SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be included in statements filed pursuant to Rule 13d-1(a)
and amendments thereto filed pursuant to Rule 13d-2(a)
(Amendment No. ______)
International Thoroughbred Breeders, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
460491806
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(CUSIP Number)
Francis W. Murray
P.O. Box 1232
Route 70 and Haddonfield Road
Cherry Hill, NJ 08034
(856)-488-3838
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
with copies to:
David S. Petkun, Esquire
Cozen & O'Connor
1900 Market Street
Philadelphia, PA 19103
Fax:(215)701-2034
December 28, 2000 and January 3, 2001
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a Statement of Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box:[ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
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* The remainder of this cover page shall be filed out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of the of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
CUSIP NO. 460491806
1. NAME OF REPORTING PERSONS. I.R.S. NUMBERS OF ABOVE PERSONS (ENTITITES ONLY)
Francis W. Murray
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS
SC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7. SOLE VOTING POWER
SHARES 3,466,666
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY 0
EACH 9. SOLE DISPOSITVE POWER
REPORTING 3,466,666
PERSON 10.SHARED DISPOSITIVE POWER
WITH 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,466,666
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
Not applicable
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.85%
14. TYPE OF REPORTING PERSON
IN
Item 1. Security and Issuer.
This Statement relates to the common stock, par value $2.00 per share
(the "Common Stock"), of International Thoroughbred Breeders, Inc. ("ITB").
ITB's principal executive offices are located at Route 70 and Haddonfield Road,
Cherry Hill, NJ 08034.
Item 2. Identity and Background.
(a) Name: This statement is being filed by Francis W. Murray ("FWM").
(b) Residence or Business Address: The business address of FWM is c/o
International Thoroughbred Breeders, Inc., Route 70 and Haddonfield Road, Cherry
Hill, NJ 08034.
(c) Principal Occupation or Employment: FWM is President and Chief
Executive Officer of ITB, Route 70 and Haddonfield Road, Cherry Hill, NJ 08034.
(d) Criminal Convictions: During the past five years, FWM has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) Court or Administrative Proceedings: During the past five years,
FWM was not a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which he was or is subject to a
judgment, decree or final order enjoining future violations of or prohibiting or
mandating activity subject to federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship: FWM is a citizen of the United States of America.
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Item 3. Source and Amount of Funds or Other Consideration.
On or about January 3, 2001, FWM received an award of 2,500,000 shares
of Common Stock from ITB as compensation. On December 28, 2000, he also received
from ITB, pursuant to ITB's Stock Incentive Plan, stock options for the purchase
of 2,000,000 shares of Common Stock, of which options for the purchase of
666,666 shares are presently exercisable, options for 666,667 shares will become
exercisable on December 28, 2001, and options for 666,667 shares will become
exercisable on December 28, 2002. Previously, FWM held options for the purchase
of 300,000 shares of Common Stock.
Item 4. Purpose of Transaction.
FWM received the shares of Common Stock and options for the purchase
of additional shares of Common Stock reported hereby as compensation and is
holding the shares for investment. FWM intends to review such investment in
Common Stock on a continuing basis and may, at any time, consistent with his
obligations under federal and state securities laws, determine to increase or
decrease his ownership of ITB Common Stock through purchases or sales in the
open market or in privately negotiated transactions. His determination to
purchase or sell shares will depend on various factors, including money and
stock market conditions and general economic conditions. FWM does not at this
time have any plans or proposals with respect to ITB as described in Items 4(a)
- (j) of Schedule 13-D. FWM retains the right to modify his plans with respect
to the transactions described in this Item 4, to acquire or dispose of ITB's
securities and to formulate plans and proposals which could result in the
occurrence of any such events, subject to applicable laws and regulations.
Item 5. Interest in Securities of the Issuer.
(a) Beneficial Ownership: Items 7, 8, 9, 10, 11, 12 and 13 from pages
2 and 3 of this statement are incorporated herein by reference.
FWM is the beneficial owner of an aggregate of 3,466,666 shares
of ITB Common Stock, or 27.85% of the outstanding number of shares of ITB Common
Stock (including shares purchasable under stock options granted to FWM which are
exercisable at the present time or would become exercisable within 60 days). Of
those shares, 2,500,000 shares were issued to FWM by ITB, on or about January 3,
2001, as compensation for his extraordinary, successful effort in connection
with the sales of ITB's real properties and in part as a bonus upon signing a
five-year employment agreement with ITB. Further, pursuant to ITB's Stock
Incentive Plan, on December 28, 2000, ITB granted stock options to FWM for the
purchase of 2 million shares of ITB Common Stock, of which options for the
purchase of 666,666 shares (or 1/3 of the shares subject to the options) are
exercisable at the present time. An additional 1/3 of the shares (666,667
shares) subject to the options will become purchasable on December 28, 2001, and
the remaining 1/3 of the shares (666,667 shares) subject to the options will
become purchasable under the options on December 28, 2002. The exercise price
under such options is $0.295625 per share for an aggregate of 1,116,279 of the
option shares, and $0.26875 per share for an aggregate of 883,721 of the option
shares.
