UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HADRON, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2120726
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 Seminary Road, Suite 800
Alexandria, Virginia 22311
(703) 824-0400
(Address, including zip code and telephone number,
of Principal Executive Offices)
HADRON, INC.
1994 STOCK OPTION PLAN, AS AMENDED
(Full title of the plan)
C.W. GILLULY
Chairman and Chief Executive Officer
Hadron, Inc.
4900 Seminary Road, Suite 800
Alexandria, Virginia 22311
(703) 824-0400
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the
registration statement.
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
------------ ---------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Common Stock 345,000 $1.15625 <F1> $398,906 $121.00
$.02 par
value
<FN>
<F1> Estimated solely for purposes of calculating the
registration fee. Based on the closing price on September 29, 1997.
</TABLE>
<PAGE>
PART II.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The Company hereby incorporates by reference into this
Registration Statement the documents listed below which have been
filed with the Securities and Exchange Commission (the
"Commission"):
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997; and
(b) All reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") since the end of the fiscal year covered by the Annual
Report referred to in (a) above.
Each document or report subsequently filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Registration
Statement, but prior to the filing of a posteffective amendment
to this Registration Statement which indicates that all
securities offered by this Registration Statement have been sold
or which deregisters all such securities then remaining unsold,
shall be deemed to be incorporated by reference into this
Registration Statement and to be a part of this Registration
Statement from the date of the filing of such document with the
Commission. Any statement contained in this Registration
Statement, or in a document incorporated in this Registration
Statement by reference, shall be deemed to be modified or
superseded for purposes of this Registration Statement to the
extent that a statement contained in any subsequently filed
document incorporated herein by reference which statement is also
incorporated herein by reference is inconsistent with such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities
The following is an updated description of the Company's
securities:
Common Stock
The authorized capital stock of the Company consists of
20,000,000 shares of common stock, $0.02 par value per share
("Common Stock"). Holders of Common Stock are entitled to one
vote for each share held on all matters submitted to a vote of
shareholders and do not have cumulative voting rights.
Accordingly, holders of a majority of the Common Stock entitled
to vote in any election of directors may elect all the directors
standing for election. Holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the
Board of Directors at its discretion from funds legally available
therefore. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive
ratably the net assets of the Company available after the payment
of debts and other liabilities. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights.
<PAGE>
Item 6. Indemnification of Directors and Officers
The New York Business Corporation Law allows, in general,
for indemnification, in certain circumstances, by a corporation
of any person threatened with or made a party to any action or
proceeding by reason of the fact that he or she is, or was, a
director or officer of such corporation. Indemnification is also
authorized with respect to a criminal action or proceeding where
the person had no reasonable cause to believe that his conduct
was unlawful.
The Company's Bylaws provide for mandatory indemnification
of its directors, officers, employees and agents against
expenses, judgments, fines and amounts paid in settlement to the
full extent that officers and directors are permitted to be
indemnified by the laws of the state of New York.
Item 8. Exhibits
See Index to Exhibits.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
<PAGE>
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8, and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Alexandria, Virginia on October 2, 1997.
HADRON, INC.
By: /S/ C.W. GILLULY
C.W. Gilluly
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the
following persons in the capacities indicated on October 2, 1997.
/S/ C.W. GILLULY
C.W. Gilluly Chairman and Chief Executive
Officer (Principal Executive
Officer)
/S/ DONALD E. ZIEGLER
Donald E. Ziegler Chief Financial Officer
(Principal Financial and
Accounting Officer)
/S/ WILLIAM J. HOWARD
William J. Howard Director
/S/ ROBERT J. LYNCH, JR.
Robert J. Lynch, Jr. Director
/S/ JOHN D. SANDERS
John D. Sanders Director
<PAGE>
EXHIBITS
TO
HADRON, INC.
REGISTRATION STATEMENT ON FORM S-8
Exhibit Index
The following exhibits are filed herewith as part of this
Registration Statement:
Exhibit
No.
