<PAGE>
As filed with the Securities and Exchange Commission on May 15, 2000
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
Registration Statement
Under
The Securities Act of 1933
-----------------------------
R.R. Donnelley & Sons Company 2000 Stock Incentive Plan
(Exact Name of Registrant as Specified in its Charter)
-----------------------------
Delaware 36-1004130
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
77 West Wacker Drive
Chicago, Illinois 60601
(Address of Principle Executive Offices) (Zip Code)
R.R. Donnelley & Sons Company 2000 Stock Incentive Plan
(Full Title of the Plan)
Monica M. Fohrman, Secretary
77 West Wacker Drive
Chicago, Illinois 60601
(Name of Agent For Service)
(312) 326-8000
(Telephone Number, Including
Area Code of Agent for Service)
---------------------
Copy to:
Gary Gerston
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered(1) Offering Price Per Share Aggregate Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 8,000,000 shares $21.84(2) $174,720,000.00(2) $46,126.08
$1.25
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase 8,000,000 rights (3) (3) (3)
Rights
==========================================================================================================================
</TABLE>
(1) Also registered hereby are such additional and indeterminate number of
shares of Common Stock and Preferred Stock Purchase Rights ("Rights") as may
become issuable because of changes resulting from stock dividends, stock splits
and similar changes.
(2) Estimated solely for the purpose of calculating the Registration Fee and,
pursuant to Rule 457(c) under the Securities Act, based upon the average of the
high and low sale prices of Common Stock of the Registrant on The New York Stock
Exchange on May 8, 2000 ($21.84).
(3) Rights are initially carried and traded with the Common Stock of the
Company. Value attributable to such Rights, if any, is reflected in the market
price of the Common Stock.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
The following documents heretofore filed with the Securities and
Exchange Commission (the "Commission") by R.R. Donnelley & Sons Company (the
"Company") are incorporated herein by reference:
(a) the Annual Report of the Company on Form 10-K for the year ended
December 31, 1999;
(b) the Quarterly Report of the Company on Form 10-Q for the period
ended March 31, 2000;
(c) the description of the Rights contained in the Company's
Registration Statement on Form 8-A filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including any amendment or report filed
for the purpose of updating such description;
(d) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such description; and
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, are deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the respective dates of
filing of such documents (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
II-1
<PAGE>
Item 4. Description of Securities
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Reference is made to Section 145 ("Section 145") of the General
Corporation Law of the State of Delaware (the "DGCL") which provides for
indemnification of directors and officers in certain circumstances.
The Company's Restated Certificate of Incorporation contains a
provision that is designed to limit the directors' liability to the extent
permitted by the DGCL and any amendments thereto. Specifically, directors will
not be held personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability: (i)
for a breach of the duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) payment of an improper dividend or improper
repurchase of the Company's stock under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. The
principal effect of the limitation of liability provision is that a stockholder
is unable to prosecute an action for monetary damages against a director of the
Company unless the stockholder can demonstrate one of the specified bases for
liability. This provision, however, does not eliminate or limit director
liability arising in connection with causes of action brought under the federal
securities laws. While the Company's Restated Certificate of Incorporation
limits the personal liability of directors, it does not eliminate the directors'
duty of care. The inclusion of the limitation of liability provision in the
Company's Restated Certificate of Incorporation may, however, discourage or
deter stockholders or management from bringing a lawsuit against directors for a
breach of their fiduciary duties, even though such an action, if successful,
might otherwise have benefited the Company and its stockholders. This provision
should not affect the availability of equitable remedies such as injunction or
rescission based upon a director's breach of the duty of care.
The Company's By-laws also provide that the Company will indemnify its
directors and officers to the fullest extent permitted by Delaware law. The
Company is generally required to indemnify its directors and officers for all
judgments, fines, settlements, legal fees and other expenses incurred in
connection with pending or threatened legal proceedings because of the
director's or officer's position with the Company or another entity for which
the director or officer serves at the Company's request, subject to certain
conditions, and to advance funds to its directors and officers to enable them to
defend against such proceedings. To receive indemnification, the director or
officer must have been successful in the legal proceedings or acted in good
faith and in what was reasonably believed to be a lawful manner in the Company's
best interest.
