As filed with the Securities and Exchange Commission on January 4, 1999
Registration Number 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
OMNICOM GROUP INC.
(Exact name of registrant as specified in its charter)
New York 13-1514814
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
437 Madison Avenue
New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
OMNICOM GROUP INC. 1998 INCENTIVE COMPENSATION PLAN
(Full title of the plan)
Barry J. Wagner, Esq.
Secretary and General Counsel
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
(212) 415-3600
(Name, address and telephone number,
including area code, of agent for service)
----------
Copies to:
Linda E. Ransom, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
(212) 259-6570
----------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Title of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price Per Aggregate Offering Amount of
be Registered Registered Share (1) Price (1) Registration Fee (1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock of
Omnicom Group Inc.,
par value $.50 per
share ................ 7,600,000 $57.15625 $434,387,500 $120,759.73
=======================================================================================================
</TABLE>
(1) Estimated for the sole purpose of computing the registration fee. Pursuant
to Securities Act Rules 457(c) and (h), the proposed maximum offering
price per share is calculated as the average of the high and low prices,
reported by the New York Stock Exchange, Inc., of the common stock of the
registrant as of December 29, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents have been filed by Omnicom Group Inc. (the
"Company") (File No. 1-10551) with the Securities and Exchange Commission (the
"Commission") and are incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998;
(c) the Company's Current Reports on Form 8-K dated January 20, 1998,
March 4, 1998 and March 6, 1998; and
(d) the description of the Company's Common Stock contained in the
Registration Statement filed pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and any amendment or report filed for purposes of updating that
description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein 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 document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Registration Statement.
The consolidated financial statements and financial statement schedules of
the Company and its subsidiaries included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 have been incorporated herein
by reference in reliance on the reports, also incorporated herein by reference,
of Arthur Andersen LLP, independent certified public accountants, given on their
authority as experts in auditing and accounting.
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<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.
The Company's Certificate of Incorporation contains a provision limiting
the liability of directors (except for approving statutorily prohibited
dividends, share repurchases or redemptions, distributions of assets on
dissolution or loans to directors) to acts or omissions in bad faith, involving
intentional misconduct or a knowing violation of the law, or resulting in
personal gain to which the director was not legally entitled. The Company's
By-Laws provide that an officer or director will be indemnified against any
costs or liabilities, including attorneys fees and amounts paid in settlement
with the consent of the Company in connection with any claim, action or
proceeding to the fullest extent permitted by the New York Business Corporation
Law.
Section 722(a) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director made, or threatened to be
made, a party to an action other than one by or in the right of the corporation,
including an action by or in the right of any other corporation or other
enterprise which any director or officer of the corporation served in any
capacity at the request of the corporation, because he was a director or officer
of the corporation, or served such other corporation or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorney's fees actually and necessarily incurred as a
result of such action, or any appeal therein, if such director or officer acted,
in good faith, for a purpose which he reasonably believed to be in, or in the
case of service for any other corporation or other enterprise, not opposed to,
the best interests of the corporation and, in criminal actions, in addition, had
no reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director made, or threatened to be
made, a party to an action by or in the right of the corporation by reason of
the fact that he is or was an officer or director of the corporation, or is or
was serving at the request of the corporation as a director or officer of any
other corporation, or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for another corporation or other enterprise, not opposed to, the best
interests of the corporation. The corporation may not, however, indemnify any
officer or director pursuant to Section 722(c) in respect of (1) a threatened
action, or a pending action which is settled or otherwise disposed of, or (2)
any claim, issue or matter as to which such person shall
II-2
<PAGE>
have been adjudged to be liable to the corporation, unless and only to the
extent that the court in which the action was brought or, if no action was
brought, any court of competent jurisdiction, determines in its discretion, that
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement and expenses as the court deems proper.
Section 723 of the New York Business Corporation Law provides that an
officer or director who has been successful on the merits or otherwise in the
defense of a civil or criminal action of the character set forth in Section 722
is entitled to indemnification as permitted in such section. Section 724 of the
New York Business Corporation Law permits a court to award the indemnification
required by Section 722.
The Company has entered into agreements with its directors to indemnify
them for liabilities or costs arising out of any alleged or actual breach of
duty, neglect, errors or omissions while serving as a director. The Company also
maintains and pays premiums for directors' and officers' liability insurance
policies.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit Number Description
-------------- -----------
5 Opinion and Consent of Dewey Ballantine LLP.
23.1 Consent of Dewey Ballantine LLP (included in Exhibit 5 hereto).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on Signature Page).
99 Omnicom Group Inc. 1998 Incentive Compensation Plan.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective
II-3
<PAGE>
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
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
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 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on January 4, 1999.
