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GODDARD INDUSTRIES, INC.
705 Plantation Street
Worcester, Massachusetts 01605
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held March 12, 1999
To The Stockholders of
Goddard Industries, Inc.
Notice is hereby given that the Annual Meeting of
Stockholders of Goddard Industries, Inc., a Massachusetts
corporation, will be held on Friday, March 12, 1999 at 11:00 a.m.
at The Beechwood Inn, 363 Plantation Street, Worcester,
Massachusetts for the following purposes:
1. To elect two directors to hold office until the Annual
Meeting of Stockholders in 2002 and until their successors are
duly elected and qualified.
2. To consider and act upon a proposal to approve the Company's
1998 Equity Incentive Plan.
3. To consider and act upon any matters incidental to the
foregoing purposes and any other matters which may properly come
before the meeting or any adjournments thereof.
Information regarding matters to be acted upon at the Annual
Meeting of Stockholders is contained in the proxy statement
attached to this notice.
Only stockholders of record at the close of business on
January 16, 1999 are entitled to notice of, or to vote at, such
meeting or any adjournments thereof.
By Order of the Board of Directors
Joel M. Reck, Clerk
Worcester, Massachusetts
January 29, 1999
You are cordially invited to attend this meeting in person,
but if you cannot do so, please complete, date, sign and return
the accompanying proxy at your earliest convenience. A reply
envelope is provided for this purpose, which needs no postage, if
mailed in the United States.
GODDARD INDUSTRIES, INC.
PROXY STATEMENT
For Annual Meeting of Stockholders
To be Held Friday, March 12, 1999
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Goddard
Industries, Inc. (referred to hereinafter as the "Company") for
use at the Annual Meeting of Stockholders to be held at 11:00
a.m. on Friday, March 12, 1999 at The Beechwood Inn, 363
Plantation Street, Worcester, Massachusetts and at any
adjournment or adjournments thereof (the "Meeting").
Solicitation of proxies may be made in person or by mail,
telephone or telegram by directors, officers and regular
employees of the Company, for which no additional compensation
will be received. The Company may also request banking
institutions, brokerage firms, custodians, trustees, nominees and
fiduciaries to forward solicitation material to the beneficial
owners of Common Stock held of record by such persons, and the
Company will reimburse the forwarding expense. All costs of
preparing, printing, assembling and mailing the form of proxy and
proxy statement will be borne by the Company. It is expected
that this proxy statement and the accompanying proxy will be
mailed to the stockholders on or about January 29, 1999. The
principal executive offices of the Company are located at 705
Plantation Street, Worcester, Massachusetts 01605.
Only stockholders of record at the close of business on
January 16, 1999 are entitled to notice of, and to vote at, the
Meeting. As of that date, there were outstanding and entitled to
vote 2,129,982 shares of Common Stock, $.01 par value (the
"Common Stock"), of the Company. Each share is entitled to one
vote on all matters to come before the Meeting. Provided a
quorum (consisting of a majority of the shares outstanding and
entitled to vote) is present in person or by proxy at the
meeting, a plurality of the votes cast for any nominee is
required for election of directors, and the affirmative vote of
the holders of a majority of shares of Common Stock present in
person or represented by proxy at the Meeting and entitled to
vote thereon is required to approve the adoption of the Company's
1998 Equity Incentive Plan (the "1998 Plan"). Under
Massachusetts law and the Company's By-laws, all shares present
or represented by proxy, whether they vote or abstain, will be
counted as present for purposes of determining a quorum and for
purposes of determining the number of shares present and entitled
to vote. Accordingly, abstentions, including broker non-votes,
will have no effect on the outcome of the vote for the election
of directors or for approval of the 1998 Plan.
The enclosed proxy, if executed and returned, will be voted
as directed on the proxy and, in the absence of such direction,
for the election of the nominees as directors, for the proposal
to approve the 1998 Plan, and in accordance with their best
judgment by the proxies if any other matter shall properly come
before the Meeting. The proxy may be revoked at any time prior
to exercise by filing with the Clerk of the Company a written
revocation, by executing a proxy with a later date, or by
attending and voting at the Meeting. The Board of Directors
knows of no matters, other than election of directors and the
proposal to approve the 1998 Plan, to be presented for
consideration at the Meeting.
The Annual Report to Stockholders of the Company for the
fiscal year ended October 3, 1998, including audited financial
statements, is being mailed to each of the stockholders of the
Company simultaneously with this proxy statement.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, two directors (constituting 40% of the Board
of Directors which was recently expanded by a vote of the Board
of Directors from four to five directors) are to be elected to
serve until the 2002 annual meeting of stockholders and until
their successors are elected and qualified. The proxy cannot be
voted for a greater number of persons than two.
The Company's Restated Articles of Organization, as amended,
and By-laws and the Massachusetts Business Corporation Law
provide that the Board of Directors shall be composed of three
classes of directors, one class to be elected each year.
It is the intention of the persons named in the accompanying
form as proxies to vote for the election of Dr. Jacky Knopp, Jr.
and Salvatore J. Vinciguerra to the class of directors indicated,
and for the term set forth therein. In the unanticipated event
that either of the nominees is unable to serve, the persons named
as proxies will vote for such substitute, if any, as the present
Board of Directors may designate or to reduce the number of
directors. Directors are elected by a plurality of the votes
cast for election of directors.
Information As To Officers, Directors and Beneficial Owners
The following table sets forth certain information, as of
November 30, 1998, with respect to the nominees, each of the
directors whose term extends beyond the Meeting, all officers and
directors as a group (8 persons) and each person owning five
percent or more of the Company's Common Stock. This table is
based on information furnished by such persons.
Number of
Shares of
Common Year
Stock Term
Name Direct Beneficiall Percen Would
or y t Expire
Since Owned (1) of and
Class Class
Salvatore J. Vinciguerra -- -- * 2002
Class 3
Dr. Jacky Knopp, Jr 1972 83,000(2) 3.9% 2002
Class 3
Saul I. Reck 1959 328,930 (3) 15.4% 2000
Class 1
Lyle E. Wimmergren 1978 15,000 (4) * 2001
Class
2
Robert E. Humphreys 1997 472,950 (5) 22.1% 2001
Class 2
All executive officers and -- 1,013,330(6 45.9% --
directors as a group )
(7 persons)
Joseph A. Lalli -- 183,550 (7) 8.6% --
6 Middlemont Way, Stow, MA
*Less than one percent
(1) Unless otherwise noted, each
person identified possesses sole voting and investment
power.