II-2
<PAGE>
Pursuant to Section 145 and the Company's Restated Certificate of
Incorporation, the Company maintains directors' and officers' liability
insurance coverage which insures the Company, its subsidiaries and the elected
officers and directors of the Company and its subsidiaries, against damages,
judgments, settlements and costs incurred by reason of certain acts committed by
such persons in their capacities as officers and directors.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
4.1 Restated Certificate of Incorporation (1)
4.2 By-Laws (2)
4.3 Amendment to By-Laws adopted January 27, 2000 (2)
4.4 Rights Agreement, dated as of April 25, 1996 between R.R. Donnelley &
Sons Company and First Chicago Trust Company of New York (3)
*23 Consent of Arthur Andersen LLP
*24 Powers of Attorney (included elsewhere herein)
*99 R.R. Donnelley & Sons Company 2000 Stock Incentive Plan
______
*Filed herewith
(1) Exhibit 3(i) to Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996 (Commission File No. 1-4694).
(2) Exhibits 3(ii)(a) and 3(ii)(b), respectively, to Annual Report on Form 10-K
for the year ended December 31, 1999 (Commission File No. 1-4694).
(3) Filed on June 5, 1996 as Exhibit 4 to Form 8-A (Commission File No. 1-4694).
II-3
<PAGE>
Item 9. Undertakings
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 ("Exchange Act") that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated
II-4
<PAGE>
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on this 15th Day of May,
2000.
R.R. DONNELLEY & SONS COMPANY
By: /s/ Monica M. Fohrman
---------------------
Monica M. Fohrman
Secretary
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Monica M. Fohrman and Gregory A. Stoklosa, and
each of them, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his or her substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ William L. Davis Chairman and Chief May 15, 2000
- ----------------------------- Executive Officer (Principal
William L. Davis Executive Officer)
/s/ Gregory A. Stoklosa Vice President and Acting May 15, 2000
- ----------------------------- Chief Financial Officer
Gregory A. Stoklosa (Principal Financial Officer
and Principal Accounting Officer)
/s/ Joseph B. Anderson, Jr. Director May 15, 2000
- -----------------------------
Joseph B. Anderson, Jr.
II-6
<PAGE>
Director May 15, 2000
- ----------------------------
Martha Layne Collins
/s/ James R. Donnelley Director May 15, 2000
- -----------------------------
James R. Donnelley
/s/ Judith H. Hamilton Director May 15, 2000
- -------------------------------
Judith H. Hamilton
Director May 15, 2000
- ----------------------------
Thomas S. Johnson
/s/ George A. Lorch Director May 15, 2000
- -----------------------------
George A. Lorch
Director May 15, 2000
- ------------------------------
Oliver R. Sockwell
Director May 15, 2000
- ------------------------------
Bide L. Thomas
/s/ Stephen M. Wolf Director May 15, 2000
- ------------------------------
Stephen M. Wolf
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- ------
4.1 Restated Certificate of Incorporation (1)
4.2 By-Laws (2)
4.3 Amendment to By-Laws adopted January 27, 2000 (2)
4.4 Rights Agreement, dated as of April 25, 1996 between R.R. Donnelley &
Sons Company and First Chicago Trust Company of New York (3)
*23 Consent of Arthur Andersen LLP
*24 Powers of Attorney (included elsewhere herein)
*99 R.R. Donnelley & Sons Company 2000 Stock Incentive Plan
______
*Filed herewith
(1) Exhibit 3(i) to Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996 (Commission File No. 1-4694).
(2) Exhibits 3(ii)(a) and 3(ii)(b), respectively, to Annual Report on Form 10-K
for the year ended December 31, 1999 (Commission File No. 1-4694).
(3) Filed on June 5, 1996 as Exhibit 4 to Form 8-A (Commission File No. 1-4694).
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 of our reports dated
January 27, 2000, included in R.R. Donnelley & Sons Company's Form 10-K for the
year ended December 31, 1999 and to all references to our Firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
-------------------------
Arthur Andersen LLP
Chicago, Illinois
May 15, 2000
<PAGE>
Exhibit 99
R.R. DONNELLEY & SONS COMPANY
2000 STOCK INCENTIVE PLAN
(as adopted by the Board of Directors on January 27, 2000)
I. GENERAL
1. Plan. To provide incentives to management through rewards based upon the
ownership or performance of the common stock of R.R. Donnelley & Sons Company
(the "Company"), the Committee hereinafter designated, may grant cash or bonus
awards, stock options, stock appreciation rights ("SARs"), or combinations
thereof, to eligible participants, on the terms and subject to the conditions
stated in the Plan. In addition, to provide incentives to members of the Board
of Directors ("Board") who are not employees of the Company ("non-employee
directors"), such non-employee directors are hereby granted options on the terms
and subject to the conditions set forth in the Plan. For purposes of the Plan,
references to employment by the Company also means employment by a majority-
owned subsidiary of the Company and employment by any other entity designated by
the Board or the Committee in which the Company has a direct or indirect equity
interest.