OMNICOM GROUP INC.
By: /s/ John Wren
------------------------------------
John Wren
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each person whose signature appears below
does hereby constitute and appoint John Wren and Barry J. Wagner, and each of
them, with full powers of substitution, his or her true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents may deem
necessary or advisable to enable the registrant to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
registration under said Act of shares of Common Stock registered pursuant
hereto, including specifically, but without limitation thereof, power and
authority to sign his or her name, in any and all capacities set forth beneath
his name, to any amendment to this Registration Statement in respect of said
shares and to any documents filed as part of or in connection with said
Registration Statement or amendments; and the undersigned does hereby ratify and
confirm all that said attorneys-in-fact and agents shall do or cause to be done
by virtue hereof.
Date: January 4, 1999 By: /s/ John Wren
------------------------------------
John Wren
Chief Executive Officer and Director
(Principal Executive Officer)
Date: January 4, 1999 By: /s/ Randall Weisenburger
------------------------------------
Randall Weisenburger
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
Date: January 4, 1999 By: /s/ Jonathan E. Ramsden
------------------------------------
Jonathan E. Ramsden
Controller
(Principal Accounting Officer)
Date: January 4, 1999 By: /s/ Bernard Brochand
------------------------------------
Bernard Brochand
Director
Date: January 4, 1999 By: /s/ Robert J. Callander
------------------------------------
Robert J. Callander
Director
Date: January 4, 1999 By: /s/ James A. Cannon
------------------------------------
James A. Cannon
Director
Date: January 4, 1999 By: /s/ Leonard S. Coleman, Jr.
------------------------------------
Leonard S. Coleman, Jr.
Director
Date: January 4, 1999 By: /s/ Bruce Crawford
------------------------------------
Bruce Crawford
Director
Date: January 4, 1999 By: /s/ Susan S. Denison
------------------------------------
Susan S. Denison
Director
Date: January 4, 1999 By: /s/ John R. Murphy
------------------------------------
John R. Murphy
Director
Date: January 4, 1999 By: /s/ John R. Purcell
------------------------------------
John R. Purcell
Director
<PAGE>
Date: January 4, 1999 By: /s/ Keith L. Reinhard
------------------------------------
Keith L. Reinhard
Director
Date: January 4, 1999 By: /s/ Allen Rosenshine
------------------------------------
Allen Rosenshine
Director
Date: January 4, 1999 By: /s/ Gary L. Roubos
------------------------------------
Gary L. Roubos
Director
Date: January 4, 1999 By: /s/ Quentin I. Smith, Jr.
------------------------------------
Quentin I. Smith, Jr.
Director
Date: January 4, 1999 By: /s/ William G. Tragos
------------------------------------
William G. Tragos
Director
Date: January 4, 1999 By: /s/ Egon P. S. Zehnder
------------------------------------
Egon P. S. Zehnder
Director
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
5 Opinion and Consent of Dewey Ballantine LLP.
23.1 Consent of Dewey Ballantine LLP (included in Exhibit 5 hereto).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on Signature Page).
99 Omnicom Group Inc. 1998 Incentive Compensation Plan.
Exhibit 5
DEWEY BALLANTINE LLP
1301 Avenue of the Americas
New York 10019-6092
TEL 212 259-8000 FAX 212 259-6333
January 4, 1999
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Re: Registration Statement on Form S-8 Filed with the Securities and
Exchange Commission on January 4, 1999
Gentlemen:
We are acting as counsel for Omnicom Group Inc., a New York corporation
("Omnicom"), in connection with the registration by Omnicom under the Securities
Act of 1933, as amended (the "Act"), of 7,600,000 shares of common stock, par
value $.50 per share (the "Shares"), to be offered pursuant to the Omnicom Group
Inc. 1998 Incentive Compensation Plan (the "Plan") under the Registration
Statement on Form S-8 filed with the Securities and Exchange Commission (the
"Registration Statement").
We are familiar with the proceedings of Omnicom relating to the
authorization and issuance of the Shares. In addition, we have made such further
examinations of law and fact as we have deemed appropriate in connection with
the opinion hereinafter set forth. We express no opinion as to the law of any
jurisdiction other than the laws of the State of New York.
Based upon the foregoing, we are of the opinion that the Shares to be
offered pursuant to the Plan have been duly authorized and, when issued in
accordance with the resolutions of the Board of Directors of Omnicom authorizing
such issuance, will be validly issued, fully paid and nonassessable.
<PAGE>
Omnicom Group Inc.