(2) Includes 32,000 shares owned by
Dr. Knopp's wife, as to which he disclaims beneficial
interest, and an option to acquire 15,000 shares held by
Dr. Knopp.
(3) Includes 5,250 shares held by
Mr. Reck's wife, as to which he disclaims beneficial
interest and options to acquire 5,000 shares held by Mr.
Reck. Mr. Reck's address is c/o Goddard Industries,
Inc., 705 Plantation Street, Worcester, Massachusetts
01605.
(4) Consists of options to acquire
15,000 shares held by Mr. Wimmergren.
(5) Includes 217,650 shares as to
which Mr. Humphreys has sole voting and dispositive
power and 240,300 shares as to which Mr. Humphreys'
shares voting and dispositive power by virtue of a power
of attorney over the investment accounts of seven
persons. Mr. Humphreys and certain other persons,
acting as a group, beneficially own an aggregate of
457,950 shares. Also includes an option to acquire
10,000 shares held by Mr. Humphreys. Mr. Humphreys's
address is One Innovation Drive, Worcester,
Massachusetts 01605.
(6) In addition to the matters
noted above in (2)-(5), includes 19,900 shares owned by
one executive officer jointly with his wife and options
on 35,000 shares held by two officers.
(7) Mr. Lalli has reported to the
Company that a Schedule 13D, Amendment No. 6, was filed
with the Securities and Exchange Commission indicating
that he has sole voting and dispositive power of 154,050
shares and shared voting and dispositive power with his
wife of 29,500 shares.
Mr. Saul I. Reck, age 80, the founder and Chairman of the
Board of the Company, served as President and Treasurer from 1960
until October 19, 1998.
Mr. Vinciguerra, age 60, has served as Chief Executive
Officer, President and Treasurer of the Company since October 19,
1998. Prior to joining the Company, he served as Chief Executive
Officer and director of Ferrofluidics Corporation from June 1996
until June 1998 and as its President from January 1995 until June
1996. From 1991 until 1994, Mr. Vinciguerra served as President
and Chief Executive Officer of the Weighing and Systems Group of
Staveley Industries, plc. Mr. Vinciguerra is a member of the
Board of Directors of Metrisa Corporation, Lytron Corporation and
Saphikon Corporation and a member of the Board of Directors of
the Japan Society of Boston.
Dr. Knopp, age 76, has served as a director since 1972. For
more than five years, he has been an account executive at the
stock brokerage firm of Moors & Cabot, Inc. and its predecessors.
Dr. Knopp is also Professor Emeritus of Canisius College,
Buffalo, New York.
Mr. Wimmergren, age 67, has served as a director since 1978.
He is Professor Emeritus of Management at Worcester Polytechnic
Institute, Worcester, Massachusetts.
Mr. Humphreys, age 56, has served as a director since 1997.
Since August 1995, Mr.. Humphreys has been President of Antigen
Express, Inc., a biotech company focused on creating drugs for
auto-immune diseases. Prior to August 1995, he was Professor and
interim Chair of the Department of Pharmacology at the University
of Massachusetts Medical School.
Saul I. Reck is the father of Michael E. Reck, President of
the Webstone Division, and Joel M. Reck, Clerk of the Company.
The Board of Directors of the Company held five meetings
during the fiscal year ended October 3, 1998. Each present
director attended at least 75% of the meetings of the Board of
Directors and of all committees of which he was a member.
The Board of Directors has an Audit Committee and a
Compensation Committee, both composed of Dr. Knopp and Mr.
Wimmergren. The Audit Committee, which met once during the last
fiscal year, is charged with recommending to the Board of
Directors retention of a firm of independent accountants and with
reviewing the Company's internal audit and accounting controls,
the report of the independent accountants and the financial
statements of the Company. The Compensation Committee, which met
twice during the last fiscal year, is responsible for
recommending salary and bonus levels of officers and key
employees. There is no Nominating Committee of the Board of
Directors. The Board of Directors as a whole will consider
nominees for director submitted to it in writing by any
shareholder.
Executive Compensation
The following table sets forth information concerning the
annual compensation for the chief executive officer and each of
the other most highly compensated executive officers of the
Company whose annual salary and bonus, if any, exceeded $100,000
for services in all capacities to the Company during the last
fiscal year.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Annual
Name and Fiscal Year Salary Bonus (1) Compensatio
n (2)
Principal Ended ($) ($) ($)
Position
Saul I. 10/3/98 $115,000 $120,700 $10,000
Reck
Former 9/27/97 115,000 143,300 10,000
President
& 9/28/96 115,000 108,700 10,000
Treasurer
Donald 10/3/98 $95,000 $10,000 $-
Nelson
Vice 9/27/97 85,200 20,000 --
President
9/28/96 81,400 15,000 --
(1) Under the terms of his Employment Agreement with
the Company, Mr. Reck was entitled to receive a bonus equal
to 10% of the amount by which Company pre-tax profits
exceeded specified base amounts.
(2) Consists of cash payments to Mr. Reck to be used
for purchase of retirement benefits.
The following table shows information concerning the
grant of stock options and SARs during fiscal 1998 to each
of the named executive officers.
OPTION/SAR GRANTS FOR LAST FISCAL YEAR
Number of Percent of
Securities Total
Underlying Options/SAR
Options/SAR s Granted Exercise or
Name s Granted to Base Price Expiration
Employees Date
in Fiscal
Year
Saul I. 5,000 19.2% $2.88 3/6/03
Reck
Donald 5,000 19.2 2.88 3/6/03
Nelson
The following table shows information concerning the
exercise of stock options during fiscal 1998 and the fiscal
year-end value of unexercised options and stock appreciation
rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Value of
Securities Unexercised
Underlying In-the Money
Unexercised
Options/SARs Options/SARs
at
Shares 10/3/98 10/3/98
Acquired
on Value Exercisable Exercisable
Exercise Realized
Name (#) ($) (#) ($)
Saul I. -- -- 5,000 --
Reck
Donald -- -- 25,000 10,000
Nelson
Under an Employment Agreement with Saul I. Reck entered
into in 1989, upon his retirement in January, 1999, Mr. Reck
will be entitled to receive an unfunded annuity of $60,000
per year for his life, and upon his death, his surviving
spouse will be entitled to an annuity of $30,000 per year
for life. Both those amounts are subject to adjustment
based upon cost of living increases after October 1, 1993.