Prior to the foregoing stock award and option grant, FWM held options
for the purchase of 300,000 shares of Common Stock, which are presently
exercisable at $5.00 per share.
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(b) Voting and Dispositive Power:
FWM has sole voting and dispositive power with respect to the
2,500,000 shares of Common Stock presently owned by him and, upon his purchase
under the stock options, would have sole voting and dispositive power over the
shares so purchased.
(c) Transactions During Past Sixty Days:
Other than as set forth in Item 5(a), FWM has not made any
purchase or sale of ITB securities during the 60 days preceding the date of this
filing.
(d) Dividends and Proceeds:
Not applicable.
(e) Date Ceased To Be Beneficial Owner of More Than 5% of ITB Stock:
Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
There are no contracts, arrangements, understanding or relationships
of or by FWM with regard to the securities of ITB, except that the stock options
granted to FWM by ITB on December 28, 2000, are subject to ITB's Stock Incentive
Plan.
Pursuant to ITB's Stock Incentive Plan (the "Plan"), the options
granted to FWM are subject to the vesting requirements described in Item 5
above. The options for an aggregate of 1,116,279 shares of Common Stock are
intended to qualify as incentive stock options within the meaning of the
Internal Revenue Code of 1986, and are not transferrable by FWM except, on
death, by will or the laws of descent and distribution, and may be exercised
during his lifetime only by him. Options for an aggregate of 883,721 shares of
Common Stock are non-qualified (non-incentive) stock options and are
transferable by gift (or on death) to FWM's family members or to trusts or other
entities for the benefit of FWM's family members. The Plan contains
anti-dilution provisions whereby the number of shares purchasable under options
would be adjusted in the event of a stock split, stock dividend, combination of
shares or other specified transactions involving ITB Common Stock. The options
granted to FWM have been granted in tandem with stock appreciation rights under
which FWM may surrender the stock option, in whole or in part, in exchange for
payment by ITB (in cash or in shares of Common Stock, at ITB's discretion) of an
amount equal to the fair market value of the shares of Common Stock subject to
such option, or portion thereof, so surrendered over the exercise price under
the option.
Item 7. Material to be Filed as Exhibits.
The following is filed as an exhibit hereto: International
Thoroughbred Breeders, Inc. Stock Incentive Plan.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
s/ Francis W. Murray
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(Signature)
Dated: January 5, 2001
Francis W. Murray
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(Name/Title)
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EXHIBIT 1
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
STOCK INCENTIVE PLAN
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Exhibit 1
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
STOCK INCENTIVE PLAN
1. Purpose. International Thoroughbred Breeders, Inc. a Delaware
corporation (the "Company"), hereby adopts the International Thoroughbred
Breeders, Inc. Stock Incentive Plan (the "Plan"). The Plan is intended to
recognize the contributions made to the Company by employees (including
employees who are members of the Board of Directors), non-employee directors of
the Company and certain consultants and advisors of the Company or any
Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of the Company or an Affiliate, and to improve
the ability of the Company or an Affiliate to attract, retain, and motivate
persons upon whom the Company's sustained growth and financial success depend,
by providing such persons with an opportunity to acquire or increase their
proprietary interest in the Company through receipt of rights to acquire the
Company's Common Stock, $2.00 par value (the "Common Stock"), and through the
transfer or issuance of Common Stock.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933.
"Affiliate" shall mean a corporation which is a parent corporation or
a subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code.
"Award" shall mean a transfer of Common Stock or a grant of an SAR, as
the context dictates, made pursuant to the terms of the Plan.
"Award Agreement" shall mean the agreement between the Company and a
Grantee with respect to an Award or an SAR Award made pursuant to the Plan.
"Board of Directors" or "Board" shall mean the Board of Directors of
the Company.
"Change of Control" shall have the meaning as set forth in Section 9
of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall have the meaning set forth in Section 3 of the Plan.
"Common Stock" shall have the meaning set forth in Section 1 of the
Plan.
"Company" shall mean International Thoroughbred Breeders, Inc, a
Delaware corporation.
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"Disability" shall have the meaning set forth in Section 22(e)(3) of
the Code.
"Employee" shall mean an employee of the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall have the meaning set forth in Subsection
8(b) of the Plan.
"Freestanding SAR" shall mean an SAR that is granted independently of
any Option, as described in Section 11.
"Grantee" shall mean a person to whom an Award or an SAR Award has
been granted pursuant to the Plan.