January 4, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or under the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Dewey Ballantine LLP
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 18, 1998
(except for Note 14 as to which the date is March 24, 1998) included in Omnicom
Group Inc.'s Form 10-K for the year ended December 31, 1997 and to all
references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
New York, New York
January 4, 1999
Exhibit 99
OMNICOM GROUP INC.
1998 INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan
The purpose of the Omnicom Group Inc. 1998 Incentive Compensation Plan
(the "Plan") is to further the interests of Omnicom Group Inc. (the "Company")
and its shareholders by providing performance incentives to those key employees
of the Company and its Subsidiaries who are largely responsible for the
management and growth of the business of the Company and its Subsidiaries and to
strengthen the link of non-employee directors of the Company directly with the
interests of the shareholders.
2. Definitions
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Award" means any Option, Performance Incentive, Restricted
Stock, Stock granted as a bonus or in lieu of cash or other obligations
under other plans or compensatory arrangements, cash payments, including
cash bonuses, or Dividend Equivalent Right granted to a Participant under
the Plan.
(b) "Award Agreement" means the written agreement, instrument or
document evidencing an Award.
(c) "Change of Control" means and includes each of the following:
(i) the acquisition, in one or more transactions, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) by any person or
entity or any group of persons or entities who constitute a group (within
the meaning of Section 13(d)(3) of the Exchange Act), other than a trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or a Subsidiary, of any securities of the Company such that,
as a result of such acquisition, such person, entity or group either (A)
beneficially owns (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, more than 20% of the Company's outstanding
voting securities entitled to vote on a regular basis for a majority of
the members of the Board of Directors of the Company or (B) otherwise has
the ability to elect, directly or indirectly, a majority of the members of
the Board; (ii) a change in the composition of the Board of Directors of
the Company such that a majority of the members of the Board of Directors
of the Company are not Continuing Directors; or (iii) approval by
shareholders of the Company of a merger or consolidation of the Company
with any other corporation, other than 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
entity) at least 80% of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or approval by shareholders of the
Company of a plan of complete dissolution or liquidation of the Company or
an agreement for the sale or disposition by the Company of (in one or more
transactions) all or substantially all of the Company's assets.
Notwithstanding the foregoing, the preceding events shall not be
deemed to be a Change of Control if, prior to any transaction or
transactions causing such change, a majority of the Continuing Directors
shall have voted not to treat such transaction or transactions as
resulting in a Change of Control.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE>
(e) "Committee" has the meaning attributed to such term in Section 3
hereof.
(f) A "Continuing Director" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member
of such Board on the effective date of the Plan or (ii) was nominated for
election or elected to such Board with the affirmative vote of a majority
of the Continuing Directors who were members of such Board at the time of
such nomination or election.
(g) "Dividend Equivalent Amount" means the amount resulting from
multiplying (i) the dividend per share of Stock payable on a dividend
payment date by (ii) the number of shares of Stock subject to the
Stock-Based Award with respect to which a Dividend Equivalent Right is
granted.
(h) "Dividend Equivalent Right" means a right granted to a
Participant to receive with respect to any Stock-Based Award (other than
Restricted Stock or Options) granted to such Participant the Dividend
Equivalent Amount on the payment date of each dividend on Stock during the
period from the date of grant of such Stock-Based Award to the final
payment of such Stock-Based Award.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" means, with respect to Stock, Awards, or
other property, the fair market value of such Stock, Awards, or other
property determined by such methods or procedures as shall be established
from time to time by the Committee in good faith and in accordance with
applicable law. Unless otherwise determined by the Committee, the Fair
Market Value of Stock shall mean the mean of the high and low sales prices
of Stock on the relevant date as reported on the stock exchange or market
on which the Stock is primarily traded, or if no sale is made on such
date, then the Fair Market Value shall mean the weighted average of the
mean of the high and low sales prices of the Stock on the next preceding
day and the next succeeding day on which such sales were made, as reported
on the stock exchange or market on which the Stock is primarily traded.
(k) "ISO" means any Option designated as an incentive stock option
within the meaning of Section 422 of the Code.
(l) "Non-Employee Director" means any director of the Company who is
not also an employee of the Company or of a Subsidiary.
(m) "Option" means a right granted to a Participant pursuant to
Section 6(b) hereof to purchase Stock at a specified price during
specified time periods. An Option may be either an ISO or a nonstatutory
Option (an Option not designated as an ISO).
(n) "Participant" has the meaning attributed to such term in Section
3(a) hereof and includes, to the extent applicable hereunder, any
Non-Employee Director who elects to receive Stock pursuant to Section 8
hereof.
(o) "Performance-Based Award" has the meaning attributed to such
term in Section 7(g) hereof.