In connection with the hiring of Mr. Vinciguerra as
Chief Executive Officer, President and Treasurer, the
Company entered into an Employment Agreement with him dated
October 19, 1998. Under the Employment Agreement, Mr.
Vinciguerra is entitled to a base salary of $140,000 per
year, plus a bonus of up to 25% of his base salary at the
discretion of the Board of Directors. In addition, he was
granted ten year incentive stock options to acquire 200,000
shares of Common Stock. Those options vest 25% at the end
of each of the first four years of employment, with
acceleration of vesting upon the happening of certain
events. Mr. Vinciguerra is entitled to six months severance
upon termination of his employment by the Company other than
for cause.
Compensation of Directors
Each director who is not also an officer or employee of
the Company receives a base fee of $2,400 per year. Each
director who is not also an officer or employee of the
Company and who lives in the greater Worcester area receives
$500 for each directors' meeting he attends. Each director
who is not also an officer or employee of the Company and
who lives outside the greater Worcester area receives $600
for each such meeting, plus travel expenses to and from
Worcester. No extra compensation is paid for attendance at
meetings of committees. All non-employee directors as a
group were paid $10,900 for services rendered during fiscal
year 1998.
The Board of Directors has a Severance Compensation
Plan for certain officers and all directors in the event
that there is a "change in control" of the Company not
approved by the Board of Directors resulting in the
termination of employment or reduction in the duties and
responsibilities of the President, Vice-Presidents and
Treasurer (as determined by the Board of Directors) and/or a
termination of service as director of the Company. The plan
provides that such President, Vice-Presidents and Treasurer
will continue to receive the compensation being paid to them
at the time of the termination or change in the nature of
employment, for a period of five years following such
termination or change, and the non-employee directors will
continue to receive directors' fees of $500 or $600 per
fiscal quarter, depending on whether or not the director
lives in the greater Worcester area, for such five year
period. At the current rate of compensation this would
entail an aggregate payment of $1,117,500 to the executive
officers as a group and a payment of $34,000 to the non-
employee directors as a group.
PROPOSAL NO. 2
APPROVAL OF THE 1998 EQUITY INCENTIVE PLAN
On September 14, 1998, the Board of Directors adopted,
subject to stockholder approval, the Company's 1998 Equity
Incentive Plan (the "1998 Plan"). The purposes of the 1998
Plan are to attract and retain key employees, directors, and
consultants, to provide an incentive for them to assist the
Company to achieve long-range performance goals and to
enable them to participate in the long-term growth of the
Company. The following is a summary description of the 1998
Plan and is qualified in its entirety by reference to the
full text of the 1998 Plan, which is attached hereto as
Exhibit A.
Under the 1998 Plan, the Company may grant (i)
incentive stock options intended to qualify under Section
422 of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) options that are not qualified as incentive
stock options ("nonqualified stock options"), (iii) stock
appreciation rights either in tandem with an option or alone
and unrelated to an option ("SARs"), (iv) shares of Common
Stock awarded based on achieving certain performance goals
("performance shares"), (v) awards of Common Stock,
including shares of Common Stock awarded without payment
therefor ("award shares"), (vi) Common Stock and other
rights granted as units that are valued in whole or in part
by reference to the value of the Common Stock ("stock
awards") and (vii) restricted shares of Common Stock
("restricted stock").
All employees and, in the case of awards other than
incentive stock options, directors and consultants of the
Company or any affiliate (as that term is defined in the
1998 Plan) capable of contributing significantly to the
successful performance of the Company, other than a person
who has irrevocably elected not to be eligible, are eligible
to participate in the 1998 Plan. As of January 16, 1999,
there were approximately ten persons eligible to
participate.
The 1998 Plan is to be administered by a committee of
not less than two non-employee directors appointed by the
Board of Directors of the Company (the "Committee"). The
Committee will serve at the pleasure of the Board of
Directors which can, at its sole discretion, discharge any
member of the Committee, appoint additional new members in
substitution for those previously appointed and/or fill
vacancies regardless of how they are caused. The Board of
Directors of the Company has the authority to adopt, alter
and repeal administrative rules, guidelines and practices
governing the operation of the 1998 Plan and to interpret
provisions of the Plan. The Board of Directors may
delegate, to the extent permitted by applicable law, to the
Committee the power to make awards to participants and all
determinations under the 1998 Plan with respect thereto.
The maximum aggregate number of shares of Common Stock
available for issuance under the 1998 Plan is 300,000
shares. The shares of Common Stock available for issuance
under the 1998 Plan are subject to adjustment for any stock
dividend, recapitalization, stock split, stock combination
or certain other corporate reorganizations. Shares issued
may consist in whole or in part of authorized but unissued
shares or treasury shares. Shares subject to an award that
expires or is terminated unexercised or is forfeited for any
reason or settled in a manner that results in fewer shares
outstanding than were initially awarded will again be
available for award under the 1998 Plan. The closing price
of the Company's Common Stock on January 16, 1999 was
$2.312.
Stock Options
Subject to the provisions of the 1998 Plan, the Board
may award incentive stock options and nonqualified stock
options and determine the number of shares to be covered by
each option, the option exercise price and the conditions
and limitations applicable to the exercise of the option.
Each option will be exercisable at such times and subject to
such terms and conditions as the Board may specify in the
applicable award. The Board may provide for the automatic
award of an option upon the delivery of shares to the
Company in payment of an option for up to the number of
shares so delivered.
The terms and conditions of incentive stock options
shall be subject to and comply with Section 422 of the Code
and any regulations thereunder. No incentive stock option
granted under the 1998 Plan may be granted more than ten
years after the effective date of the 1998 Plan and no such
option may be exercisable more than ten years from the date
of grant (five years after the date of grant for incentive
stock options granted to holders of more than ten percent of
the Common Stock). Incentive stock options may be granted
only to employees of the Company and are transferable by the
optionee only by the laws of descent and distribution, and
are exercisable only by the employee during his or her
lifetime.
Nonqualified stock options may be granted at an
exercise price equal to, greater than or lesser than the
fair market value of the Common Stock on the date of grant,
in the discretion of the Board. Incentive stock options,
however, may not be granted at less than the fair market
value of the Common Stock and may be granted to holders of
more than ten percent of the Common Stock only at an
exercise price of at least 110% of the fair market value of
the Common Stock on the date of the grant.