5.1 Opinion and Consent of McGuire, Woods,
Battle & Boothe, L.L.P., Counsel to the Company
as to the validity of the Common Stock
offered hereunder
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP
23.3 Consent of McGuire, Woods, Battle & Boothe,
L.L.P. (included in Exhibit 5.1)
28.1 Hadron, Inc. 1994 Stock Option Plan, As Amended
Exhibit 5.1
September 29, 1997
Board of Directors
Hadron, Inc.
4900 Seminary Road
Alexandria, Virginia 22311
Gentlemen:
You propose to file as soon as possible with the Securities
and Exchange Commission a registration statement on Form S-8 (the
"Registration Statement") relating to the Hadron, Inc. 1994 Stock
Option Plan (the "Plan"). The Registration Statement covers
345,000 shares of Hadron, Inc. Common Stock, $.02 par value,
which have been, with the approval of the shareholders of Hadron,
Inc. reserved for issuance under the Plan.
We are of the opinion that the 345,000 shares of Common
Stock which are authorized for issuance under the Plan, when
issued and sold in accordance with the terms and provisions of
the Plan and as set forth in and contemplated by the Registration
Statement, will be duly authorized, legally issued, fully paid
and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/ McGuire Woods Battle & Boothe, LLP
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
Hadron, Inc.:
We consent to the incorporation by reference in this
registration statement on Form S-8 of our report dated September
28, 1995, on our audits of the statements of operations,
shareholders' deficit and cash flows of Hadron, Inc. for the year
ended June 30, 1995 which report appears in the June 30, 1997
annual report on Form 10-K of Hadron, Inc.
/S/ Coopers & Lybrand L.L.P.
Washington, D.C.
September 30, 1997
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Hadron, Inc.:
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 333-00000) pertaining to the
Hadron, Inc. 1994 Stock Option Plan, as Amended of our report
dated September 25, 1997 with respect to the consolidated
financial statements and schedule of Hadron, Inc. included in its
Annual Report (Form 10-K) for the year ended June 30, 1997, filed
with the Securities and Exchange Commission.
/S/ Ernst & Young LLP
Vienna, Virginia
September 30, 1997
EXHIBIT 28.1
HADRON, INC.
1994 STOCK OPTION PLAN, AS AMENDED
SECTION 1. Purpose of Plan. The purpose of this Hadron,
Inc. 1994 Stock Option Plan ("Plan") is to encourage ownership of
common stock, $.02 par value ("Common Stock"), of Hadron, Inc., a
New York corporation (the "Company"), by eligible key employees,
directors and consultants of the Company and its Affiliates (as
defined below) and to provide increased incentive for such
employees, directors and consultants to render services and to
exert maximum effort for the business success of the Company. In
addition, the Company expects that the Plan will further
strengthen the identification of employees, directors and
consultants with the stockholders. Certain options to be granted
under this Plan are intended to qualify as Incentive Stock
Options ("ISOs") pursuant to Section 422 of the Internal Revenue
Code of 1986, as amended ("Code"), while other options granted
under this Plan will be nonqualified options which are not
intended to qualify as ISOs ("Nonqualified Options"), either or
both as provided in the agreements evidencing the options as
provided in Section 6 hereof. As used in this Plan, the term
"Affiliates" means any "parent corporation" of the Company and any
"subsidiary corporation" of the Company within the meaning of
Code Sections 424(e) and (f), respectively.
SECTION 2. Administration of the Plan.
(a) Composition of Committee. The Plan shall be
administered by the Compensation and Stock Option Committee
(the "Committee") designated by the Board of Directors of
the Company (the "Board"), and consisting of not fewer than
two members of the Board. The Board shall also designate
the Chairman of the Committee. Pursuant to Rule 16b-3 of
the Securities Exchange Act of 1934, as amended ("Exchange
Act"), no director shall serve as a member of the Committee
unless he is a "disinterested person" within the meaning of
said Rule 16b-3.