"ISO" shall mean an Option granted under the Plan which is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code.
"Non-Employee Director" shall mean a member of the Board of Directors
of the Company who is both a "non-employee" of the Company within the meaning of
Rule 16b-3 and an "outside director" within the meaning of Section 162(m) of the
Code.
"Non-qualified Stock Option" shall mean an Option granted under the
Plan which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
"Option" shall mean either an ISO or a Non-qualified Stock Option
granted under the Plan.
"Optionee" shall mean a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
"Option Document" shall mean the document described in Section 8 of
the Plan, as applicable, which sets forth the terms and conditions of each grant
of Options under the Plan.
"Option Price" shall mean the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Subsection 8(b) of the
Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act.
"SAR" shall have the meaning set forth in Section 11 of the Plan.
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"Section 16 Person" shall mean any person who is an "officer" or
"director" within the meaning of Rule 16a-1(f) promulgated under the Exchange
Act or any successor rule.
"Shares" shall mean the shares of Common Stock of the Company which
are the subject of Options, SARs or granted as Awards under the Plan.
"Tandem SAR" shall mean an SAR that is granted in connection with a
related Option pursuant to Section 11.
3. Administration of the Plan. The Board of Directors may administer the
Plan itself or may designate a committee or committees composed of two or more
of members of the Board of Directors. At the discretion of the Board of
Directors, a separate committee may be designated consisting of two or more
Non-Employee Directors to operate and administer the Plan with respect to only
Section 16 Persons or such other persons as deemed appropriate by the Board of
Directors, while appointing another committee or itself to administer the Plan
with respect to all other persons eligible to participate in the Plan. Any such
committee or committees designated by the Board of Directors, and the Board of
Directors itself in its administrative capacity with respect to the Plan, is
referred to as the "Committee."
(a) Meetings. The Committee shall hold meetings at such times and
places as it may determine, shall keep minutes of its meetings, and shall adopt,
amend and revoke such rules or procedures as it may deem proper; provided,
however, that it may take action only upon the agreement of a majority of the
whole Committee. Any action which the Committee shall take through a written
instrument signed by a majority of its members shall be as effective as though
it had been taken at a meeting duly called and held.
(b) Indemnification. Service on the Committee shall constitute service
as a member of the Board of Directors of the Company. Each member of the
Committee shall be entitled, without further act on his or her part, to
indemnity from the Company and limitation of liability to the fullest extent
provided by applicable law and by the Company's Certificate of Incorporation
and/or By-laws in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the granting of
Options thereunder in which he or she may be involved by reason of his or her
being or having been a member of the Committee, whether or not he or she
continues to be such member of the Committee at the time of the action, suit or
proceeding.
(c) Interpretation. The Committee shall have the power and authority
to interpret the Plan and to adopt rules and regulations for its administration
that are not inconsistent with the express terms of the Plan. Any such actions
by the Committee shall be final, binding and conclusive on all parties in
interest.
4. Grants and Awards under the Plan. Under the Plan, the Committee may, in
its discretion, grant Options in the form of Non-qualified Stock Options and
ISOs, Awards of Common Stock or a combination thereof. The Committee may also
grant Tandem SARs or Freestanding SARs pursuant to Section 11.
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5. Eligibility. All Employees, members of the Board of Directors and
consultants and advisors to the Company shall be eligible to receive Options and
Awards hereunder. Consultants and advisors shall be eligible only if they render
bona fide services to the Company unrelated to the offer or sale of securities;
provided, however, that the limitation contained in this sentence shall not
apply to the extent that the inapplicability of such limitation will not
disqualify the Common Stock from being eligible for registration on Form S-8 (or
any successor form) under the Act. The Committee, in its sole discretion, shall
determine whether an individual qualifies as an Employee.
6. Shares Subject to Plan. The aggregate maximum number of Shares for which
Awards or Options may be granted pursuant to the Plan is four million
(4,000,000). The number of Shares which may be issued under the Plan shall be
further subject to adjustment in accordance with Section 10. The Shares shall be
issued from authorized and unissued Common Stock or Common Stock held in or
hereafter acquired for the treasury of the Company. If an Option terminates or
expires without having been fully exercised for any reason or if Shares subject
to an Award have been conveyed back to the Company pursuant to the terms of an
Award Agreement, the Shares for which the Option was not exercised or the Shares
that were conveyed back to the Company may again be the subject of one or more
Options or Awards granted pursuant to the Plan.