Stock Appreciation Rights
Subject to the provisions of the 1998 Plan, the Board
of Directors may award SARs in tandem with an option (at or
after the award of the option) or alone and unrelated to an
option. An SAR entitles the holder to receive from the
Company an amount equal to the excess, if any, of the fair
market value of the Common Stock over the exercise price.
SARs granted in tandem with an option will terminate to the
extent that the related option is exercised, and the related
option will terminate to the extent that the tandem SARs are
exercised.
Performance Shares
The 1998 Plan authorizes the Board of Directors to
grant performance shares to participants in the form of
grants of shares of Common Stock. Performance shares are
earned over a period of time (a performance cycle) selected
by the Board from time to time. There may be more than one
performance cycle in existence at any one time and the
duration of the performance cycles may differ from each
other. Unless otherwise determined by the Board of
Directors, the payment value of the performance shares will
be equal to the fair market value of the Common Stock on the
date the performance shares are earned or on the date the
Board determines that the performance shares have been
earned. The Board will establish performance goals for each
cycle for the purpose of determining the extent to which
performance shares awarded for that cycle are earned. As
soon as practicable after the end of a performance cycle,
the Board must determine the number of performance shares
which have been earned on the basis of performance in
relation to the established performance goals. Payment
values of earned performance shares are distributed to the
participant or, if the participant has died, to the
beneficiary designated by the participant.
Restricted Stock
Subject to provisions of the 1998 Plan, the Board of
Directors may grant shares of restricted stock to
participants, with such restricted periods and other
conditions as the Board may determine and for no cash
consideration or such minimum consideration as may be
required by applicable law. During the restricted period,
shares of restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as
permitted by the Board. Shares of restricted stock will be
evidenced in such manner as the Board may determine. At the
expiration of the restricted period, the Company will
deliver the stock certificates to the participant or, if the
participant has died, to the beneficiary designed by the
participant.
Stock Awards
Subject to the provisions of the 1998 Plan, the Board
of Directors may award stock awards, which may be designated
as award shares by the Board, subject to such terms,
restrictions, conditions, performance criteria, vesting
requirements and payment needs, if any, as the Board shall
determine. Shares of Common Stock awarded in connection
with a stock award shall be issued for no cash consideration
or such minimum consideration as may be required by law.
General Provisions
Each award shall be evidenced by a written document
delivered to the participant specifying the terms and
conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the 1998
Plan as the Board considers necessary or advisable. Each
type of award may be made alone, in addition to, or in
relation to any other type of award. The terms of each type
of award need not be identical and the Board need not treat
participants uniformly. The Board may amend, modify or
terminate any outstanding award, including substituting
therefor another award, changing the date of exercise or
realization and converting an incentive stock option to a
nonqualified stock option, provided that the participant's
consent to such action shall be required unless the Board
determines that the action would not materially and
adversely affect the participant.
The Board of Directors will determine whether awards
granted pursuant to the 1998 Plan are settled in whole or in
part in cash, Common Stock, other securities of the Company
or other property. The Board may permit a participant to
defer all or any portion of a payment under the 1998 Plan.
In the Board's discretion, tax obligations required to be
withheld in respect of an award may be paid in whole or in
part in shares of common stock, including shares retained
from such award. The Board will determine the effect on an
award of the death, disability, retirement or other
termination of employment of a participant and the extent to
which and period during which the participant's legal
representative, guardian or designated beneficiary may
receive payment of an award or exercise rights thereunder.
The Board in its discretion may take certain actions in
order to preserve a participant's rights under an award in
the event of a change in control of the Company, including
providing for the acceleration of any time period relating
to the exercise or realization of the award, providing for
the cash purchase of the award or adjusting the terms of the
award in order to reflect the change in control.
The Board of Directors of the Company may amend,
suspend or terminate the 1998 Plan or any portion thereof at
any time; provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply
with any applicable law, rules or regulations.
As of January 16, 1999, options to purchase 200,000
shares of Common Stock had been granted under the 1998 Plan.
All such options were granted to Salvatore J. Vinciguerra,
the Company's Chief Executive Officer, President and
Treasurer.
Federal Income Tax Consequences
The following general discussion of the Federal income
tax consequences of awards granted under the 1998 Plan is
based upon the provisions of the Internal Revenue Code as in
effect on the date hereof, current regulations thereunder
and existing public and private administrative rulings of
the Internal Revenue Service. This discussion is not
intended to be a complete discussion of all of the Federal
income tax consequences of the 1998 Plan or of all of the
requirements that must be met in order to qualify for the
tax treatment described herein. Changes in the law and
regulations may modify the discussion, and in some cases the
changes may be retroactive. No information is provided as
to state tax laws. The 1998 Plan is not qualified under
Section 401 of the Code, nor is it subject to the provisions
of the Employee Retirement Income Security Act of 1974, as
amended. The tax treatment of each kind of award under the
1998 Plan is as follows:
Nonqualified Stock Options. An option holder will not
recognize any taxable income upon the grant of a
nonqualified option under the 1998 Plan. Generally, an
option holder recognizes ordinary taxable income at the time
a nonqualified option is exercised in an amount equal to the
excess of the fair market value of the shares of Common
Stock on the date of exercise over the exercise price.
However, if (a) the Company imposes restrictions on the
shares which do not permit the recipient to transfer the
shares to others and which require the recipient to return
the shares to the Company at less than fair market value
upon termination of employment (a "risk of forfeiture"), or
(b) the recipient is an officer or director of the Company
subject to Section 16(b) of the Securities Exchange Act of
1934, as amended ("Section 16(b)") then, upon their sale of
shares of Common Stock, the date on which taxable income (if
any) is recognized (the "Recognition Date") will be the date
on which the stock becomes "freely transferable" or not
subject to risk of forfeiture. In this circumstance, the
option holder will generally recognize ordinary taxable
income on the Recognition Date in an amount equal to the
excess of the fair market value of the shares at that time
over the exercise price.
Despite this general rule, if the Recognition Date is
after the date of exercise, then the option holder may make
an election pursuant to Section 83(b) of the Code. In this
case, the option holder will recognize ordinary taxable
income at the time the option is exercised and not on the
later date. In order to be effective, the Section 83(b)
election must be filed with the Company and the Internal
Revenue Service within 30 days of exercise.
The Company will generally be entitled to a
compensation deduction for Federal income tax purposes in an
amount equal to the taxable income recognized by the option
holder, provided the Company reports the income on a form W-
2 or 1099, whichever is applicable, that is timely provided
to the option holder and filed with the IRS.