(b) Committee Action. the Committee shall hold its
meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum, and all
determinations of the Committee shall be made by not less
than a majority of its members. Any decision or
determination reduced to writing and signed by a majority of
the members shall be fully effective as if it had been made
by a majority vote of its members at a meeting duly called
and held. The Committee may designate the Secretary of the
Company or other Company employees to assist the Committee
in the administration of the Plan, and may grant authority
to such persons to execute award agreements or other
documents on behalf of the Committee and the Company. Any
duly constituted committee of the Board satisfying the
qualifications of this Section 2 may be appointed as the
Committee.
<PAGE>
(c) Committee Expenses. All expenses and liabilities
incurred by the Committee in the administration of the Plan
shall be borne by the Company. The Committee may employ
attorneys, consultants, accountants or other persons.
SECTION 3. Stock Reserved for the Plan. Subject to
adjustment as provided in Section 6(k) hereof, the maximum number
of shares of Common Stock for which options granted hereunder may
be exercised shall be 345,000. The shares subject to the Plan
shall consist of authorized but unissued shares of Common Stock
and such number of shares shall be and is hereby reserved for
sale for such purpose. Any of such shares which may remain unsold
and which are not subject to outstanding options at the
termination of the Plan shall cease to be reserved for the
purpose of the Plan, but until termination of the Plan or the
termination of the last of the options granted under the Plan,
whichever last occurs, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan.
Should any option expire or be canceled prior to its exercise in
full, the shares theretofore subject to such option may again be
made subject to an option under the Plan.
SECTION 4. Eligibility.
(a) The persons eligible to participate in the Plan as a
recipient of options ("Optionee") shall include only key
employees, directors and consultants of the Company or its
Affiliates at the time the option is granted. An employee or
consultant who has been granted an option hereunder may be
granted an additional option or options, if the Committee
shall so determine.
(b) During the term of the Plan, each non-employee director
elected or appointed to the Board of Directors will
automatically receive on the date of his first initial
appointment to the Company's Board of Directors or the date
the Plan was adopted by the Board of Directors, in the case
of current directors (the "Initial Grant Date"), an option
to purchase 2,500 shares of the Company's Common Stock (the
"Initial Option") at a per share exercise price equal to the
fair market value of the Common Stock on the Initial Grant
Date. Furthermore, each Director will automatically receive
on each anniversary of his initial election or appointment
to the Company's Board of Directors or, in the case of
current directors the date V the Plan was adopted by the
Board of Directors, an option to purchase 2,500 shares of
the Company's Common Stock exercisable at a per share value
equal to the fair market value for the Common Stock on the
applicable additional grant date. Subject to acceleration
upon the occurrence of certain prescribed events, such
option becomes exercisable as to one-third upon the date of
grant, one-third upon the first anniversary of the date of
grant and one-third upon the second anniversary of the date
of grant.
<PAGE>
SECTION 5. Grant of Options.
(a) Committee Discretion. The Committee shall have sole
and absolute discretionary authority (i) to determine,
authorize, and designate those key employees, directors and
consultants of the Company or its Affiliates who are to
receive options under the Plan, (ii) to determine the number
of shares of Common Stock to be covered by such options and
the terms thereof, and (iii) to determine the type of option
granted: 150, Nonqualified Option or a combination of 150
and Nonqualified Options; provided that a non-employee
director may not receive any ISOs. The Committee shall
thereupon grant options in accordance with such
determinations as evidenced by a written option agreement.
Subject to the express provisions of the Plan, the Committee
shall have discretionary authority to prescribe, amend and
rescind rules and regulations relating to the Plan, to
interpret the Plan, to prescribe and amend the terms of the
option agreements (which need not be identical) and to make
all other determinations deemed necessary or advisable for
the administration of the Plan.
(b) Stockholder Approval. An options granted under this
Plan are subject to, and may not be exercised before, the
approval of this Plan by the affirmative vote of the holders
of a majority of the outstanding shares of the Company
present, or represented by proxy, and entitled to vote
thereat or by written consent in accordance with the laws of
the State of New York. If such approval by the stockholders
of the Company is not forthcoming, all options previously
granted under this Plan shall be void.