2. Eligibility. Officers and other key management employees of the Company,
its subsidiaries, and any other entity designated by the Board or the Committee
in which the Company has a direct or indirect equity interest, shall be
eligible, upon selection by the Committee, to receive cash or bonus awards,
stock options or SARs, either singly or in combination, as the Committee, in its
discretion, shall determine ("participants"). Non-employee directors shall
receive stock options on the terms and subject to the conditions stated in the
Plan.
3. Limitation on Shares to be Issued. Subject to adjustment as provided in
Section 5 of this Article I, 8,000,000 shares of common stock, par value $1.25
per share ("common stock"), shall be available under the Plan, reduced by the
aggregate number of shares of common stock which become subject to outstanding
bonus awards, stock options and SARs which are not granted in tandem with or by
reference to a stock option ("free-standing SARs"). Shares subject to a grant
or award under the Plan or under any other stock incentive plan of the Company
approved by stockholders on or prior to December 31, 1999 which for any reason
are not issued or delivered, including by reason of the expiration, termination,
cancellation or forfeiture of all or a portion of the grant or award or by
reason of the delivery or withholding of shares to pay all or a portion of the
exercise price or to satisfy tax withholding obligations, shall again be
available for future grants and awards; provided, however, that for purposes of
this sentence, stock options and
<PAGE>
SARs granted in tandem with or by reference to a stock option granted prior to
the grant of such SARs ("tandem SARs") shall be treated as one grant. In the
event the Company repurchases shares in the open market or otherwise, a number
of shares having a repurchase price equal to the aggregate proceeds received by
the Company from the exercise of stock options granted by the Company under the
Plan or any other stock incentive plan of the Company approved by stockholders
on or prior to December 31, 1999 shall again be available for future grants and
awards. For the purpose of complying with Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations thereunder,
the maximum number of shares of common stock with respect to which options or
SARs or a combination thereof may be granted during any one-year period to any
person shall be 1,000,000, subject to adjustment as provided in Section 5 of
this Article I; provided, however, that for purposes of this sentence, stock
options and tandem SARs shall be treated as one grant. The maximum number of
shares of common stock with respect to which bonus awards, including performance
awards or fixed awards in the form of restricted stock or other form may be
granted hereunder is 3,000,000 in the aggregate, subject to adjustment as
provided in Section 5 of this Article I.
Shares of common stock to be issued shall be treasury stock of the Company.
4. Administration of the Plan. The Plan shall be administered by a Committee
designated by the Board of Directors (the "Committee"). Each member of the
Committee may be (i) an "outside director" within the meaning of Section 162(m)
of the Code and (ii) a "Non-Employee Director" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee shall, subject to the terms of the Plan, select eligible participants
for grants and awards; determine the form of each grant and award, either as
cash, a bonus award, stock options or SARs or a combination thereof; and
determine the number of shares or units subject to the grant or award, the fair
market value of the common stock or units when necessary, the time and
conditions of vesting, exercise or settlement, whether dividends or dividend
equivalents accrue under any award, and all other terms and conditions of each
grant and award, including, without limitation, the form of instrument
evidencing the grant or award. The Committee may establish rules and
regulations for the administration of the Plan, interpret the Plan, and impose,
incidental to a grant or award, conditions with respect to competitive
employment or other activities not inconsistent with the Plan. All such rules,
regulations, interpretations and conditions shall be conclusive and binding on
all parties. Each grant and award shall be evidenced by a written instrument
and no grant or award shall be valid until an agreement is executed by the
Company and such grant or award shall be effective as of the effective date set
forth in the agreement.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other executive officer of the Company as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its power and authority with regard to (i) the selection for
participation in the Plan of (A) a participant who is a "covered employee"
within the meaning of Section 162(m) of the Code or who, in the Committee's
judgment, is likely to be a covered employee at any time during the period a
grant or award hereunder to such participant would be
2
<PAGE>
outstanding or (B) an officer or other person subject to Section 16 of the
Exchange Act or (ii) decisions concerning the timing, pricing or amount of a
grant or award to a participant, officer or other person described in clause (i)
above. A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by all of the members of the Committee without a meeting.