When an option holder subsequently disposes of the
shares of Common Stock received upon exercise of a
nonqualified option, he or she will recognize long-term or
short-term capital gain or loss (depending upon the holding
period), in an amount equal to the difference between the
sale price and the fair market value on the date on which
the option holder recognized ordinary taxable income as a
result of the exercise of the nonqualified option.
An option holder who pays the exercise price for a
nonqualified option, in whole or in part, by delivering
shares of Common Stock already owned by him or her will
recognize no gain or loss for Federal income tax purposes on
the shares surrendered, but otherwise will be taxed
according to the rules described above.
Incentive Stock Options. An option holder generally will
not recognize taxable income upon either the grant or the
exercise of an incentive stock option. However, under
certain circumstances, there may be alternative minimum tax
or other tax consequences, as discussed below.
An option holder will recognize taxable income upon the
disposition of the shares received upon exercise of an
incentive stock option. Any gain recognized upon a
disposition that is not a "disqualifying disposition" will
be taxable as long-term capital gain. A "disqualifying
disposition" means any disposition of shares acquired on the
exercise of an incentive stock option within two years of
the date the option was granted or within one year of the
date the shares were issued to the option holder. The use of
shares acquired pursuant to the exercise of an incentive
stock option to pay the option price under another incentive
stock option is treated as a disposition for this purpose.
In general, if an option holder makes a disqualifying
disposition, an amount equal to the excess of (a) the lesser
of (i) the fair market value of the shares on the date of
exercise or (ii) the amount actually realized over (b) the
option exercise price, will be taxable as ordinary income
and the balance of the gain recognized, if any, will be
taxable as either long-term or short-term capital gain,
depending on the optionee's holding period for the shares.
In the case of a gift or certain other transfers, the amount
of ordinary income taxable to the optionee is not limited to
the amount of gain which would be recognized in the case of
a sale. Instead, it is equal to the excess of the fair
market value of the shares on the date of exercise over the
option exercise price.
As noted previously, the tax result may change if (a)
the Company imposes restrictions on the shares which do not
permit the recipient to transfer the shares to others and
which require the recipient to return the shares to the
Company at less than fair market value upon termination of
employment, or (b) the recipient is an officer or director
of the Company subject to Section 16(b). In the case of a
disqualifying disposition of shares acquired pursuant to the
exercise of such an incentive stock option, the date on
which the fair market value of the shares is determined will
be postponed, and the tax consequences will be similar to
the treatment that applies to shares acquired pursuant to
options granted under the 1998 Plan, including the ability
to make a Section 83(b) election.
In general, in the year an incentive stock option is
exercised, the holder must include the excess of the fair
market value of the shares issued upon exercise over the
exercise price in the calculation of alternative minimum
taxable income. The application of the alternative minimum
tax rules for an option holder subject to Section 16(b) or
who receives shares that are not "substantially vested" are
more complex and may depend upon whether the holder makes a
Section 83(b) election, as described above.
The Company will not be entitled to any deduction with
respect to the grant or exercise of an incentive stock
option provided the holder does not make a disqualifying
disposition. If the option holder does make a disqualifying
disposition, the Company will generally be entitled to a
deduction for Federal income tax purposes in an amount equal
to the taxable income recognized by the holder, provided the
Company reports the income on a form W-2 that is timely
provided to the option holder and filed with the IRS.
Stock Appreciation Rights. A recipient of an SAR will not
be considered to receive any income at the time an SAR is
granted, nor will the Company be entitled to a deduction at
that time. Upon the exercise of an SAR, the holder will
have ordinary income equal to the cash received upon the
exercise. At that time, the Company will be entitled to a
tax deduction equal to the amount of ordinary income
realized by the holder.
Restricted Stock and Performance Shares. The recipient of
restricted stock or performance shares will be treated in
the same manner as a person who has exercised a nonqualified
stock option, as described above, for which the Company has
imposed restrictions on the shares received, and for which
the exercise price is either zero or a nominal amount. In
general, this means that the holder may either wait until
the restrictions have elapsed (or the performance goals have
been met), and then pay tax at ordinary income tax rates,
based upon the fair market value of the shares at that time,
or he or she can file a Section 83(b) election, and pay tax
based on the fair market value of the shares at the time
they are received. Again, the Company will be entitled to a
deduction that corresponds to the income recognized by the
recipient. If a recipient makes a Section 83(b) election
but later forfeits some or all of the shares as to which the
election was made, he or she will not be entitled to a
deduction or other reduction related to the income
previously recognized.
Stock Awards. A person who receives a stock award that
includes Common Stock will be treated, with regard to such
Common Stock, in the same manner as a person who has
exercised a nonqualified stock option. In general, this
means that the holder will recognize taxable income at the
time the shares are received if they are not subject to
restrictions, or as described in the preceding paragraph for
restricted stock if they are subject to restrictions. The
tax treatment of a stock award that consists of other rights
will depend on the provisions of the award. It may be
immediately taxable if there are no restrictions on the
receipt of the cash or other property that the stock award
represents, or the tax consequences may be deferred if the
receipt of cash or other property for the stock award is
restricted, or subject to vesting or performance goals. In
those situations in which a participant receives property
subject to restrictions, the participant may wish to make a
Section 83(b) election, as described above. At the time
that the holder of the stock award recognizes ordinary
income, the Company will be entitled to a tax deduction
equal to the amount of ordinary income realized by the
holder.
The affirmative vote of a majority of the votes of
holders of the Common Stock present in person or by proxy at
the Meeting is required to approve the 1998 Plan.
The Board of Directors recommends that stockholders
vote FOR approval of Proposal No. 2.
OTHER MATTERS
Relationship with Independent Public Accountants
The Audit Committee of the Board of Directors has
selected Greenberg, Rosenblatt, Kull & Bitsoli, P.C. as
independent auditors for the Company for the current fiscal
year. That firm and its predecessors have served in such
capacity since fiscal year 1982.
It is anticipated that a representative of Greenberg,
Rosenblatt, Kull & Bitsoli, P.C. will be present at the
Meeting. The representative will be afforded the
opportunity to make a statement and is expected to be
available to respond to appropriate questions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934,
as amended, requires the Company's executive officers and
directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission. Executive officers, directors and
greater than 10% stockholders are required to furnish the
Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of
such forms it has received and written representations from
certain reporting persons that they were not required to
file Forms 5 for specified fiscal years, the Company
believes that all of its executive officers, directors and
greater than 10% stockholders complied with all Section
16(a) filing requirements applicable to them during the
Company's fiscal year ended October 3, 1998.