(c) Limitation on Incentive Stock Options. The aggregate
fair market value (determined in accordance with Section
6(b) of this Plan at the time the option is granted) of the
Common Stock with respect to which ISOs may be exercisable
for the first time by any Optionee during any calendar year
under all such plans of the Company and its Affiliates shall
not exceed $100,000.
SECTION 6. Terms and Conditions. Each option granted
under the Plan shall be evidenced by an agreement, in a form
approved by the Committee, which shall be subject to the
following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate.
(a) Option Period. The Committee shall promptly notify the
Optionee of the option grant and a written agreement shall
promptly be executed and delivered by and on behalf of the
Company and the Optionee, provided that the option grant
shall expire if a written agreement is not signed by said
Optionee (or his agent or attorney) and returned to the
Company within 60 days from date of receipt by the Optionee
of such agreement. The date of grant shall be the date the
option is actually granted by the Committee, even though the
written agreement may be executed and delivered by the
<PAGE>
Company and the Optionee alter that date. Each option
agreement shall specify the period for which the option
thereunder is granted (which in no event shall exceed ten
years from the date of grant) and shall provide that the
option shall expire at the end of such period. If the
original term of an option is less than ten years from the
date of grant, the option may be amended prior to its
expiration, with the approval of the Committee and the
Optionee, to extend the term so that the term as amended is
not more than ten years from the date of grant. However, in
the case of an 150 granted to an individual who, at the time
of grant, owns stock comprising more than 10 percent of the
total combined voting power of all classes of stock of the
Company or its Affiliate ("Ten Percent Stockholder"), such
period shall not exceed five years from the date of grant.
(b) Option Price. The purchase price of each share of
Common Stock subject to each option granted pursuant to the
Plan shall be determined by the Committee at the time the
option is granted and, in the case of ISOs, shall not be
less than 100% of the fair market value of a share of Common
Stock on the date the option is granted, as determined by
the Committee. In the case of an 150 granted to a Ten
Percent Stockholder, the option price shall not be less than
110% of the fair market value of a share of Common Stock on
the date the option is granted. The purchase price of each
share of Common Stock subject to a Nonqualified Option under
this Plan shall be determined by the Committee prior to
granting the option. The Committee shall set the purchase
price for each share subject to a Nonqualified Option at
such price as the Committee in its sole discretion shall
determine, provided that the purchase price of each share of
Common Stock subject to a Nonqualified Option shall not be
greater than the fair market value of a share of Common
Stock on the date the option is granted as determined by the
Committee.
For all purposes under the Plan, the fair market value of a
share of Common Stock on a particular date shall be equal to the
average of the reported high and low bid prices of the Common
Stock for the preceding ten (10) days. In the event the Common
Stock is not publicly traded at the time a determination of its
value is required to be made hereunder, the determination of its
fair market value shall be made by the Committee in such manner
as it deems appropriate.
(c) Exercise Period. The Committee may provide in the
option agreement that an option may be exercised in whole,
immediately, or is to be exercisable in increments. However,
no portion of any option may be exercisable by an Optionee
prior to the approval of the Plan by the stockholders of the
Company.
<PAGE>
(d) Procedure for Exercise. Options shall be exercised by
the delivery of written notice to the Secretary of the
Company setting forth the number of shares with respect to
which the option is being exercised. Such notice shall be
accompanied by cash or cashier's check, bank draft, postal
or express money order payable to the order of the Company,
or at the option of the Committee, in Common Stock
theretofore owned by such Optionee (or any combination of
cash and Common Stock). Notice may also be delivered by
telefax provided that the purchase price of such shares is
delivered to the Company via wire transfer on the same day
the telefax is received by the Company. The notice shall
specify the address to which the certificates for such
shares are to be mailed. An Optionee shall be deemed to be a
stockholder with respect to shares covered by an option on
the date the Company receives such written notice and such
option payment.
As promptly as practicable alter receipt of such written
notification and payment, the Company shall deliver to the
Optionee certificates for the number of shares with respect to
which such option has been so exercised, issued in the Optionee's
name or such other name as Optionee directs; provided, however,
that such delivery shall be deemed effected for all purposes when
a stock transfer agent of the Company shall have deposited such
certificates in the United States mall, addressed to the Optionee
at the address specified pursuant to this Section 6(d).