7. Term of the Plan. This Plan shall become effective upon its adoption by
the Board, and Options and Awards may be issued upon such adoption and from time
to time thereafter; provided, however, that the Plan shall be submitted to the
holders of the Company's Common Stock for their approval at the next annual
meeting of shareholders, or prior thereto at a special meeting of shareholders
expressly called for such purpose; and provided further, that the approval of
the Company's Common Stockholders shall be obtained within 12 months of the date
of adoption of the Plan. If the Plan is not approved by the requisite vote of
the shareholders entitled to vote at a duly called shareholders' meeting at
which a quorum representing a majority of all voting stock is present in person
or by proxy, then this Plan and all Options and Awards then outstanding under it
shall forthwith automatically terminate and be of no force or effect.
8. Option Documents and Terms. Each Option granted under the Plan shall be
a Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO for Federal income tax purposes. If any Option
designated an ISO is determined for any reason not to qualify as an incentive
stock option within the meaning of Section 422 of the Code, such Option shall be
treated as a Non-qualified Stock Option for all purposes under the provisions of
the Plan. Options granted pursuant to the Plan shall be evidenced by the Option
Documents in such form as the Committee shall from time to time approve, which
Option Documents shall comply with and be subject to the following terms and
conditions and such other terms and conditions as the Committee shall from time
to time require which are not inconsistent with the terms of the Plan.
(a) Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains. An Optionee may receive more than one
Option, which may include Options which are intended to be ISO's and Options
which are not intended to be ISO's, on the terms and subject to the conditions
and restrictions of the Plan.
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(b) Option Price. Each Option Document shall state the Option Price
which, for a Non-qualified Stock Option, may be less than, equal to, or greater
than the Fair Market Value of the Shares on the date the Option is granted and,
for an ISO, shall be at least 100% of the Fair Market Value of the Shares on the
date the Option is granted as determined by the Committee in accordance with
this Subsection 8(b); provided, however, that if an ISO is granted to an
Optionee who then owns, directly or by attribution under Section 424(d) of the
Code, shares possessing more than ten percent of the total combined voting power
of all classes of stock of the Company or an Affiliate, then the Option Price
shall be at least 110% of the Fair Market Value of the Shares on the date the
Option is granted. If the Common Stock is traded in a public market, then the
Fair Market Value per share shall be, if the Common Stock is listed on a
national securities exchange or included in the NASDAQ System, the last reported
sale price thereof for the "Valuation Date" (as hereinafter defined), or, if the
Common Stock is not so listed or included, the mean between the last reported
"bid" and "asked" prices thereof on the Valuation Date, as reported on NASDAQ
or, if not so reported, as reported by the National Daily Quotation Bureau, Inc.
or as reported in a customary financial reporting service, as applicable and as
the Committee determines. If the Common Stock is not traded in a public market,
Fair Market Value shall be determined in good faith by the Committee. For
purposes of the determination of Fair Market Value under this Section 8(b), the
Valuation Date shall be the immediately preceding business day unless the
transaction with respect to which Fair Market Value is being determined occurs
following the closing of the exchange, the NASDAQ System, NASDAQ or the
financial reporting service, as applicable, in which case the Valuation Date
shall be the date on which the transaction occurs.
(c) Exercise. No Option shall be deemed to have been exercised prior
to the receipt by the Company of written notice of such exercise and (unless
arrangements satisfactory to the Company have been made for payment through a
broker in accordance with procedures permitted by Regulation P of the Federal
Reserve Board) of payment in full of the Option Price for the Shares to be
purchased. Each such notice shall specify the number of Shares to be purchased
and shall (unless the Shares are covered by a then current registration
statement or a Notification under Regulation A under the Act), contain the
Optionee's acknowledgment in form and substance satisfactory to the Company that
(a) such Shares are being purchased for investment and not for distribution or
resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and understands tha
(i) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the Shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) such Shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (d) an appropriate legend referring to the foregoing restrictions on
transfer and any other restrictions imposed under the Option Documents may be
endorsed on the certificates. Notwithstanding the foregoing, if the Company
determines that issuance of Shares should be delayed pending (A) registration
under federal or state securities laws, (B) the receipt of an opinion of counsel
satisfactory to the Company that an appropriate exemption from such registration
is available, (C) the listing or inclusion of the Shares on any securities
exchang or an automated quotation system or (D) the consent or approval of any
governmental regulatory body whose consent or approval is
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necessary in connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described in
this sentence has occurred.