Other Matters To Be Acted Upon
The Board of Directors has no knowledge of any other
matters which may come before the Meeting and does not
itself intend to present any such matters. However, if any
other matters shall properly come before the Meeting, the
persons named as proxies will have discretionary authority
to vote the shares represented by the accompanying proxy in
accordance with their own judgment.
Shareholder Proposals
Shareholder proposals intended to be presented at the
Annual Meeting in 2000 and included in the Company's proxy
materials pursuant to Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, as amended must be received
by the Company on or before October 2, 1999 and should be
addressed to Salvatore J. Vinciguerra, President, Goddard
Industries, Inc., 705 Plantation Street, Worcester,
Massachusetts 01605. If a proponent fails to notify the
Company by December 16, 1999 of a non-Rule 14a-8 shareholder
proposal which it intends to submit at the Annual Meeting in
2000, the proxy solicited by the Board of Directors with
respect to such meeting may grant discretionary authority to
the proxies named therein to vote with respect to such
matter.
Annual Report And Form 10-KSB
Additional copies of the Annual Report to Stockholders
for the fiscal year ended October 3, 1998 and copies of the
Annual Report of the Company to the Securities and Exchange
Commission on Form 10-KSB for that fiscal year are available
to stockholders without charge upon written request
addressed to Lucy J. Rybacki at the Company at 705
Plantation Street, Worcester, Massachusetts 01605.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, STOCKHOLDERS ARE URGED TO FILL IN, SIGN AND
RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED
ENVELOPE.
#654962 v7 - SEARLEJR - #1d#07!.DOC - 1170/1170
EXHIBIT A
GODDARD INDUSTRIES, INC.
1998 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Goddard Industries, Inc. 1998 Equity
Incentive Plan (the "Plan") is to attract and retain key
employees, directors and consultants to provide an incentive for
them to assist the Company to achieve long-range performance
goals, and to enable them to participate in the long-term growth
of the Company.
Section 2. Definitions
(a) "Affiliate" means any business entity in which the Company
owns directly or indirectly 50% or more of the total combined
voting power or has a significant financial interest as
determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right,
Performance or Award Share, or Restricted Stock awarded under the
Plan.
(c) "Award Share" means a share of Common Stock awarded to an
employee without payment therefor.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means a committee of not less than two non-
employee directors appointed by the Board to administer the Plan
or, alternatively, if the Board so determines, the whole Board of
Directors.
(g) "Common Stock" or "Stock" means the Common Stock, par value
$.01 per share, of the Company.
(h) "Company" means Goddard Industries, Inc., a Massachusetts
corporation.
(i) "Designated Beneficiary" means the beneficiary designated by
a Participant, in a manner determined by the Board, to receive
amounts due or exercise rights of the Participant in the event of
the Participant's death. In the absence of an effective
designation by a Participant, Designated Beneficiary shall mean
the Participant's estate.
(j) "Fair Market Value" means the fair market value as
determined in accordance with Section 14.
(k) "Incentive Stock Option" means an option to purchase shares
of Common Stock awarded to a Participant under Section 6 which is
intended to meet the requirements of Section 422 of the Code or
any successor provision.
(l) "Nonstatutory Stock Option" means an option to purchase
shares of Common Stock awarded to a Participant under Section 6
which is not intended to be an Incentive Stock Option.
(m) "Option" means an Incentive Stock Option or a Nonstatutory
Stock Option.
(n) "Participant" means a person selected by the Board to
receive an Award under the Plan.
(o) "Performance Cycle" or "Cycle" means the period of time
selected by the Board during which performance is measured for
the purpose of determining the extent to which an award of
Performance Shares has been earned.
(p) "Performance Shares" mean shares of Common Stock which may
be earned by the achievement of performance goals awarded to a
Participant under Section 8.
(q) "Restricted Period" means the period of time selected by the
Board during which an award of Restricted Stock may be forfeited
to the Company.
(r) "Restricted Stock" means shares of Common Stock subject to
forfeiture awarded to a Participant under Section 9.
(s) "Stock Appreciation Right" or "SAR" means a right to receive
any excess in value of shares of Common Stock over the exercise
price awarded to a Participant under Section 7.
(t) "Stock Unit" means an award of Common Stock or units that
are valued in whole or in part by reference to, or otherwise
based on, the value of Common Stock, awarded to a Participant
under Section 10.
Section 3. Administration
(a) The Plan shall be administered by the Committee. The
Committee shall serve at the pleasure of the Board, which may
from time to time appoint additional members of the Committee,
remove members and appoint new members in substitution for those
previously appointed, and fill vacancies however caused. Except
where the Plan is administered by the entire Board of Directors,
a majority of the Committee shall constitute a quorum and the
acts of a majority of the members present at any meeting at which
a quorum is present shall be deemed the action of the Committee,
except that where grants are being made to one or more members of
the Committee, a member who is the subject of a grant being
presented to that meeting shall count toward the quorum but may
not vote on any grant at that meeting, and a majority of the
members eligible to vote shall be sufficient for any action. The
Committee may act by unanimous written consent in lieu of a
meeting.
(b) Subject to the express provisions of this Plan and provided
that all actions taken shall be consistent with the purposes of
the Plan, the Committee shall have full and complete authority
and the sole discretion to: (i) determine those persons eligible
under Section 4; (ii) select those persons to whom Awards shall
be granted under the Plan; (ii) determine the number of shares
covered by and the form of the Awards to be granted; (iii)
determine the time or times when Awards shall be granted; (iv)
establish the terms and conditions upon which Options may be
exercised or Awards vested, including exercise in conjunction
with other awards made or compensation paid; (v) alter any
restrictions or conditions upon any Awards; and (vi) adopt rules
and regulations, establish, define and/or interpret any other
terms and conditions, and make all other determinations (which
may be on a case-by-case basis) deemed necessary or desirable for
the administration of the Plan.