(e) Termination of Employment. If an employee consultant
to whom an option is granted ceases to be employed by the
Company for any reason other than death or disability or if
a director to whom an option is granted ceases to serve on
the Board for any reason other than death or disability, any
option which is exercisable on the date of such termination
of employment or cessation of service from the Board shall
expire ninety (90) days following such date of such
termination of employment or cessation of service from the
Board.
(f) Disability or Death of Optionee. In the event of the
determination of disability or death of an Optionee under
the Plan while he is employed by the Company or while he
serves on the Board, the options previously granted to him
may be exercised (to the extent he would have been entitled
to do so at the date of the determination of disability or
death) at any time and from time to time, within a three-
month period alter such determination of disability or
death, by the former employee, director or consultant, the
guardian of his estate, the executor or administrator of his
estate or by the person or persons to whom his rights under
the option shall pass by will or the laws of descent and
distribution, but in no event may the option be exercised
alter its expiration under the terms of the option
agreement. An Optionee shall be deemed to be disabled if, in
the opinion of a physician selected by the Committee, he is
incapable of performing services for the Company of the kind
he was performing at the time the disability occurred by
reason of any medically determinable physical or mental
<PAGE>
impairment which can be expected to result in death or to be
of long, continued and indefinite duration. The date of
determination of disability for purposes hereof shall be the
date of such determination by such physician. The Committee,
in its sole discretion, may allow an Optionee to exercise
all or a portion of the Options granted but unexercised for
a longer period than three months alter disability or death.
(g) Assignability. An option shall not be assignable or
otherwise transferable except by will or by the laws of
descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act, as amended, or the
rules thereunder. During the lifetime of an Optionee, an
option shall be exercisable only by him.
(h) Incentive Stock Options. Each option agreement may
contain such terms and provisions as the Committee may
determine to be necessary or desirable in order to qualify
an option designated as an incentive stock option.
(i) No Rights as Stockholder. No Optionee shall have any
rights as a stockholder with respect to shares covered by an
option until the option is exercised by the written notice
and accompanied by payment as provided in clause (d) above.
(j) Extraordinary Corporate Transactions. The existence of
outstanding options shall not affect in any way the right or
power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the
Company's capital structure or its business, or any merger
or consolidation of the Company, or any issuance of Common
Stock or other securities or subscription rights thereto, or
any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise. If
the Company recapitalizes or otherwise changes its capital
structure, or merges, consolidates, sells all of its assets
or dissolves (each of the foregoing a fundamental Change"),
then thereafter upon any exercise of an option theretofore
granted, the Optionee shall be entitled to purchase under
such option, in lieu of the number of shares of Common Stock
as to which option shall then be exercisable, the number and
class of shares of stock and securities to which the
Optionee would have been entitled pursuant to the terms of
the Fundamental Change if, immediately prior to such
Fundamental Change, the Optionee had been the holder of
record of the number of shares of Common Stock as to which
such option is then exercisable. If (i) the Company shall
not be the surviving entity in any merger or consolidation
(or survives only as a subsidiary of another entity), (ii)
the Company sells all or substantially all of its assets to
any other person or entity (other than a wholly-owned
<PAGE>
subsidiary), (iii) any person or entity (including a "group"
as contemplated by Section 13(d) (3) of the Exchange Act)
acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the
outstanding shares of Common Stock, (iv) the Company is to
be dissolved and liquidated, or (v) as a result of or in
connection with a contested election of directors, the
persons who were directors of the Company before such
election shall cease to constitute a majority of the Board
(each such event in clauses (i) through (v) above is
referred to herein as a "Corporate Change"), the Committee,
in its sole discretion, may accelerate the time at which all
or a portion of an Optionee's Options may be exercised for a
limited period of time before or alter a specified date.