(p) "Performance Incentive" means a right granted to a Participant
pursuant to Section 6(c) hereof to receive a payment in cash, Stock or a
combination of cash and Stock, if specified performance goals are met in a
specified time period of more than twelve months.
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<PAGE>
(q) "Restricted Stock" means Stock awarded to a Participant pursuant
to Section 6(d) hereof that may be subject to certain restrictions and to
a risk of forfeiture.
(r) "Stock" means the common stock, $0.50 par value, of the Company.
(s) "Stock Based Award" means a right that may be denominated or
payable in, or valued in whole or in part, by reference to the market
value of, Stock, including Options, Performance Incentives, Restricted
Stock and Stock granted as a bonus or as an Award in lieu of cash
payments.
(t) "Subsidiary" means any corporation that is a subsidiary of the
Company within the meaning of Section 424(f) of the Code, and any entity
that is organized as a limited liability company in which the Company,
directly or indirectly, possesses 50% or more of the voting power of all
members of such limited liability company entitled to vote.
3. Administration of the Plan
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). Except to the extent expressly
set forth in Section 8 hereof or elsewhere herein, the Committee shall have and
exercise all power and authority under the Plan. Any action of the Committee in
administering the Plan shall be final, conclusive and binding on all persons,
including the Company, its Subsidiaries, employees, Participants, persons
claiming rights from or through Participants and shareholders of the Company.
Subject to the provisions of the Plan, the Committee shall have full and
final authority in its discretion (a) to select the key employees who will
receive Awards pursuant to the Plan ("Participants"), (b) to determine the type
or types of Awards to be granted to each Participant, (c) to determine the
number of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not limited to,
restrictions as to transferability or forfeiture, exercisability or settlement
of an Award and waivers or accelerations thereof, and waivers of or
modifications to performance conditions relating to an Award, based in each case
on such considerations as the Committee shall determine) and all other matters
to be determined in connection with an Award; (d) to determine whether, to what
extent, and under what circumstances an Award may be settled, or the exercise
price of an Award may be paid, in cash, Stock, other Awards or other property,
or an Award may be cancelled, forfeited, or surrendered; (e) to establish
performance goals and to determine whether, and to certify that, performance
goals to which the settlement of an Award is subject are satisfied; (f) to
correct any defect or supply any omission or reconcile any inconsistency in the
Plan, and to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and (g) to make all
other determinations as it may deem necessary or advisable for the
administration of the Plan. The Committee may delegate to officers or managers
of the Company or any Subsidiary or to unaffiliated service providers the
authority, subject to such terms as the Committee shall determine, to perform
administrative functions and to perform such other functions as the Committee
may determine, to the extent permitted under Rule 16b-3, Section 162(m) of the
Code and applicable law.
4. Participation in the Plan
Participants in the Plan shall be selected by the Committee from among the
key employees of the Company and its Subsidiaries and shall include, to the
extent applicable hereunder, Non-Employee Directors electing to receive Stock in
accordance with Section 8 hereof.
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<PAGE>
5. Maximum Amount Available for Awards
(a) Basic Limitation. Subject to the provisions of Sections 5(b) through
5(d) and 9(a) hereof, the maximum number of shares of Stock in respect of which
Awards may be granted in any calendar year is 1.5% of the total number of shares
of Stock issued and outstanding on the first day of that calendar year.
(b) Additional Shares. In addition to the shares of Stock authorized by
Section 5(a) hereof, the following shares may be the subject of Awards under the
Plan:
(i) Carryovers. If the maximum number of shares of Stock in respect
of which Awards may be granted in any calendar year pursuant to this
Section 5 (the "Maximum Shares") exceeds the number of shares of Stock in
respect of which Awards are granted in that calendar year (the "Covered
Shares"), Shares equal to the excess of the Maximum Shares over the
Covered Shares ("Unused Shares") shall be added to the shares of Stock
otherwise available for Awards in the immediately following calendar year.
Unused Shares may be carried over to each subsequent calendar year in
succession to the extent that Awards are not granted in respect of the
Unused Shares.
(ii) Surrender of Shares. If a Participant tenders, or had withheld,
as provided elsewhere herein, shares of Stock in payment of all or part of
the option price under an Option granted under the Plan, or in
satisfaction of withholding tax obligations, the shares of Stock tendered
by the Participant or so withheld shall become available for Awards.
(iii) Forfeiture of Shares. If shares of Stock that are issued under
the Plan are subsequently forfeited (or if an Award with respect to shares
of Stock is forfeited) in accordance with the terms of the Award, the
forfeited shares of Stock shall immediately become available for Awards.