5. Adjustments. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of common stock other than a regular cash
dividend, the number and class of securities available under the Plan, the
number and class of securities subject to each outstanding bonus award, the
number and class of securities subject to each outstanding stock option and the
purchase price per security and the terms of each outstanding SAR shall be
appropriately adjusted by the Committee, such adjustments to be made in the case
of outstanding stock options and SARs without an increase in the aggregate
purchase price or base price. If any such adjustment would result in a
fractional security being (i) available under the Plan, such fractional security
shall be disregarded, or (ii) subject to an outstanding grant or award under the
Plan, the Company shall pay the holder thereof, in connection with the first
vesting, exercise or settlement of such grant or award, in whole or in part,
occurring after such adjustment, an amount in cash determined by multiplying (i)
the fraction of such security (rounded to the nearest hundredth) by (ii) the
excess, if any, of (A) the fair market value on the vesting, exercise or
settlement date over (B) the exercise or base price, if any, of such grant or
award; provided, however, that if the fair market value of such fractional
security immediately after such adjustment is less than the fair market value of
one share of common stock immediately prior to such adjustment, such fractional
security shall be disregarded and no payment shall be made.
6. Effective Date and Term of Plan. The Plan shall be submitted to the
stockholders of the Company for approval at the 2000 annual meeting of
stockholders and, if approved, shall become effective on the date of such
stockholder approval. The Plan shall terminate on the date on which shares are
no longer available for grants or awards under the Plan, unless terminated prior
thereto by action of the Board. No further grants or awards shall be made under
the Plan after termination, but termination shall not affect the rights of any
participant under any grants or awards made prior to termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect except that no amendment may be made without stockholder approval if
stockholder approval is required by applicable law, rule or regulation,
including Section 162(m) of the Code, or such amendment would increase (subject
to Section 5 of this Article I) the number of shares available under the Plan.
No amendment may impair the rights of a holder of an outstanding grant or award
without the consent of such holder.
II. BONUS AWARDS
3
<PAGE>
1. Form of Award. Bonus awards, whether performance awards or fixed awards,
may be made to eligible participants in the form of (i) cash, whether in an
absolute amount or as a percentage of compensation, (ii) stock units, each of
which is substantially the equivalent of a share of common stock but for the
power to vote and, subject to the Committee's discretion, the entitlement to an
amount equal to dividends or other distributions otherwise payable on a like
number of shares of common stock, (iii) shares of common stock issued to the
participant but forfeitable and with restrictions on transfer in any form as
hereinafter provided or (iv) any combination of the foregoing.
2. Performance Awards. (a) Awards may be made in terms of a stated potential
maximum dollar amount, percentage of compensation or number of units or shares,
with such actual amount, percentage or number to be determined by reference to
the level of achievement of corporate, sector, business unit, division,
individual or other specific performance goals over a performance period of not
less than one nor more than ten years, as determined by the Committee.
(b) In no event shall any participant receive a payment with respect
to any performance award if the minimum threshold performance goals requirement
applicable to the payment is not achieved during the performance period.
(c) If the Committee desires that compensation payable pursuant to
any performance award be "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code, then with respect to such performance
award, for any calendar year no participant shall receive stock units or shares
of common stock in excess of 100,000 stock units or shares of common stock or a
cash award in excess of the then fair market value of 100,000 shares of common
stock, subject to adjustment as provided in Section 5 of Article I.
(d) The Committee retains sole discretion to reduce the amount of or
eliminate any payment otherwise payable to a participant with respect to any
performance award. The Committee may exercise such discretion by establishing
conditions for payments with respect to performance awards in addition to the
performance goals, including the achievement of financial, strategic or
individual goals, which may be objective or subjective, as it deems appropriate.