(k) Changes in Company's Capital Structure. If the
outstanding shares of Common Stock or other securities of
the Company, or both, for which the option is then
exercisable shall at any time be changed or exchanged by
declaration of a stock dividend, stock split, or combination
of shares, the number and kind of shares of Common Stock or
other securities which are subject to the Plan or subject to
any options theretofore granted, and the option prices,
shall be appropriately and equitably adjusted so as to
maintain the proportionate number of shares or other
securities without changing the aggregate option price.
(l) Acceleration of Options. Except as hereinbefore
expressly provided, (i) the issuance by the Company of
shares of stock of any class of securities convertible into
shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares
or obligations of the Company convertible into such shares
or other securities, (ii) the payment of a dividend in
property other than Common Stock or (iii) the occurrence of
any similar transaction, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares
of Common Stock subject to options theretofore granted or
the purchase price per share, unless the Committee shall
determine in its sole discretion that an adjustment is
necessary to provide equitable treatment to Optionee.
Notwithstanding anything to the contrary contained in this
Plan, the Committee may in its sole discretion accelerate
the time at which any option may be exercised, including,
but not limited to, upon the occurrence of the events
specified in this Section 6, and is authorized at any time
(with the consent of the Optionee) to purchase options
pursuant to Section 7.
<PAGE>
(m) Stockholders Agreement. The Committee shall provide
in the option agreement that prior to receiving any shares
of Common Stock or other securities on the exercise of the
option, the Optionee (or the Optionee's representative upon
the Optionee's death) shall be required to execute the
Company's Stockholder's Agreement.
SECTION 7. Relinquishment of Options.
(a) The Committee, in granting options hereunder, shall
have discretion to determine whether or not options shall
include a right of relinquishment as hereinafter provided by
this Section 7. The Committee shall also have discretion to
determine whether an option agreement evidencing an option
initially granted by the Committee without a right of
relinquishment shall be amended or supplemented to include
such a right of relinquishment. Neither the Committee nor
the Company shall be under any obligation or incur any
liability to any person by reason of the Committee's refusal
to grant or include a right of relinquishment in any option
granted hereunder or in any option agreement evidencing the
same. Subject to the Committee's determination in any case
that the grant by it of a right of relinquishment is
consistent with Section 1 hereof, any option granted under
this Plan, and the option agreement evidencing such option,
may provide:
i) That the Optionee, or his heirs or other legal
representatives to the extent entitled to exercise the
option under the terms thereof, in lieu of purchasing the
entire number of shares subject to purchase thereunder,
shall have the right to relinquish all or any part of the
then unexercised portion of the option (to the extent then
exercisable) for a number of shares of Common Stock, for an
amount of cash or for a combination of Common Stock and cash
to be determined in accordance with the following provisions
of this clause (i):
a) The written notice of exercise of such right
of relinquishment shall state the percentage, if any,
of the Appreciated Value (as defined below) that the
Optionee elects to receive in cash ("Cash Percentage"),
such Cash Percentage to be in increments of 10% of such
Appreciated Value up to 100% thereof;
b) The number of shares of Common Stock, if any,
issuable pursuant to such relinquishment shall be the
number of such shares, rounded to the next greater
number of fall shares, as shall be equal to the
quotient obtained by dividing (A) the difference
between (I) the Appreciated Value and (II) the result
obtained by multiplying the Appreciated Value and the
Cash Percentage by (B) the then current market value
per share of Common Stock;
<PAGE>
c) The amount of cash payable pursuant to such
relinquishment shall be an amount equal to the
Appreciated Value less the aggregate current market
value of the Common Stock issued pursuant to such
relinquishment, if any, which cash shall be paid by the
Company subject to such conditions as are deemed
advisable by the Committee to permit compliance by the
Company with the withholding provisions applicable to
employers under the Code and any applicable state
income tax laws;
d) For the purpose of this clause (i),
"Appreciated Value" means the excess of (x) the
aggregate current market value of the shares of Common
Stock covered by the option or the portion thereof to
be relinquished over (y) the aggregate purchase price
for such shares specified in such option;
ii) That such right of relinquishment may be exercised
only upon receipt by the Company of a written notice of such
relinquishment which shall be dated the date of election to
make such relinquishment; and that, for the purposes of this
Plan, such date of election shall be deemed to be the date
when such notice is sent by registered or certified mall, or