(iv) Payment of Cash in Lieu of Shares. To the extent that cash is
paid pursuant to an Award in lieu of shares of Stock, the shares of Stock
covered by the Award shall become available for Awards.
(c) Aggregate Limitation on ISOs and Restricted Shares. Subject to the
provisions of Section 9(a) hereof, during the term of the Plan, no more than
200,000 shares of Stock in the aggregate may be the subject of ISOs, and not
more than fifty percent (50%) of the total number of shares of Stock available
to be granted pursuant to Sections 5(a) and 5(b) in any calendar year shall be
Restricted Stock.
(d) Shares Available for Issuance. Shares of Stock may be made available
from the authorized but unissued shares or from shares held in the Company's
treasury and not reserved for some other purpose. If an Award is payable solely
in cash, no shares of Stock shall be deducted from the number of shares
available for issuance under this Section 5 by reason of such Award.
6. Awards
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 9(a)
hereof), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant and terms of partial payments for partial achievements of
performance goals; provided, however, that the Committee shall retain full
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<PAGE>
power to accelerate or waive any such additional term or condition as it may
have previously imposed. All Awards shall be evidenced by an Award Agreement.
(b) Options. The Committee may grant Options to Participants (in the case
of ISOs, limited to the Participants who are key employees of the Company and
any Subsidiary within the meaning of Section 424(f) of the Code) on the
following terms and conditions:
(i) Exercise Price. The exercise price of each Option shall be
determined by the Committee at the time the Option is granted, but (except
as provided in Section 7(a) hereof) the exercise price of any Option shall
not be less than the Fair Market Value of the shares of Stock covered
thereby at the time the Option is granted.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
whether the exercise price shall be paid in cash, by the surrender at Fair
Market Value of shares of Stock, in any combination of cash and shares of
Stock, in other Awards, or in other property (including notes or other
contractual obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements, to the extent
permitted by applicable law), and the methods by which Stock will be
delivered or deemed to be delivered to Participants.
(iii) ISOs. The terms of any Option granted under the Plan as an ISO
shall comply in all respects with the provisions of Section 422 of the
Code, including, but not limited to, the requirement that no ISO shall be
granted more than ten years after the effective date of the Plan.
(c) Performance Incentives. The Committee is authorized to grant
Performance Incentives to Participants on the following terms and conditions:
(i) Performance Criteria and Period. At the time it makes an award
of Performance Incentives, the Committee shall establish both the
performance goal or goals and the performance period or periods applicable
to the Performance Incentive so awarded. A performance goal shall be a
goal, expressed in terms of the attainment by the Company or any
Subsidiary, division or department of specific amounts of, or increase in,
one or more of the following, any of which may be measured either in
absolute terms or as compared to another company or companies: earnings
per share, net income, return on equity, total stockholder return,
revenue, cash flow, shareholders' equity, market performance and/or the
completion of certain business or capital transactions, or other
measurement deemed appropriate by the Committee. The performance period
will be the period of time over which one or more of the performance goals
must be achieved, which may be of such length longer than twelve months as
the Committee, in its discretion, shall select.
(ii) General. Neither the performance goals nor the performance
periods need be identical for all Performance Incentives at any time or
from time to time. The Committee shall have the authority, in its
discretion, to accelerate the time at which any performance period will
expire or waive or modify the performance goals of any Participant or
Participants. The Committee may also make such adjustments, to the extent
it deems appropriate, to the performance goals for any Performance
Incentive awarded to compensate for, or to reflect, any material changes
which may have occurred in accounting practices, tax laws, other laws or
regulations, the financial structure of the Company, acquisitions or
dispositions of business or Subsidiaries or any unusual circumstances
outside of management's control which, in the sole judgment of the
Committee, alters or affects the computation of such performance goals or
the performance of the Company or any relevant Subsidiary, division or
department.
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(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Restricted Period. Restricted Stock awarded to a Participant
shall be subject to such restrictions on transferability and other
restrictions for such periods as shall be established by the Committee, in
its discretion, at the time of such Award, which restrictions may lapse
separately or in combination as the Committee may determine, provided that
such restrictions shall lapse not less than three years nor more than five
years after the grant of such Award. Notwithstanding the foregoing, the
Committee, in its discretion, may grant awards of Restricted Stock of up
to 5% of the total number of shares of Stock available to be granted in
any calendar year in the form of Restricted Stock subject to restrictions
on transferability and other restrictions which may lapse less than three
years after the grant of such Award.
(ii) Forfeiture. Restricted Stock shall be forfeitable to the
Company upon termination of employment during the applicable restricted
periods. The Committee, in its discretion, whether in an Award Agreement
or anytime after an Award is made, may accelerate the time at which
restrictions or forfeiture conditions will lapse or remove any such
restrictions, including upon death, disability or retirement, whenever the
Committee determines that such action is in the best interests of the
Company.