Section 4. Eligibility
All employees and, in the case of Awards other than Incentive
Stock Options, directors and consultants of the Company or any
Affiliate capable of contributing significantly to the successful
performance of the Company, other than a person who has
irrevocably elected not to be eligible, are eligible to be
Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b), Awards may be
made under the Plan of Options to acquire not in excess of
300,000 shares of Company Common Stock. Other Awards may be made
as the Board may determine, provided that a maximum of 300,000
shares of Common Stock may be issued under this Plan. If any
Award in respect of shares of Common Stock expires or is
terminated unexercised or is forfeited for any reason or settled
in a manner that results in fewer shares outstanding than were
initially awarded, including without limitation the surrender of
shares in payment for the Award or any tax obligation thereon,
the shares subject to such Award or so surrendered, as the case
may be, to the extent of such expiration, termination, forfeiture
or decrease, shall again be available for award under the Plan,
subject, however, in the case of Incentive Stock Options, to any
limitation required under the Code. Common Stock issued through
the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Awards
under the Plan. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury
shares.
(b) In the event that the Board determines that any stock
dividend, extraordinary cash dividend, creation of a class of
equity securities, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of
shares, offering of rights to purchase Common Stock at a price
substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits
intended to be made available under the Plan, then the Board,
subject, in the case of Incentive Stock Options, to any
limitation required under the Code, shall equitably adjust any or
all of (i) the number and kind of shares in respect of which
Awards may be made under the Plan, (ii) the number and kind of
shares subject to outstanding Awards, and (iii) the award,
exercise or conversion price with respect to any of the
foregoing, provided that the number of shares subject to any
Award shall always be a whole number. In addition, if considered
appropriate, the Board may make provision for a cash payment with
respect to an outstanding Award..
Section 6. Stock Options
(a) Subject to the provisions of the Plan, the Board may award
Incentive Stock Options and Nonstatutory Stock Options and
determine the number of shares to be covered by each Option, the
option price therefor and the conditions and limitations
applicable to the exercise of the Option. The terms and
conditions of Incentive Stock Options shall be subject to and
comply with Section 422 of the Code, or any successor provision,
and any regulations thereunder.
(b) The Board shall establish the option price at the time each
Option is awarded, which price shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of award with
respect to Incentive Stock Options.
(c) Each Option shall be exercisable at such times and subject
to such terms and conditions as the Board may specify in the
applicable Award or thereafter. The Board may impose such
conditions with respect to the exercise of Options, including
conditions relating to applicable federal or state securities
laws, as it considers necessary or advisable.
(d) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is
received by the Company. Such payment may be made in whole or in
part in cash or, to the extent permitted by the Board at or after
the award of the Option, by delivery of a note or shares of
Common Stock owned by the Optionholder, including Restricted
Stock, valued at their Fair Market Value on the date of delivery,
or such other lawful consideration as the Board may determine.
(e) The Board may provide for the automatic award of an Option
upon the delivery of shares to the Company in payment of an
Option for up to the number of shares so delivered.
(f) In the case of Incentive Stock Options the following
additional conditions shall apply:
(i) Such options shall be granted only to employees of the
Company, and shall not be granted to any person who owns stock
that possesses more than ten percent of the total combined voting
power of all classes of stock of the Company or of its parent or
subsidiary corporation (as those terms are defined in section
422(b) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder), unless, at the time of such
grant, the exercise price of such option is at least 110% of the
fair market value of the stock that is subject to such option and
the option shall not be exercisable more than five years after
the date of grant;
(ii) Such options shall not be granted more than ten years from
the date hereof and shall not be exercisable more than ten years
from the date of grant;
(iii) Such options shall, by their terms, be transferable by
the optionee only by will or the laws of descent and
distribution, and shall be exercisable only by such employee
during his lifetime.
Section 7. Stock Appreciation Rights
Subject to the provisions of the Plan, the Board may award
SARs in tandem with an Option (at or after the award of the
Option), or alone and unrelated to an Option. SARs in tandem
with an Option shall terminate to the extent that the related
Option is exercised, and the related Option shall terminate to
the extent that the tandem SARs are exercised.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Board may award
Performance Shares and determine the number of such shares for
each Performance Cycle and the duration of each Performance
Cycle. There may be more than one Performance Cycle in existence
at any one time, and the duration of Performance Cycles may
differ from each other. The payment value of Performance Shares
shall be equal to the Fair Market Value of the Common Stock on
the date the Performance Shares are earned or, in the discretion
of the Board, on the date the Board determines that the
Performance Shares have been earned.
(b) The Board shall establish performance goals for each Cycle,
for the purpose of determining the extent to which Performance
Shares awarded for such Cycle are earned, on the basis of such
criteria and to accomplish such objectives as the Board may from
time to time select. During any Cycle, the Board may adjust the
performance goals for such Cycle as it deems equitable in
recognition of unusual or non-recurring events affecting the
Company, changes in applicable tax laws or accounting principles,
or such other factors as the Board may determine.
(c) As soon as practicable after the end of a Performance Cycle,
the Board shall determine the number of Performance Shares which
have been earned on the basis of performance in relation to the
established performance goals. The payment values of earned
Performance Shares shall be distributed to the Participant or, if
the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Board shall
determine, at or after the time of award, whether payment values
will be settled in whole or in part in cash or other property,
including Common Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Board may award
shares of Restricted Stock and determine the duration of the
Restricted Period during which, and the conditions under which,
the shares may be forfeited to the Company and the other terms
and conditions of such Awards. Shares of Restricted Stock may be
issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted
by the Board, during the Restricted Period. Shares of Restricted
Stock shall be evidenced in such manner as the Board may
determine. Any certificates issued in respect of shares of
Restricted Stock shall be registered in the name of the
Participant and unless otherwise determined by the Board,
deposited by the Participant, together with a stock power
endorsed in blank, with the Company. At the expiration of the
Restricted Period, the Company shall deliver such certificates to
the Participant or if the Participant has died, to the
Participant's Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Board may award
Stock Units subject to such terms, restrictions, conditions,
performance criteria, vesting requirements and payment rules as
the Board shall determine.
(b) Shares of Common Stock awarded in connection with a Stock
Unit Award shall be issued for no cash consideration or such
minimum consideration as may be required by applicable law. Such
shares of Common Stock may be designated as Award Shares by the
Board.
Section 11. Exercise of Options; Payment
(a) Options may be exercised in whole or in part at such time
and in such manner as the Committee may determine and as shall be
prescribed in the written agreement with each holder.
(b) The purchase price of shares of Stock upon exercise of an
Option shall be paid by the Option holder in full upon exercise
and may be paid as the Committee may determine in its sole
discretion in any combination of: (i) cash or check payable to
the order of the Company; (ii) property valued at Fair Market
Value; (iii) delivery of a promissory note; (iv) delivery of
shares of Common Stock (valued at Fair Market Value at the date
of purchase of the Common Stock subject to the Option); or (iii)
such other means as the Committee may permit.