(d) Medium of Payment. Subject to the terms of the applicable Option
Document, an Optionee shall pay for Shares (i) in cash, (ii) by certified or
cashier's check payable to the order of the Company, or (iii) by such other mode
of payment as the Committee may approve, including payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board. The Optionee may also exercise the Option in any manner contemplated by
Section 11. Furthermore, payment may be made in whole or in part in shares of
the Company's Common Stock held by the Optionee. If payment is made in whole or
in part in shares of the Company's Common Stock, then the Optionee shall deliver
to the Company certificates registered in the name of such Optionee representing
the shares owned by such Optionee, free of all liens, claims and encumbrances of
every kind and having an aggregate Fair Market Value on the date of delivery
that is at least as great as the Option Price of the Shares (or relevant portion
thereof) with respect to which such Option is to be exercised by the payment in
shares of Common Stock, endorsed in blank or accompanied by stock powers duly
endorsed in blank by the Optionee. In the event that certificates for shares of
the Company's Common Stock delivered to the Company represent a number of shares
in excess of the number of shares required to make payment for the Option Price
of the Shares (or relevant portion thereof) with respect to which such Option is
to be exercised by payment in shares of Common Stock, the stock certificate or
certificates issued to the Optionee shall represent (i) the Shares in respect of
which payment is made, and (ii) such excess number of shares. Notwithstanding
the foregoing, the Committee may impose from time to time such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option as
it deems appropriate.
(e) Duration of Options.
i. Each Option and all rights thereunder shall expire and the Option
shall no longer be exercisable on a date not later than ten (10) years from the
date on which the Option was granted. Options shall expire and cease to be
exercisable on such earlier date as the Committee may determine at the time of
grant, and Options also shall be subject to termination before their expiration
date as provided in the Plan or in the applicable Option Document.
ii. In the case of an ISO, if the Optionee on the date of grant owns,
directly or by attribution under Section 424(d) of the Code, shares possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of an Affiliate then the Option Document applicable
thereto shall specify an expiration date that is (or is not later than) the
fifth anniversary of the date of grant.
iii. The Board of Directors may set an accelerated expiration date in
the event of the liquidation or dissolution of the Company.
(f) Effect of Termination of Employment.
i. In the event of termination of an Optionee or Grantee's employment
or service with the Company and Affiliates or status as a director by reason of
such Optionee or Grantee's death or disability, any outstanding Option or Award
held
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by such Optionee or Grantee shall, notwithstanding the extent to which such
Option or Award was exercisable prior to termination of employment, immediately
become exercisable as to the total number of Shares purchasable thereunder. In
the event of termination of an Optionee or Grantee's employment or service with
the Company and Affiliates or status as a director by reason of such Optionee or
Grantee's retirement with the consent of the Board or in accordance with an
applicable tax-qualified retirement plan, any outstanding Option or Award held
by such Optionee or Grantee shall be exercisable only to the extent to which
such Option or Award was exercisable immediately prior to retirement. Any such
Option or Award that is exercisable under this Subsection 8(f)(i) shall remain
so exercisable at any time prior to its expiration date or, if earlier, the
first anniversary of termination of the Optionee or Grantee's employment or
service with the Company and Affiliates or status as a director.
ii. In the event of termination of an Optionee's or Grantee's
employment or service with the Company or status as a director for any reason
other than death, disability, or retirement with the consent of the Board or in
accordance with an applicable tax-qualified retirement plan, any outstanding
Option or Award held by such Optionee or Grantee shall be exercisable only to
the extent such Option or Award was exercisable immediately before such
termination and shall remain so exercisable for a period ending on the earlier
of the expiration date of the Option or Award and a date ninety (90) days after
the termination of employment or service with the Company or status as director.
Whether an authorized leave of absence or absence in military or government
service shall constitute termination of employment or service with the Company
or status as a director shall be determined by the Board. Transfer of employment
between the Company and an Affiliate or between one Affiliate and another shall
not constitute termination of employment.
iii. Notwithstanding anything to the contrary contained in the Plan or
an Option Document, an ISO shall be treated as a Non-qualified Stock Option to
the extent such ISO is exercised at any time after the expiration of the time
period permitted under the Code for the exercise of an ISO.
(g) Transfers. No ISO granted under the Plan may be transferred,
except by will or by the laws of descent and distribution except as otherwise
set forth in the Option Document or to the extent that the Committee otherwise
determines. An Optionee may transfer any Non-qualified Stock Option to such
Optionee's family members, entities for the benefit of such family members and
such other persons as the Committee may determine; provided that the Optionee
receives no consideration for the transfer and the transferred Non-qualified
Stock Option shall continue to be subject to the same terms and conditions as
were applicable to the Non-qualified Stock Option immediately before the
transfer. Except as otherwise set forth above, Options are not transferable.
(h) Limitation on ISO Grants. To the extent that the aggregate fair
market value of the shares of Common Stock (determined at the time the ISO is
granted) with respect to which ISO's under all incentive stock option plans of
the Company or its Affiliates are exercisable for the first time by the Optionee
during any calendar year exceeds $ 100,000, such ISO's shall, to the extent of
such excess, be treated as Non-qualified Stock Options.
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(i) Other Provisions. Subject to the provisions of the Plan, the
Option Documents shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall deem advisable.