(e) For purposes of the Plan, "performance goals" means the
objectives established by the Committee which shall be satisfied or met during
the applicable performance period as a condition to a participant's receipt of
all or a part of a performance-based award under the Plan. The performance goals
shall be tied to one or more of the following business criteria, determined with
respect to the Company or the applicable sector, business unit or division: net
sales, cost of sales, gross profit, earnings from operations, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), earnings before
income taxes, earnings before interest and taxes, cash flow measures, return on
equity, return on assets, return on net assets employed, net income per common
share (basic or diluted), EVA (Economic Value Added, which represents the cash
operating earnings of the Company after deducting a charge for capital employed)
or any other similar criteria established by the Committee for the applicable
performance
4
<PAGE>
period. In the discretion of the Committee, the Committee may amend or adjust
the performance goals or other terms or conditions of an outstanding award in
recognition of unusual or nonrecurring events. If the Committee desires that
compensation payable pursuant to any award subject to performance goals be
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code, the performance goals (i) shall be established by the Committee no
later than 90 days after the beginning of the applicable performance period (or
such other time designated by the Internal Revenue Service) and (ii) shall
satisfy all other applicable requirements imposed under Treasury Regulations
promulgated under Section 162(m) of the Code, including the requirement that
such performance goals be stated in terms of an objective formula or standard.
3. Fixed Awards. Awards may be made which are not contingent on the
achievement of specific objectives, but are contingent on the participant's
continuing in the Company's employ for a period specified in the award.
4. Rights with Respect to Restricted Shares. If shares of restricted common
stock are subject to an award, the participant shall have the right, unless and
until such award is forfeited or unless otherwise determined by the Committee at
the time of grant, to vote the shares and to receive dividends thereon from the
date of grant and the right to participate in any capital adjustment applicable
to all holders of common stock; provided, however, that a distribution with
respect to shares of common stock, other than a regular quarterly cash dividend,
shall be deposited with the Company and shall be subject to the same
restrictions as the shares of common stock with respect to which such
distribution was made.
During the restriction period, a certificate or certificates representing
restricted shares shall be registered in the holder's name or the name of a
nominee of the Company and may bear a legend, in addition to any legend which
may be required under applicable laws, rules or regulations, indicating that the
ownership of the shares of common stock represented by such certificate is
subject to the restrictions, terms and conditions of the Plan and the agreement
relating to the restricted shares. All such certificates shall be deposited
with the Company, together with stock powers or other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate, which would permit transfer to the
Company of all or a portion of the shares of common stock subject to the award
in the event such award is forfeited in whole or in part. Upon termination of
any applicable restriction period, including, if applicable, the satisfaction or
achievement of applicable objectives, and subject to the Company's right to
require payment of any taxes, the requisite number of shares of common stock
shall be delivered to the holder of such award.
5. Rights with Respect to Stock Units. If stock units are credited to a
participant pursuant to an award, then, subject to the Committee's discretion,
amounts equal to dividends and other distributions otherwise payable on a like
number of shares of common stock after the crediting of the units (unless the
record date for such dividends or other distributions precedes the date of grant
of such award) shall be credited to an account for the
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participant and held until the award is forfeited or paid out and interest shall
be credited on the account at a rate determined by the Committee.
6. Vesting and Resultant Events. The Committee may, in its discretion, provide
for early vesting of an award in the event of the participant's death, permanent
and total disability or retirement. At the time of vesting, (i) the award (and
any dividend equivalents, other distributions and interest which have been
credited), if in units, shall be paid to the participant either in shares of
common stock equal to the number of units, in cash equal to the fair market
value of such shares, or in such combination thereof as the Committee shall
determine, (ii) the award, if a cash bonus award, shall be paid to the
participant either in cash, or in shares of common stock with a then fair market
value equal to the amount of such award, or in such combination thereof as the
Committee shall determine and (iii) shares of restricted common stock issued
pursuant to an award shall be released from the restrictions.
III. STOCK OPTIONS
1. Grants. (a) Options for Eligible Participants. Options to purchase shares
of common stock of the Company may be granted to such eligible participants as
may be selected by the Committee. These options may, but need not, constitute
"incentive stock options" under Section 422 of the Code. To the extent that the
aggregate fair market value (determined as of the date of grant) of shares of
common stock with respect to which options designated as incentive stock options
are exercisable for the first time by an optionee during any calendar year
(under the Plan or any other plan of the Company, or any parent or subsidiary)
exceeds the amount (currently $100,000) established by the Code, such options
shall not constitute incentive stock options.
(b) Automatic Options for Non-Employee Directors. The Company shall grant
an option to purchase shares of common stock of the Company on the date of the
2000 annual meeting of stockholders and, thereafter, annually on the date of the
Company's annual meeting of stockholders to each individual who immediately
following such meeting on such date is a non-employee director. The number of
shares of common stock subject to an option granted to a non-employee director
pursuant to this Section 1(b) (a "Director Option") shall equal the number
determined by (i) multiplying (A) the then current annual cash retainer fee
payable to a non-employee director by (B) 2.5, and (ii) dividing that product by
100% of the fair market value of a share of common stock on the date of grant of
such option. A Director Option shall become exercisable in whole or in part on
the earlier to occur of (i) the date which is the first anniversary of the date
the Director Option is granted (the date of grant being hereafter referred to as
the "Option Date") or (ii) the day immediately preceding the date of the first
annual meeting of stockholders of the Company next following the Option Date.