(c) With the consent of the Committee, payment of the exercise
price may also be made by delivery of a properly executed
exercise notice to the Company, together with a copy of
irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds to pay the exercise
price. To facilitate such arrangements, the Company may enter
into agreements for coordinating procedures with one or more
securities brokerage firms. The date of delivery of such
exercise notices shall be deemed the date of exercise.
(d) The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or
advisable, including making the Common Stock issued upon exercise
subject to restrictions on vesting or transferability, or to risk
of forfeiture, upon the happening of such events as the Committee
may determine, any of which may be accelerated or waived in the
Committee's sole discretion.
(e) No shares of Common Stock shall be issued upon exercise of
any Option under this Plan until full payment in the form
approved by the Committee has been made and all other legal
requirements applicable to the issuance or transfer of such
shares and such other requirements as are consistent with the
Plan have been complied with to the satisfaction of the
Committee.
Section 12. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced
by a writing delivered to the Participant specifying the terms
and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as
the Board considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(b) Board Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms
of each type of Award need not be identical, and the Board need
not treat Participants uniformly. Except as otherwise provided
by the Plan or a particular Award, any determination with respect
to an Award may be made by the Board at the time of award or at
any time thereafter.
(c) Settlement. The Board shall determine whether Awards are
settled in whole or in part in cash, Common Stock, other
securities of the Company, Awards or other property. The Board
may permit a Participant to defer all or any portion of a payment
under the Plan, including the crediting of interest on deferred
amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(d) Dividends and Cash Awards. In the discretion of the Board,
any Award under the Plan may provide the Participant with (i)
dividends or dividend equivalents payable currently or deferred
with or without interest, and (ii) cash payments in lieu of or in
addition to an Award.
(e) Termination of Employment. The Board shall determine the
effect on an Award of the disability, death, retirement or other
termination of employment of a Participant and the extent to
which, and the period during which, the Participant's legal
representative, guardian or Designated Beneficiary may receive
payment of an Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's
rights under an Award in the event of a change in control of the
Company, the Board in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following
actions: (i) provide for the acceleration of any time period
relating to the exercise or realization of the Award, (ii)
provide for the purchase of the Award upon the Participant's
request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had
the Award been currently exercisable or payable, (iii) adjust the
terms of the Award in a manner determined by the Board to reflect
the change in control, (iv) cause the Award to be assumed, or new
rights substituted therefor, by another entity, or (v) make such
other provision as the Board may consider equitable and in the
best interests of the Company.
(g) Withholding. The Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any
taxes required by law to be withheld in respect of Awards under
the Plan no later than the date of the event creating the tax
liability. In the Board's discretion, such tax obligations may
be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation,
valued at their Fair Market Value on the date of delivery. The
Company and its Affiliates may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind
otherwise due to the Participant.
(h) Foreign Nationals. Awards may be made to Participants who
are foreign nationals or employed outside the United States on
such terms and conditions different from those specified in the
Plan as the Board considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable laws.
(i) Amendment of Award. The Board may amend, modify or
terminate any outstanding Award, including substituting therefor
another Award of the same or a different type, changing the date
of exercise or realization and convening an Incentive Stock
Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the
Board determines that the action, taking into account any related
action, would not materially and adversely affect the
Participant.
Section 13. Fair Market Value
(a) If the Common Stock is then traded on any national
securities exchange or automated quotation system which has sale
price reporting, the Fair Market Value of the Common Stock shall
be the mean between the high and low sales prices, if any, on
such exchange or system on the date as of which Fair Market Value
is being determined or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest
sales prices on the nearest date before and the nearest date
after that date in accordance with applicable regulations under
the Code.
(b) If the Common Stock is then traded on an exchange or system
which does not have sale price reporting, the Fair Market Value
of the Common Stock shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported
for such the date as of which Fair Market Value is being
determined, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices
on the nearest date before and the nearest date after such date
in accordance with applicable regulations under the Code.
(c) With respect to Common Stock if it is not publicly traded
and with respect to any other property, the Fair Market Value of
such property shall be determined in good faith by the Committee
or in the manner otherwise provided by the Committee from time to
time.
Section 14. Miscellaneous
(a) No Right To Employment. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued
employment. The Company expressly reserves the right at any time
to dismiss a Participant free from any liability or claim under
the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall
have any rights as a shareholder with respect to any shares of
Common Stock to be distributed under the Plan until he or she
becomes the holder thereof. A Participant to whom Common Stock
is awarded shall be considered the holder of the Stock at the
time of the Award except as otherwise provided in the applicable
Award.
(c) Governing Law. The provisions of the Plan shall be governed
by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
(d) Effective Date of Plan. The effective date of this Plan
shall be the date of adoption by the Board of Directors. If the
Plan is subject to the approval of the stockholders under
subsection (e) below, upon such approval it shall be effective as
of the date of adoption by the Board of Directors. If prior to
such approval the Committee grants Awards under the Plan of a
type that require stockholder approval, upon such approval such
Awards shall be effective as of the date of grant.
(e) Stockholder Approval. The adoption of this Plan, or any
amendment hereto, shall be subject to approval by stockholders
only to the extent required by (i) the Code, (ii) the rules under
Section 16 of the Securities Exchange Act of 1934, (iii) rules of
any stock exchange or over-the-counter stock market, or (iv) as
otherwise required by law. Any such approval shall be obtained
within the time required by such law or rule. Any stockholder
approval of this Plan or any amendment so required shall mean the
affirmative vote of at least a majority of the shares of capital
stock present and entitled to vote at a duly held meeting of
stockholders, unless a greater vote is required by state law, or
the law or rule requiring stockholder approval, in which case
such greater requirement shall apply. Stockholder approval may
be obtained by written consent in lieu of meeting to the extent
permitted by applicable state law.
(f) Amendment of Plan. The Board of Directors of the Company
may at any time, and from time to time, amend, suspend or
terminate this Plan in whole or in part; provided, however, that
the Board of Directors may not modify the Plan in a manner
requiring the approval of stockholders under subsection (e) above
unless such approval is obtained to the extent required.
(g) Term of Plan. This Plan shall terminate ten years from the
date of adoption by the Board of Directors, and no Award shall be
granted under this Plan thereafter, but such termination shall
not affect the validity of Awards granted prior to the date of
termination.