(j) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend any Option Document or Award Agreement issued to
an Optionee or Award holder, subject to the Optionee's or Award holder's consent
if such amendment is not favorable to the Optionee or Award holder, or if such
amendment has the effect of changing an ISO to a Non-Qualified Stock Option,
except that the consent of the Optionee or Award holder shall not be required
for any amendment made pursuant to Subsection 8(e)(iii) or Section 9 of the
Plan, as applicable.
9. Change of Control.
(a) Definition. A "Change of Control" shall be deemed to have occurred
upon the earliest to occur of the following events:
i. any "person" as such term is used in Sections 13(d) and 14(d) of
the Exchange Act other than the Company, any subsidiary of the Company, any
"person" (as hereinabove defined) acting on behalf of the Company as underwriter
pursuant to an offering who is temporarily holding securities in connection with
such offering, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any "person" (as hereinabove defined)
who, on the date the Plan is effective, shall have been the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of or have voting control over
shares of capital stock of the Company possessing more than twenty-five percent
(25%) of the combined voting power of the Company's then outstanding securities
is or becomes the "beneficial owner" (as hereinabove defined), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities;
ii. during any period of not more than two consecutive years (not
including any period prior to the date the Plan is effective), individuals who
at the beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a "person" (as hereinabove
defined) who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this Section 9) whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds 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 at least a majority thereof;
iii. the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation or other legal entity, other than (1)
a merger or consolidation which would result in the voting securities of the
Company outstanding
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immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) other than a "person" who, on the date the
Plan is effective, shall have been the "beneficial owner" (as hereinabove
defined) of or have voting control over shares of capital stock of the Company
possessing more than twenty five percent (25%) of the combined voting power of
the Company's then outstanding securities acquires more than fifty percent (50%)
of the combined voting power of the Company's then outstanding securities;
iv. 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 of the Company's assets (or any transaction
having a similar effect); or
v. a "change of control" (as may hereinafter be defined by the Board
of Directors for the express purposes of this Plan) has occurred.
(a) Effect of Change of Control. In the event of a Change of Control,
the Committee may take whatever action, if any, it deems necessary or desirable
in its sole discretion with respect to the outstanding Options and Awards. Such
action may include, without limiting the generality of the foregoing, (i)
providing for the automatic acceleration of vesting and exercisability of the
Options and/or the lapse of restrictions on Awards; (ii) after giving Optionees
an opportunity to exercise their Options, terminating any or all unexercised
Options at such time or times as the Committee may determine; (iii) requiring
that Optionees and Grantees surrender their Options and Awards in exchange for a
payment by the Company equal to the amount by which the Fair Market Value at
that time of the Shares subject to the Options (to the extent the Options are
then vested) or Awards exceeds the Option Price for the Shares and the purchase
price, if any, for the Shares granted pursuant to an Award; and/or (iv) any
combination of the foregoing actions and/or such alternative or additional
actions as the Committee may specify. Any such action shall take place as of the
date of the Change of Control or such other date as the Committee may specify.
(b) Limitations. Notwithstanding the foregoing, no acceleration of
vesting or exercisability, cancellation, lapse of restrictions, termination or
payment shall occur with respect to any Option or Award if the Board of
Directors (as constituted prior to the Change in Control date) reasonably
determines in good faith, prior to the Change in Control, that all outstanding
Options and/or Awards shall be assumed and honored, or new rights substituted
therefor, by the party acquiring control of the Company; provided, however, that
any such honored, assumed and/or substituted Options and/or Awards must provide
the Optionee and/or Grantee with rights and benefits (including, but not limited
to, substantially equivalent economic value, exercise and vesting provisions,
and similar or better methods of exercise and payment) substantially equivalent
to or better than the rights and benefits under the Optionee's and/or Grantee's
outstanding Options and/or Awards prior to the transaction constituting the
Change of Control.
10. Adjustments on Changes in Capitalization.
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(a) If a dividend shall be declared upon the Common Stock payable in
shares of Common Stock or if a stock split is declared with respect to the
Common Stock, the number of shares of Common Stock then subject to any Option
and SAR outstanding under the Plan and the number of Shares reserved for the
grant of Options and Awards pursuant to the Plan but not yet subject to an
Option or Award shall be adjusted by adding to each such Share the number of
shares which would be distributable in respect thereof if such Shares had been
outstanding on the date fixed for determining the shareholders of the Company
entitled to receive such stock dividend or stock split. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split, combination of shares, merger, consolidation or otherwise, ther
shall be substituted for each share of Common Stock subject to any such Option
and SAR and for each share of Common Stock reserved for the grant of Options and
Awards pursuant to the Plan but not yet subject to an Option or Award, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall have been so changed or for which each
such share shall have been exchanged. In the event there shall be any change,
other than as specified above in this Section 10, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which such Common Stock shall have been changed or for which it shall have been
exchanged, then if the Committee shall in its sole discretion determine that
such change equitably requires an adjustment in the number or kind of Shares
theretofore reserved for the grant of Options and SARs pursuant to the Plan but
not yet subject to an Option or Award and of the Shares then subject to Options
and SARs, suc adjustment shall be made by the Committee and shall be effective
and binding for all purposes of the Plan and of each Option and Award
outstanding thereunder. In the case of any such substitution or adjustment as
provided for in this Section 10, the Option Price for each share of Common Stock
or other security which shall have been substituted for each share of Common
Stock covered by an outstanding Option shall be adjusted appropriately to
reflect such substitution or adjustment.