Subject to Section 4 of this Article III, a Director Option shall expire on the
first business day preceding the date of the tenth anniversary of the date of
grant.
(c) Elective Options for Non-Employee Directors. Each non-employee
director may from time to time elect, in accordance with procedures to be
specified by the
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Committee, to receive in lieu of all or part of (i) the annual cash retainer fee
for services as a director of the Company, any fees for attendance at meetings
of the Board or any committee of the Board and any fees for serving as a member
or chairman of any committee of the Board that would otherwise be payable to
such non-employee director ("Fees") or (ii) the annual phantom stock award
granted to such non-employee director pursuant to the Retirement Benefits and
Phantom Stock Grants for Directors Policy ("Retirement Benefit"), an option to
purchase shares of Common Stock, which option shall have a value (as determined
in accordance with the Black-Scholes stock option valuation method) as of the
date of grant of such option equal to the amount of such Fees or Retirement
Benefit. An option granted to a non-employee director pursuant to this Section
1(c) shall be a Director Option and shall become exercisable in full on the date
which is the first anniversary of the date the Director Option is granted.
2. Number of Shares and Purchase Price. The number of shares of common stock
subject to an option and the purchase price per share of common stock
purchasable upon exercise of the option shall be determined by the Committee;
provided, however, that the purchase price per share of common stock shall not
be less than 100% of the fair market value of a share of common stock on the
date of grant of the option, including a Director Option; provided further, that
if an incentive stock option shall be granted to any person who, on the date of
grant of such option, owns capital stock possessing more than ten percent of the
total combined voting power of all classes of capital stock of the Company (or
of any parent or subsidiary) (a "Ten Percent Holder"), the purchase price per
share of common stock shall be the price (currently 110% of fair market value)
required by the Code in order to constitute an incentive stock option.
3. Exercise of Options. The period during which options granted hereunder
(other than Director Options) may be exercised shall be determined by the
Committee; provided, however, that no stock option shall be exercised later than
ten years after its date of grant; provided further, that if an incentive stock
option shall be granted to a Ten Percent Holder, such option shall not be
exercisable more than five years after its date of grant. The Committee may, in
its discretion, establish performance measures which shall be satisfied or met
as a condition to the grant of an option or to the exercisability of all or a
portion of an option. The Committee shall determine whether an option shall
become exercisable in cumulative or non-cumulative installments and in part or
in full at any time. An exercisable option, or portion thereof, may be
exercised only with respect to whole shares of common stock.
An option may be exercised (i) by giving written notice to the Company
specifying the number of whole shares of common stock to be purchased and
accompanied by payment therefor in full (or arrangement made for such payment to
the Company's satisfaction) either (A) in cash, (B) in previously owned whole
shares of common stock (which the optionee has held for at least six months
prior to delivery of such shares or which the optionee purchased on the open
market and for which the optionee has good title free and clear of all liens and
encumbrances) having a fair market value, determined as of the date of exercise,
equal to the aggregate purchase price payable by reason of such exercise, (C) in
cash by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise or (D) a
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combination of (A) and (B), (ii) if applicable, by surrendering to the Company
any SARs which are canceled by reason of the exercise of the option and (iii) by
executing such documents as the Company may reasonably request. The Committee
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(D). Any fraction of a share of common stock which would be required
to pay such purchase price shall be disregarded and the remaining amount due
shall be paid in cash by the optionee. No shares of common stock shall be
delivered until the full purchase price therefor has been paid.
4. Termination of Employment or Service. Subject to the requirements of the
Code, all of the terms relating to the exercise, cancellation or other
disposition of an option upon a termination of employment with the Company or
service on the Board, as the case may be, of the holder of such option, whether
by reason of disability, retirement, death or any other reason, shall be
determined by the Committee; provided, however, that the expiration date of an
option may never be extended beyond the original expiration date of such option.