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates may bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock.
(iv) Rights as a Shareholder. Subject to the terms and conditions of
the Award Agreement, the Participant shall have all the rights of a
shareholder with respect to shares of Restricted Stock awarded to him or
her, including, without limitation, the right to vote such shares and the
right to receive all dividends or other distributions made with respect to
such shares. If any such dividends or distributions are paid in Stock, the
Stock shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which the Stock has
been distributed.
(e) Stock as a Bonus or in Lieu of Cash or Other Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant Stock or other
Awards in lieu of Company or Subsidiary obligations to pay cash or deliver other
property under other plans or compensatory arrangements; provided that, in the
case of Participants subject to Section 16 of the Exchange Act, such cash
amounts are determined under such other plans in a manner that complies with
applicable requirements of Rule 16b-3 so that the acquisition of Stock or other
Awards hereunder shall be exempt from Section 16(b) liability. Stock or other
Awards granted under this Section 6(e) shall be subject to such other terms as
shall be determined by the Committee.
(f) Cash Payments. The Committee is authorized, subject to limitations
under applicable law, to grant to Participants cash payments, including cash
bonuses, whether awarded separately or as a supplement to any Stock-Based Award.
The Committee shall determine the terms and conditions of such Awards.
(g) Dividend Equivalent Rights. The Committee is authorized to grant
Dividend Equivalent Rights payable in cash, Stock or a combination of cash and
Stock in tandem with any Stock-Based Awards (other than Restricted Stock or
Options). The Committee shall determine the terms and conditions of such Awards.
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7. Additional Provisions Applicable to Awards
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan or any award granted under any other plan of the Company
or any Subsidiary, or any business entity acquired by the Company or any
Subsidiary, or any other right of a Participant to receive payment from the
Company or any Subsidiary. If an Award is granted in substitution for another
Award or award, the Committee shall require the surrender of such other Award or
award in consideration for the grant of the new Award. Awards granted in
addition to, or in tandem with, other Awards or awards may be granted either as
of the same time as, or a different time from, the grant of such other Awards or
awards. The per share exercise price of any Option or purchase price of any
other Award conferring a right to purchase Stock:
(i) granted in substitution for an outstanding Award or award, shall
be not less than the lesser of (A) the Fair Market Value of a share of
Stock at the date such substitute Award is granted or (B) such Fair Market
Value at that date, reduced to reflect the Fair Market Value at that date
of the Award or award required to be surrendered by the Participant as a
condition to receipt of the substitute Award; or
(ii) retroactively granted in tandem with an outstanding Award or
award, shall not be less than the lesser of the Fair Market Value of a
share of Stock at the date of grant of the later Award or at the date of
grant of the earlier Award or award.
Notwithstanding the foregoing, except as provided in Section 9 hereof, the
per share exercise price of any Award that is an Option or the purchase price of
any other Award conferring a right to purchase Stock may not be decreased after
the grant of the Award, and an Award that is an Option or any other Award
conferring a right to purchase Stock may not be surrendered as consideration in
exchange for the grant of a new Award that is an Option with a lower per share
exercise price or any other Award conferring a right to purchase Stock at a
lower purchase price.
(b) Exchange and Buy Out Provisions. The Committee may at any time offer
to exchange or buy out any previously granted Award for a payment in cash,
Stock, other Awards (subject to Section 7(a) hereof), or other property based on
such terms and conditions as the Committee shall determine and communicate to a
Participant at the time that such offer is made.
(c) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee.
(d) Term of Awards. The term of each Award shall, except as provided
herein, be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any ISO exceed a period of ten years
from the date of its grant (or such shorter period as may be applicable under
Section 422 of the Code).
(e) Form of Payment. Subject to the terms of the Plan and any applicable
Award Agreement, payments or transfers to be made by the Company or a Subsidiary
upon the grant, exercise or settlement of an Award may be made in such forms as
the Committee shall determine, including, without limitation, cash, Stock, other
Awards, or other property (and may be made in a single payment or transfer, in
installments, or on a deferred basis), in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee. (Such payments
may include, without limitation,
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provisions for the payment or crediting of reasonable interest on installments
or deferred payments.) The Committee, in its discretion, may accelerate any
payment or transfer upon a change in control as defined by the Committee. The
Committee may also authorize payment upon the exercise of an Option by net
issuance or other cashless exercise methods and may permit a Participant to pay
the exercise price upon the exercise of an Option by authorizing a third party
to sell shares of Stock (or a sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any tax withholding resulting from
such exercise. The Committee may also require that any shares of Stock
surrendered as provided in Section 5(b)(ii) hereof shall be acceptable to it in
its sole discretion.