(b) Any adjustment under this Section 10 in the number of Shares
subject to Options shall apply proportionately to only the unexercised portion
of any Option granted hereunder. If fractions of a Share would result from any
such adjustment, the adjustment shall be revised to the next lower whole number
of Shares.
(c) The Committee shall have authority to determine the adjustments to
be made under this Section, and any such determination by the Committee shall be
final, binding and conclusive.
11. Stock Appreciation Rights (SARs).
(a) In General. Subject to the terms and conditions of the Plan, the
Committee may, in its sole and absolute discretion, grant to an Optionee the
right to surrender an Option to the Company, in whole or in part, and to receive
in exchange therefor payment by the Company of an amount equal to the excess of
the Fair Market Value of the shares of Common Stock subject to such Option, or
portion thereof, so surrendered (determined in the manner described in section
8(b) as of the date the SARs are exercised) over the exercise price to acquire
such shares (which right shall be referred to as an "Tandem SAR"). Such payment
may be
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made, as determined by the Committee in accordance with subsection 11(c) below,
either in shares of Common Stock or in cash or in any combination thereof.
Subject to the terms and conditions of the Plan, the Committee may also grant
Freestanding SARs, Tandem SARs or any combination of the two to eligible
individuals at any time and from time to time, as determined by the Committee.
(b) SAR Grant. Each Tandem SAR shall relate to a specific Option
granted under the Plan and shall be granted to the Optionee concurrently with
the grant of such Option by inclusion of appropriate provisions in the Option
Document pertaining thereto. The number of Tandem SARs granted to an Optionee
shall not exceed the number of shares of Common Stock which such Optionee is
entitled to purchase pursuant to the related Option. The number of Tandem SARs
held by an Optionee shall be reduced by (i) the number of SARs exercised under
the provisions of the Option Document pertaining to the related Option, and (ii)
the number of shares of Common Stock purchased pursuant to the exercise of the
related Option. Each Freestanding SAR shall have a grant price equal to the Fair
Market Value of the Common Stock on the date of the grant of the SAR.
(c) Payment. The Committee shall have sole discretion to determine
whether payment in respect of SARs granted to any Grantee or other individual
shall be made in shares of Common Stock, or in cash, or in a combination
thereof. If payment is made in Common Stock, the number of shares of Common
Stock which shall be issued pursuant to the exercise of SARs shall be determined
by dividing (i) the total number of SARs being exercised, multiplied by the
amount by which the Fair Market Value (as determined under section 8(b)) of a
share of Common Stock on the exercise date exceeds the exercise price for shares
covered by the related Option, by (ii) the Fair Market Value of a share of
Common Stock on the exercise date of the SARs. No fractional share of Common
Stock shall be issued on exercise of an SAR; cash shall be paid by the Company
to the individual exercising an SAR in lieu of any such fractional share. If
payment on exercise of an SAR is to be made in cash, the individual exercising
the SAR shall receive in respect of each share to which such exercise relates an
amount of money equal to the difference between the Fair Market Value of a share
of Common Stock on the exercise date and the exercise price for shares covered
by the related Option.
(d) Limitations. SARs shall be exercisable at such times and under
such terms and conditions as the Committee, in its sole and absolute discretion,
shall determine; provided, however, that a Tandem SAR may be exercised only at
such times and by such individuals as the related Option under the Plan and the
Option Agreement may be exercised.
(e) Termination of SARs. Each Freestanding SAR Award Agreement will
set forth the extent to which the Participant has the right to exercise the SAR
after his or her termination of employment with the Company and its Affiliates.
Each Tandem SAR shall terminate in accordance with the terms of the Plan for the
associated Option. These terms will be determined by the Committee in its sole
discretion, need not be uniform among all SARs issued under the Plan, and may
reflect, among other things, distinctions based on the reasons for termination
of employment.
(f) Nontransferability of SARs. Except as otherwise provided in an SAR
Award Agreement or a related Option Agreement, no SAR may be sold, transferred,
pledged,
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assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
in an SAR Award Agreement, all SARs will be exercisable during a Grantee's
lifetime only by the Grantee or the Grantee's guardian or legal representative.