IV. STOCK APPRECIATION RIGHTS
1. Grants. Free-standing SARs entitling the grantee to receive cash or shares
of common stock having a fair market value equal to the appreciation in market
value of a stated number of shares of common stock from the date of grant to the
date of exercise of such SARs, or in the case of tandem SARs, from the date of
grant of the related stock option to the date of exercise of such tandem SARs,
may be granted to such participants as may be selected by the Committee. The
holder of a tandem SAR may elect to exercise either the option or the SAR, but
not both. Tandem SARs shall be automatically canceled upon exercise of the
related stock option.
2. Number of SARs and Base Price. The number of SARs subject to a grant shall
be determined by the Committee. Any tandem SAR related to an incentive stock
option shall be granted at the same time that such incentive stock option is
granted. The base price of a tandem SAR shall be the purchase price per share
of common stock of the related option. The base price of a free-standing SAR
shall be determined by the Committee; provided, however, that such base price
shall not be less than 100% of the fair market value of a share of common stock
on the date of grant of such SAR.
3. Exercise of SARs. The agreement relating to a grant of SARs may specify
whether such grant shall be settled in shares of common stock (including
restricted shares of common stock) or cash or a combination thereof. Upon
exercise of an SAR, the grantee shall be paid the excess of the then fair market
value of the number of shares of common stock to which the SAR relates over the
base price of the SAR. Such excess shall be paid in cash or in shares of common
stock having a fair market value equal to such excess or in such combination
thereof as the Committee shall determine. The period during which SARs granted
hereunder may be exercised shall be determined by the Committee; provided,
however, no SAR shall be exercised later than ten years after the date of its
grant; and provided, further, that no tandem SAR shall be exercised if the
related option
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has expired or has been canceled or forfeited or has otherwise terminated. The
Committee may, in its discretion, establish performance measures which shall be
satisfied or met as a condition to the grant of an SAR or to the exercisability
of all or a portion of an SAR. The Committee shall determine whether an SAR may
be exercised in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable SAR, or portion thereof, may be exercised, in the
case of a tandem SAR, only with respect to whole shares of common stock and, in
the case of a free-standing SAR, only with respect to a whole number of SARs. If
an SAR is exercised for restricted shares of common stock, the restricted shares
shall be issued in accordance with Section 4 of Article II and the holder of
such restricted shares shall have such rights of a stockholder of the Company as
determined pursuant to such Section. Prior to the exercise of an SAR for shares
of common stock, including restricted shares, the holder of such SAR shall have
no rights as a stockholder of the Company with respect to the shares of common
stock subject to such SAR.
A tandem SAR may be exercised (i) by giving written notice to the Company
specifying the number of whole SARs which are being exercised, (ii) by
surrendering to the Company any options which are canceled by reason of the
exercise of such SAR and (iii) by executing such documents as the Company may
reasonably request. A free-standing SAR may be exercised (i) by giving written
notice to the Company specifying the whole number of SARs which are being
exercised and (ii) by executing such documents as the Company may reasonably
request.
4. Termination of Employment. Subject to the requirements of the Code, all of
the terms relating to the exercise, cancellation or other disposition of an SAR
upon a termination of employment with the Company of the holder of such SAR,
whether by reason of disability, retirement, death or any other reason, shall be
determined by the Committee; provided, however, that the expiration date of an
SAR may never be extended beyond the original expiration date of such SAR.
V. OTHER
1. Non-Transferability of Options and Stock Appreciation Rights. No option or
SAR shall be transferable other than (i) by will, the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company or (ii) as otherwise set forth in the agreement relating to such option
or SAR. Each option or SAR may be exercised during the participant's lifetime
only by the participant or the participant's guardian, legal representative or
similar person or the permitted transferee of the participant. Except as
permitted by the second preceding sentence, no option or SAR may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any option or SAR, such
award and all rights thereunder shall immediately become null and void.