when receipt is acknowledged by the Company, if mailed by
other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the
sender or otherwise delivered; provided, that, in the event
the method just described for determining such date of
election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules
and regulations adopted by the Securities and Exchange
Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the
operation of Section 16(b) of the Exchange Act in whole or
in part any such relinquishment transaction, then such date
of election shall be determined by such other method
consistent with Section 16(b) of the Exchange Act or the
rules and regulations thereunder as the Committee shall in
its discretion select and apply;
iii) That the "current market value" of a share of
Common Stock on a particular date shall be deemed to be its
fair market value on that date as determined in accordance
with Paragraph 6(b); and
iv) That the option, or any portion thereof, may be
relinquished only to the extent that (A) it is exercisable
on the date written notice of relinquishment is received by
the Company, (B) the Committee, subject to the provisions of
Paragraph 7(b), shall consent to the election of the holder
to relinquish such option in whole or in part for cash as
set forth in such written notice of relinquishment and (C)
the holder of such option pays, or makes provision
satisfactory to the Company for the payment of, any taxes
which the Company is obligated to collect with respect to
such relinquishment.
<PAGE>
(b) The Committee shall have sole discretion to consent to
or disapprove, and neither the Committee nor the Company
shall be under any liability by reason of the Committee's
disapproval of, any election by a holder of an option to
relinquish such option in whole or in part for cash as
provided in Paragraph 7(a), except that no such consent to
or approval of a relinquishment for cash shall be required
under the following circumstances:
i) Each Optionee who is subject to the short-swing
profits recapture provisions of Section 16(b) of the
Exchange Act ("Covered Optionee") shall be entitled to
receive payment only in cash when options are relinquished
during any window period commencing on the third business
day following the Company's release of a quarterly or annual
summary statement of sales and earnings and ending on the
twelfth business day following such release ('Window
Period"); provided, however, that payment shall be so made
in cash only in respect of 50% of the options covered by any
stock option agreement.
ii) A Covered Optionee shall be entitled to receive
payment only in shares of Common Stock upon (a) the
relinquishment of options outside a Window Period and (b)
the relinquishment of options during a Window Period once
such Optionee has received payment in cash for the
relinquishment of 50% of the options covered by any stock
option agreement.
(c) The Committee, in granting options hereunder, shall
have discretion to determine the terms upon which such
options shall be relinquishable, subject to the applicable
provisions of this Plan, and including such provisions as
are deemed advisable to permit the exemption from the
operation from Section 16(b) of the Exchange Act of any such
relinquishment transaction, and options outstanding, and
option agreements evidencing such options, may be amended,
if necessary, to permit such exemption. If an option is
relinquished, such option shall be deemed to have been
exercised to the extent of the number of shares of Common
Stock covered by the option or part thereof which is
relinquished, and no further options may be granted covering
such shares of Common Stock.
(d) Neither any option nor any right to relinquish the same
to the Company as contemplated by this Paragraph 7 shall be
assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code or Title I
of the Employee Retirement Income Security Act, as amended,
A or the rules thereunder.
<PAGE>
(e) Except as provided in Section 7(f) below, no right of
relinquishment may be exercised within the first six months
alter the initial award of any Option containing, or the
amendment or supplementation of any existing option
agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised alter the
initial award of any option containing, or the amendment or
supplementation of any existing option agreement adding the
right of relinquishment, unless such right of relinquishment
is effective upon the Optionee's death, disability or
termination of his relationship with the Company and the
payment upon the exercise of such right is only in cash.
SECTION 8. Amendments or Termination. The Board may
amend, alter or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of any
Optionee, without his consent, under any option theretofore
granted, or which, without the approval of the stockholders,
would: (i) except as is provided in Section 6(k) of the Plan,
increase the total number of shares reserved for the purposes of
the Plan, (il) change the class of persons eligible to
participate in the Plan as provided in Section 4 of the Plan,
(iii) extend the applicable maximum option period provided for in
Section 6(a) of the Plan, (iv) extend the expiration date of this
Plan set forth in Section 14 of the Plan, (v) except as provided
in Section 6(k) of the Plan, decrease to any extent the option
price of any option granted under the Plan or (vi) withdraw the
administration of the Plan from the Committee.
