification of the shares upon any securities exchange or
under any state or federal law of the United States or of any other country or
governmental subdivision, or the consent or approval of any governmental
regulatory body, or investment or other representations, are necessary or
desirable in connection with the issue or purchase or delivery of shares
subject to an Award, no shares shall be delivered pursuant to an Award
4
<PAGE> 8
unless the listing, registration, qualification, consent, approval or
representations shall have been effected or obtained free of any conditions not
acceptable to the Committee. Any determination in this connection by the
Committee shall be final. In the event the shares issued pursuant to an Award
are not registered under the Securities Act of 1933, the Company may imprint on
the certificate for those shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon
registration or upon receipt by the Company of an opinion of counsel
satisfactory to the Company, in form and substance satisfactory to the
Company, that registration is not required for a sale or transfer.
The Company may, but shall in no event be obligated to, register any securities
covered by this Plan under the Securities Act of 1933 (as now in effect or as
later amended) and, in the event any shares are registered, the Company may
remove any legend on certificates representing those shares. The Company shall
not be obligated to take any other affirmative action in order to cause the
issuance or delivery of shares under an Award to comply with any law or
regulation or any governmental authority.
ARTICLE V
ADMINISTRATION
The Plan shall be administered by the Compensation Committee
of the Board, the members of which shall be Disinterested persons. The
Committee shall consist of not less than two members of the Board who are not
Employees. The Board shall have the power from time to time
5
<PAGE> 9
to add or remove members of the Committee and to fill vacancies arising for any
reason. Meetings shall be held at any time and place as the Committee shall
choose. A majority of the members of the Committee shall constitute a quorum
for the transaction of business. The vote of a majority of those members
present at any meeting shall decide any question brought before that meeting.
In addition, the Committee may take any action otherwise proper under the Plan
by the affirmative vote, taken without a meeting, of a majority of its members.
No member of the Committee shall be liable for any act or omission of any other
member of the Committee or for any act or omission on his own part, including
but not limited to the exercise of any power or discretion given to him under
the Plan, except those resulting from his own gross negligence or willful
misconduct. All questions of interpretation and application of the Plan or as
to Awards granted under it shall be subject to the determination of a majority
of the Committee. The Committee, in exercising any power or authority granted
under this Plan or in making any determination under this Plan, shall perform
or refrain from performing those acts using its sole discretion and judgment.
Any decision made by the Committee or any refraining to act or any act taken by
the Committee in good faith shall be final and binding on all parties. The
Committee's decision shall never be subject to de novo review.
ARTICLE VI
TAX WITHHOLDING
6.1 GENERAL METHOD OF WITHHOLDING. The Company may meet
its tax withholding obligations under the Code and applicable state or local
law arising upon the later of the date of transfer of the shares of Stock to a
Grantee or the first date on which his rights with respect to the Stock are
transferable by him by delivering to him (or his estate, if applicable) a
reduced number of shares of Stock in the manner specified herein. The Company
shall (i) calculate the amount of withholding tax due on the assumption that
all such shares of Stock are made available for
6
<PAGE> 10
delivery, (ii) reduce the number of such shares made available for delivery so
that the Fair Market Value of the shares withheld approximates the amount of
tax the Company is obliged to withhold, and (iii) in lieu of the withheld
shares, remit cash to the United States Treasury and other applicable
governmental authorities, on behalf of the participant, in the amount of the
withholding tax due. The Company shall withhold only whole shares of Stock to
satisfy its withholding obligation. If the Fair Market Value of the withheld
shares does not equal the Company's withholding tax obligation, the Company
shall withhold shares with a Fair Market Value slightly in excess of the amount
of its withholding obligation and shall remit the excess cash to the Grantee
(or his estate, if applicable) with the shares of Stock made available for
delivery. The withheld shares of Stock not made available for delivery by the
Company shall be retained as treasury stock or will be cancelled and, in either
case, the recipient's right, title and interest in such Stock shall terminate.
In the alternative, the Treasurer of the Company may permit
the Grantee to pay the sum necessary to satisfy the Company's withholding
obligation directly to the Company.
6.2 SECTION 83(B) ELECTIONS. No Employee shall exercise
the election permitted under Section 83(b) of the Code with respect to an Award
without written approval of the Treasurer of the Company. If the Treasurer
permits such an election with respect to any Award, the Company shall require
the Grantee to pay the Company an amount necessary to satisfy the Company's tax
withholding obligation.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board may modify, revise or terminate this Plan at any
time. However, no amendment or termination of the Plan may impair a Grantee's
rights with respect to an Award granted prior to the amendment or termination
without the written consent of the Grantee.
7
<PAGE> 11
ARTICLE VIII
MISCELLANEOUS
8.1 NO EMPLOYMENT OBLIGATION. The granting of any Award
shall not impose upon the Company any obligation to employ or continue to
employ any Grantee. The right of the Company to terminate the employment of
any officer or other Employee shall not be diminished or affected by reason of
the fact that an Award has been granted to him.
8.2 GENDER. If the context requires, words of one gender
when used in this Plan shall include the other and words used in the singular
or plural shall include the other.
8.3 HEADINGS. Headings of Articles and Sections are
included for convenience of reference only and do not constitute part of this
Plan and shall not be used in construing the terms of this Plan.
8.4 OTHER AWARDS. The grant of an Award shall not confer
upon the Grantee the right to receive any future or other Awards under this
Plan or the right to receive future Awards subject to the same transferability
conditions as Awards previously granted.
8.5 GOVERNING LAW. The provisions of this Plan shall be
construed, administered and governed under the laws of the State of Texas.
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 4,573
<SECURITIES> 0
<RECEIVABLES> 36,155
<ALLOWANCES> 310
<INVENTORY> 41,398
<CURRENT-ASSETS> 99,877
<PP&E> 51,782
<DEPRECIATION> 0
<TOTAL-ASSETS> 164,728
<CURRENT-LIABILITIES> 40,532
<BONDS> 0
0
0
<COMMON> 15,129
<OTHER-SE> 96,659
<TOTAL-LIABILITY-AND-EQUITY> 164,728
<SALES> 83,138
<TOTAL-REVENUES> 83,138
<CGS> 48,451
<TOTAL-COSTS> 48,451
<OTHER-EXPENSES> 25,482
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 907
<INCOME-PRETAX> 8,298
<INCOME-TAX> 3,337
<INCOME-CONTINUING> 4,961
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,961
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