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2. Tax Withholding. The Company shall have the right to require, prior to the
issuance or delivery of any shares of common stock or the payment of any cash
pursuant to a grant or award hereunder, payment by the holder thereof of any
Federal, state, local or other taxes which may be required to be withheld or
paid in connection therewith. An agreement may provide that (i) the Company
shall withhold whole shares of common stock which would otherwise be delivered
to a holder, having an aggregate fair market value determined as of the date the
obligation to withhold or pay taxes arises in connection therewith (the "Tax
Date"), or withhold an amount of cash which would otherwise be payable to a
holder, in the amount necessary to satisfy any such obligation or (ii) the
holder may satisfy any such obligation by any of the following means: (A) a
cash payment to the Company, (B) delivery to the Company of previously owned
whole shares of common stock (which the holder has held for at least six months
prior to the delivery of such shares or which the holder purchased on the open
market and for which the holder has good title, free and clear of all liens and
encumbrances) having an aggregate fair market value determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (C)
authorizing the Company to withhold whole shares of common stock which would
otherwise be delivered having an aggregate fair market value determined as of
the Tax Date or withhold an amount of cash which would otherwise be payable to a
holder, equal to the amount necessary to satisfy any such liability, (D) in the
case of the exercise of an option, a cash payment by a broker-dealer acceptable
to the Company to whom the optionee has submitted an irrevocable notice of
exercise or (E) any combination of (A), (B) and (C); provided, however, that the
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(E). An agreement relating to a grant or award hereunder may
not provide for shares of common stock to be withheld having an aggregate fair
market value in excess of the minimum amount of taxes required to be withheld.
Any fraction of a share of common stock which would be required to satisfy such
an obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.
3. Acceleration Upon Change in Control. If while (i) any performance award or
fixed award granted under Article II is outstanding or (ii) any stock option
granted under Article III of the Plan or SAR granted under Article IV of the
Plan is outstanding --
(a) any "person," as such term is defined in Section 3(a)(9) of the
Exchange Act, as modified and used in Section 13(d) and 14(d) thereof (but
not including (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company) (hereinafter a "Person") is or becomes the beneficial
owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates, excluding an acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding
convertible or
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exchangeable securities) representing 50% or more of the combined voting
power of the Company's then outstanding securities; or
(b) during any period of two (2) consecutive years beginning January
1, 2000, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a Person
who has entered into any agreement with the Company to effect a transaction
described in Clause (a), (c) or (d) of this Section) whose election by the
Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50%
of the combined voting power of the Company's then outstanding securities;
or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets,
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in the
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), (i) with respect to such performance awards, the highest
level of achievement specified in the award shall be deemed met and the award
shall be immediately and fully vested, (ii) with respect to such fixed awards,
the period of continued employment specified in the award upon which the award
is contingent shall be deemed completed and the award shall be immediately and
fully vested and (iii) with respect to such options and SARs, all such options
and SARs, whether or not then exercisable in whole or in part, shall be fully
and immediately exercisable.
4. Restrictions on Shares. Each grant and award made hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or
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qualification of the shares of common stock subject thereto upon any securities
exchange or under any law, or the consent or approval of any governmental body,
or the taking of any other action is necessary or desirable as a condition of,
or in connection with, the delivery of shares thereunder, such shares shall not
be delivered unless such listing, registration, qualification, consent, approval
or other action shall have been effected or obtained, free of any conditions not
acceptable to the Company. The Company may require that certificates evidencing
shares of common stock delivered pursuant to any grant or award made hereunder
bear a legend indicating that the sale, transfer or other disposition thereof by
the holder is prohibited except in compliance with the Securities Act of 1933,
as amended, and the rules and regulations thereunder.
5. No Right of Participation or Employment. No person (other than non-employee
directors to the extent provided in Article III) shall have any right to
participate in the Plan. Neither the Plan nor any grant or award made hereunder
shall confer upon any person any right to continued employment by the Company,
any subsidiary or any affiliate of the Company or affect in any manner the right
of the Company, any subsidiary or any affiliate of the Company to terminate the
employment of any person at any time without liability hereunder.
6. Rights as Stockholder. No person shall have any right as a stockholder of
the Company with respect to any shares of common stock or other equity security
of the Company which is subject to a grant or award hereunder unless and until
such person becomes a stockholder of record with respect to such shares of
common stock or equity security.
7. Governing Law. The Plan, each grant and award hereunder and the related
agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
8. Foreign Participants. Notwithstanding any provision of the Plan to the
contrary the Committee may, with a view to both promoting achievement of the
purposes of the plan and complying with provisions of laws in countries outside
the United States in which the Company or its subsidiaries operate or have
employees, determine which persons outside the United States shall be eligible
to participate in the Plan on such terms and conditions different from those
specified in the Plan as may in the judgement of the Committee be necessary or
advisable and, to that end, the Committee may establish sub-plans, modified
option exercise procedures and other terms and procedures.
9. Approval of Plan. The Plan and all grants and awards made hereunder shall
be null and void if the adoption of the Plan is not approved by the affirmative
vote of a majority of the shares of common stock present in person or
represented by proxy at the 2000 annual meeting of stockholders.
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