SECTION 9. Compliance With Other Laws and Regulations.
The Plan, the grant and exercise of options thereunder, and the
obligation of the Company to sell and deliver shares under such
options, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any
governmental or regulatory agency as may be required. The
Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to the completion
of any registration or qualification of such shares under any
federal or state law or issuance of any ruling or regulation of
any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable. Any
adjustments provided for in subparagraphs 6(j), (k) and (l) shall
be subject to any shareholder action required by Delaware
corporate law.
SECTION 10. Purchase for Investment. Unless the options
and shares of Common Stock covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary,
each person exercising an option under this Plan may be required
by the Company to give a representation in writing that he is
acquiring such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution
of any part thereof.
<PAGE>
SECTION 11. Taxes.
(a) The Company may make such provisions as it may deem
appropriate for the withholding of any taxes which it
determines is required in connection with any options
granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11(a), any
Optionee may pay all or any portion of the taxes required to
be withheld by the Company or paid by him in connection with
the exercise of a nonqualified option by electing to have
the Company withhold shares of Common Stock, or by
delivering previously owned shares of Common Stock, having a
fair market value, determined in accordance with Paragraph
6(b), equal to the amount required to be withheld or paid.
An Optionee must make the foregoing election on or before
the date that the amount of tax to be withheld is
determined ("Tax Date'). An such elections are irrevocable
and subject to disapproval by the Committee.
SECTION 12. Replacement of Options. The Committee from
time to time may permit an Optionee under the Plan to surrender
for cancellation any unexercised outstanding option and receive
from the Company in exchange an option for such number of shares
of Common Stock as may be designated by the Committee. The
Committee may, with the consent of the person entitled to
exercise any outstanding option, amend such option, including
reducing the exercise price of any option to not less than the
fair market value of the Common Stock at the time of the
amendment and extending the term thereof.
SECTION 13. No Right to Company Employment. Nothing in
this Plan, or as a result of any option granted pursuant to this
Plan, shall confer on any individual any right to continue in the
employ of the Company or interfere in any way with the right of
the Company to terminate an individual's employment at any time.
The option agreements may contain such provisions as the
Committee may approve with reference to the effect of approved
leaves of absence.
SECTION 14. Liability of Company. The Company and any
Affiliate which is in existence, or hereafter comes into
existence, shall not be liable to an Optionee or other persons as
to:
(a) The Non-issuance of Shares. The non-issuance or sale
of shares as to which the Company has been unable to obtain
from any regulatory body having jurisdiction the authority
deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but
not realized, by any Optionee or other person due to the
exercise of any option granted hereunder.
<PAGE>
SECTION 15. Effectiveness and Expiration of Plan. The
Plan shall be effective on the date the Board adopts the Plan. If
the stockholders of the Company fail to approve the Plan within
twelve months of the date the Board approved the Plan, the Plan
shall terminate and all options previously granted under the Plan
shall become void and of no effect. The Plan shall expire ten
years after the date the Board approves the Plan and thereafter
no option shall be granted pursuant to the Plan.
SECTION 16. Non-Exclusivity of the Plan. Neither the
adoption by the Board, nor the submission of the Plan to the
stockholders of the Company for approval, shall be construed as
creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including
without limitation, the granting of restricted stock or stock
options otherwise than under the Plan, and such arrangements may
be either generally applicable or applicable only in specific
cases.
SECTION 17. Governing Law. This Plan and any agreements
hereunder shall be interpreted and construed in accordance with
the laws of the State of New York and applicable federal law.
SECTION 18. Cashless Exercise. The Committee also may
allow cashless exercises as permitted under Federal Reserve
Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and
applicable law. The proceeds from such a payment shall be added
to the general funds of the Company and shall be used for general
corporate purposes.