(f) No Loans. Neither the Company nor any Subsidiary may make, guarantee,
or arrange for a loan or loans to a Participant with respect to the exercise of
any Option or other payment in connection with any Award.
(g) Awards to Comply with Section 162(m). The Committee may (but is not
required to) grant an Award pursuant to the Plan to a Participant which Award is
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code (a "Performance-Based Award"). The right to receive a Performance-Based
Award, other than Options granted at not less than Fair Market Value, shall be
conditional upon the achievement of performance goals established by the
Committee in writing at the time such Performance-Based Award is granted. Such
performance goals, which may vary from Participant to Participant and
Performance-Based Award to Performance-Based Award, shall be based upon the
attainment by the Company or any Subsidiary, division or department of specific
amounts of, or increases in, one or more of the following, any of which may be
measured either in absolute terms or as compared to another company or
companies: earnings per share, net income, operating margin, return on equity,
total stockholder return, revenue, cash flow, net worth, book value,
shareholders' equity, market performance and/or the completion of certain
business or capital transactions. Before any compensation pursuant to a
Performance-Based Award is paid, the Committee shall certify in writing that the
performance goals applicable to the Performance-Based Award were in fact
satisfied.
The maximum amount which may be granted as Performance-Based Awards to any
Participant in any calendar year shall not exceed (i) Stock-Based Awards
(whether payable in cash or stock) for 250,000 shares of Stock, subject to
adjustment as provided in Section 9(a) hereof, and (ii) cash payments of one
percent (1%) of the Company's operating profit for the calendar year in respect
of which such cash payment is made. For this purpose, "operating profit" shall
mean the Company's income before taxes, unusual charges and changes in
accounting principles.
(h) Change of Control. In the event of a Change of Control of the Company,
all Awards granted under the Plan (including Performance-Based Awards) that are
still outstanding and not yet vested or exercisable or which are subject to
restrictions shall become immediately 100% vested in each Participant or shall
be free of any restrictions, as of the first date that the definition of Change
of Control has been fulfilled, and shall be exercisable for the remaining
duration of the Award. All Awards that are exercisable as of the effective date
of the Change of Control will remain exercisable for the remaining duration of
the Award.
8. Non-Employee Directors' Equity Compensation Election
Commencing with May 1998 (if shareholders of the Company approve the Plan
as provided in Section 10(g) hereof), and in each year thereafter, each
Non-Employee Director shall have the right to elect, not later than July 15 in
the case of calendar year 1998 and December 15 in each
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subsequent year during the term of the Plan, to receive up to such portion of
such Non-Employee Director's annual retainer for the following year's service
(or in the case of 1998 for the remaining portion of the year) as a director as
the Board of Directors of the Company shall determine (which may, in the
discretion of the Board of Directors, be the entire amount of the annual
retainer), exclusive of any per meeting fees, committee fees or expense
reimbursements, in shares of Stock. The Board of Directors shall, or may
delegate to the Committee the authority to, prescribe the forms of election and
of the agreement embodying the terms and conditions applicable to such payments
in shares of Stock, including appropriate adjustments in the event the
Non-Employee Director's services as a director are terminated prior to the end
of the year with respect to which he or she made such an election. Payment in
shares of Stock shall be made in arrears on the January 15 (or such other date
on or about January 15 as the Board of Directors may designate) following the
calendar year in respect of which the election was made. The total number of
shares of Stock payable to a Non-Employee Director pursuant hereto shall be
determined by dividing that portion (or all, as the case may be) of the
Non-Employee Director's annual retainer to be paid in shares of Stock by the
Fair Market Value of shares of Stock as of July 15 for calendar year 1998, and
as of the December 15 preceding the calendar year in respect of which the
election was made (or if such date is not a business day, as of the immediately
preceding business day), provided that no fractional shares shall be issued and
any amount in lieu thereof shall be paid in cash.
9. Adjustments upon Changes in Capitalization;
Acceleration in Certain Events
(a) Changes in Capitalization. In the event that the Committee shall
determine that any stock dividend, recapitalization, forward split or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase
or share exchange, or other similar corporate transaction or event, affects the
Stock or the book value of the Company such that an adjustment is appropriate in
order to prevent dilution or enlargement of the rights of Participants under the
Plan, then the Committee shall, in such manner as it may deem equitable, adjust
any or all of (i) the number and kind of shares of Stock which may thereafter be
issued in connection with Awards, (ii) the number and kind of shares of Stock
issuable in respect of outstanding Awards, (iii) the aggregate number and kind
of shares of Stock available under the Plan, and (iv) the exercise price, grant
price, or purchase price relating to any Award or, if deemed appropriate, make
provision for a cash payment with respect to any outstanding Award; provided,
however, in each case, that no adjustment shall be made which would cause the
Plan to violate Section 422(b)(1) of the Code with respect to ISOs or would
adversely affect the status of a Performance-Based Award as "performance-based
compensation" under Section 162(m) of the Code.