The Committee may, in its discretion, require a Grantee's guardian or legal
representative to supply it with evidence the Committee deems necessary to
establish the authority of the guardian or legal representative to act on behalf
of the Grantee.
12. Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the Committee may from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall state the number of
shares of Common Stock to which it pertains.
(b) Grant. Stock certificates evidencing Shares granted pursuant to an
Award shall be issued in the sole name of the Grantee. Notwithstanding the
foregoing, as a precondition to a grant, the Company may require an
acknowledgment by the Grantee as required with respect to Options under Section
8.
(c) Conditions. The Committee may specify in an Award Agreement any
conditions under which the Grantee of that Award shall be required to convey to
the Company the Shares covered by the Award. Upon the occurrence of any such
specified condition, the Grantee shall forthwith surrender and deliver to the
Company the certificates evidencing such Shares as well as completely executed
instruments of conveyance. The Committee, in its discretion, may provide that
certificates for Shares transferred pursuant to an Award be held in escrow by
the Company or an officer of the Company until such time as each and every
condition has lapsed and that the Grantee be required, as a condition of the
Award, to deliver to such escrow agent or Company officer stock powers covering
the Award Shares duly endorsed by the Grantee. Unless otherwise provided in the
Award Agreement, distributions made on Shares held in escrow will be deposited
in escrow, to be distributed to the party becoming entitled to the Shares on
which the distribution was made. Stock certificates evidencing Shares subject to
conditions shall bear a legend to the effect that the Common Stock evidenced
thereby is subject to repurchase or conveyance to the Company in accordance with
an Award made under the Plan and that the Shares may not be sold or otherwise
transferred.
(d) Lapse of Conditions. Upon termination, or lapse of each and every
forfeiture condition, if any, the Company shall cause certificates without the
legend referring to the Company's repurchase right (but with any other legends
that may be appropriate) evidencing the Shares covered by the Award to be issued
to the Grantee upon the Grantee's surrender of the legended certificates held by
him or her to the Company.
(e) Rights as Stockholder. Upon payment of the purchase price, if any,
for Shares covered by an Award and compliance with the acknowledgment
requirement of Subsection 12(b), the Grantee shall have all of the rights of a
stockholder with respect to the Shares covered thereby, including the right to
vote the Shares and receive all dividends and other
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distributions paid or made with respect thereto, except to the extent otherwise
provided by the Committee or in the Award Agreement.
13. Amendment of the Plan. The Board of Directors of the Company may amend
the Plan from time to time in such manner as it may deem advisable.
Nevertheless, the Board of Directors of the Company may not change the class of
individuals eligible to receive an ISO or increase the maximum number of Shares
as to which Options may be granted without obtaining approval, within twelve
months before or after such action, by the stockholders in the manner required
by applicable state law. Notwithstanding anything herein to the contrary, the
Committee may, at its sole discretion, amend the Plan and any outstanding Option
or Award to (i) eliminate any provision it determines is no longer required to
comply with Rule 16b-3 as a result of revisions to Rule 16b-3 which are
generally effective after the date the Plan is effective or (ii) provide the
holder of the Option or Award an exemption from potential liability under
Section 16(b) of the Exchange Act and the rules and regulations thereunder.
14. No Commitment to Retain. The grant of an Option or Award pursuant to
the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any Affiliate to
retain the Optionee or Grantee as an employee, consultant or advisor of the
Company or any Affiliate, as a member of the Board of Directors or in any other
capacity.
15. Withholding of Taxes. In connection with any event relating to an
Option or Award, the Company shall have the right to (a) require the recipient
to remit or otherwise make available to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for such Shares or
(b) take whatever other action it deems necessary to protect its interests with
respect to tax liabilities. The Company's obligations under the Plan shall be
conditioned on the Optionee's or Grantee's compliance, to the Company's
satisfaction, with any withholding requirement.
16. Parachute Payments. Notwithstanding anything herein to the contrary, if
the right to receive or benefit from any grant of an Option or an Award, either
alone or together with payments that an Optionee or Grantee has the right to
receive from the Company, would constitute a "parachute payment" under Section
280G of the Code, all such payments may be reduced, in the discretion of the
Committee, to the largest amount that will avoid an excise tax to the Optionee
or Grantee under Section 280G of the Code.
17. Interpretation. The Plan is intended to enable transactions under the
Plan with respect to directors to satisfy the conditions of Rule 16b-3; to the
extent that any provision of the Plan would cause a conflict with such
conditions or would cause the administration of the Plan as provided in Section
3 to fail to satisfy the conditions of Rule 16b-3, such provision shall be
deemed null and void to the extent permitted by applicable law.
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