(b) Other Adjustments. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding paragraph) affecting the Company or any
Subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles. Notwithstanding the foregoing, no adjustment shall be
made in any outstanding Performance-Based Awards to the extent that such
adjustment would adversely affect the status of that Performance-Based Award as
"performance-based compensation" under Section 162(m) of the Code.
10. General Provisions
(a) Changes to the Plan and Awards.
(i) The Board of Directors of the Company may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant
Awards under the Plan without the consent of the Company's shareholders or
Participants, except that any such amendment, alteration, suspension,
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discontinuation, or termination shall be subject to the approval of the
Company's shareholders within one year after such Board action if such
shareholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which
the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to the
shareholders for approval; provided, however, that without the consent of
an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely
affect the rights of such Participant under any Award theretofore granted
and any Award Agreement relating thereto. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Award theretofore granted and any Award Agreement relating
thereto; provided, however, that (A) no such amendment, alteration,
suspension, discontinuation or termination may be made to the extent that
it would adversely affect the status of a Performance-Based Award as
"performance-based compensation" under Section 162(m) of the Code; and (B)
without the consent of an affected Participant, no such amendment,
alteration, suspension, discontinuation or termination may materially and
adversely affect the rights of such Participant under such Award.
(ii) Notwithstanding the foregoing, (A) any performance condition
specified in connection with an Award shall not be deemed a fixed
contractual term, but shall remain subject to adjustment by the Committee,
in its discretion, at any time in view of the Committee's assessment of
the Company's strategy, performance of comparable companies, and other
circumstances, except to the extent that any such adjustment to a
performance condition would adversely affect the status of a
Performance-Based Award as "performance-based compensation" under Section
162(m) of the Code; and (B) unless approved by the shareholders of the
Company, no amendment will: (x) change the class of persons eligible to
receive Awards; (y) materially increase the benefits accruing to
Participants under the Plan; or (z) increase the number of shares of Stock
subject to the Plan.
(b) No Right to Award or Employment; Shareholder Rights. No employee or
other person shall have any claim or right to receive an Award under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company or any
Subsidiary. There is no obligation for uniformity of treatment of Participants.
No Award shall confer on any Participant any of the rights of a shareholder of
the Company unless and until Stock is duly issued or transferred to the
Participant in accordance with the terms of the Award.
(c) Taxes. The Company or any Subsidiary is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Stock or any payroll or other payment to a Participant,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations.
(d) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participant to, any party, other than the Company or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Awards and rights shall
be exercisable during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative. Notwithstanding the foregoing, the
Committee may, in its discretion, provide that Awards or other rights or
interests of a Participant granted pursuant to the Plan (other than an ISO) be
transferable, without consideration, to immediate family
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members (i.e., children, grandchildren or spouse), to trusts for the benefit of
such immediate family members and to partnerships in which such family members
are the only partners. The Committee may attach to such transferability feature
such terms and conditions as it deems advisable. In addition, a Participant may,
in the manner established by the Committee, designate a beneficiary (which may
be a person or a trust) to exercise the rights of the Participant, and to
receive any distribution, with respect to any Award upon the death of the
Participant. A beneficiary, guardian, legal representative or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional restrictions deemed necessary or appropriate by the
Committee.
(e) Discretion. In exercising, or declining to exercise, any grant of
authority or discretion hereunder, the Committee may consider or ignore such
factors or circumstances and may accord such weight to such factors and
circumstances as the Committee alone and in its sole judgment deems appropriate
and without regard to the effect such exercise of, or declination to exercise,
such grant of authority or discretion would have upon the affected Participant,
any other Participant, any employee, the Company, any Subsidiary, any
shareholder or any other person.
(f) Term; Effective Date. The effective date of the Plan is March 24,
1998. The Plan shall continue for a period of three years from such effective
date until March 24, 2001, or such earlier date as it may be terminated by the
Board of Directors as provided herein. No Award shall be made under the Plan
from and after such termination date.
(g) Shareholder Approval. Awards may be granted hereunder at any time
after the effective date of the Plan; provided, however, that any Stock-Based
Award granted prior to the receipt of shareholder approval of the Plan shall not
be effective until such shareholder approval has been obtained.
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