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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TRIDEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Tridex Corporation
61 Wilton Road
Westport, Connecticut 06880
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1998
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Tridex Corporation (the "Company"), a Connecticut
corporation, will be held on Wednesday, May 27, 1998, at 10:00 am Eastern
Daylight Savings Time, at The Inn at Longshore, 260 Compo Road South, Westport,
Connecticut for the following purposes, all of which are more completely set
forth in the accompanying Proxy Statement:
(1) To consider and act upon a proposal to elect five Directors to
serve until the next Annual Meeting of Shareholders or until
their successors have been duly elected and qualified;
(2) To consider and act upon a proposal to amend the 1997 Long
Term Incentive Plan (the "1997 Plan") to increase the number
of shares of common stock of Tridex Corporation authorized for
issuance under the plan from 600,000 to 1,000,000 shares.
(3) To consider and act upon a proposal to ratify the
establishment by the Company of the 1998 Non-Executive Long
Term Incentive Plan.
(4) To consider and act upon a proposal to authorize the
issuance of warrants to purchase 350,931 shares of common
stock of the Company.
(5) To consider and act upon a proposal to ratify the selection
of Price Waterhouse LLP, Certified Public Accountants, as
independent public accountants of the Company for the year
ending December 31, 1998; and
(6) To receive the reports of Officers (without taking any action
thereon) and transact such other business as may legally come
before the Meeting.
Shareholders of record at the close of business on April 20, 1998 are
entitled to notice of and to vote at the Meeting. The transfer books will not be
closed for the Meeting.
The Company's Proxy Statement, Form of Proxy and Annual Report for the
year ended December 31, 1997 are submitted herewith.
By Order of the Board of Directors,
George T. Crandall
Secretary
Westport, Connecticut
May 7, 1998
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, THE COMPANY REQUESTS THAT YOU
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY. A RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT
PURPOSE. IF YOU DO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION IS APPRECIATED.
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(Left Blank Intentionally)
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Tridex Corporation
61 Wilton Road
Westport, Connecticut 06880
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
SOLICITATION AND REVOCATION OF PROXY
The following information concerning the enclosed proxy and matters to
be acted upon under the authority of such proxy is furnished to shareholders of
Tridex Corporation (the "Company") in connection with the solicitation by the
Company of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Wednesday, May 27, 1998.
Any shareholder that executes and returns the enclosed proxy has the
power to revoke the same anytime prior to it being voted.
The shares represented by the proxy will be voted unless the proxy is
mutilated or otherwise received in such form or at such time as to render it not
votable. The proxy is in ballot form so that a specification may be made to
grant or withhold authority to vote for the election of Directors and to
indicate separate approval or disapproval as to each of the other matters
presented to shareholders. All of the proposals will be presented by the Board
of Directors. The shares represented by the proxy will be voted for the election
of each of the Directors named thereon, unless authority to do so is withheld.
With respect to each proposal presented to shareholders other than the election
of Directors, the shares represented by the proxy will be voted in accordance
with the specifications made. Where a choice is not so specified, the shares
represented by the proxy will be voted "FOR" the proposals. The Proxy Committee
consists of Messrs. Seth M. Lukash, Paul J. Dunphy and Thomas R. Schwarz. A
majority of the shares entitled to vote, present in person or represented by
proxy, will constitute a quorum to transact business at the Annual Meeting. A
majority of the votes cast is required for the approval of the proposals to be
considered by the shareholders at the Annual Meeting.
This Proxy Statement is being mailed to shareholders on or about
May 7, 1998.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the close of business on April 20, 1998, the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 6,351,124 shares of common stock issued and outstanding.
Each share entitles the holder to cast one vote on each matter submitted for
shareholder vote at the Annual Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as to the beneficial
ownership of the Company's common stock as of April 20, 1998 for each person who
is known by the Company to own beneficially more than five percent of the
Company's issued and outstanding common stock, each person who is, or was,
as of December 31, 1997, a Director, a nominee for Director, or an individual
named in the Summary Compensation Table, and all Directors and Executive
Officers of the Company as a group. The persons named in such table have
furnished the information set forth opposite their respective names:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Owneship(1) Class(2)
- ---------------------------------------------------- -------------------- ----------
Management Beneficial Owners
<S> <C> <C>
Seth M. Lukash ..................................... 607,974 (3) 9.5%
Alvin Lukash ....................................... 57,136 (4) *
Graham Y. Tanaka ................................... 96,899 (5) 1.5%
Paul J. Dunphy ..................................... 45,833 (6) *
Thomas R Schwarz ................................... 10,833 (6) *
Dennis J. Lewis .................................... 147,514 (7) 2.3%
Gary H. German ..................................... 87,256 (8) 1.4%
Paul C. Wolf ....................................... 79,916 (8) 1.3%
George T. Crandall ................................. 43,667 (9) *
All Directors and Executive Officers
as a group (11 persons) .......................... 1,143,225 (10) 17.7%
Other Beneficial Owners
Paul J. Smith,
2214 Hogan Court, Charlotte, NC 28270............. 714,000 11.2%
Massachusetts Mutual Life Insurance Company &
Related Parties, 1295 State Street,
Springfield, MA 01111............................. 285,714(11) 4.5%
Dimensional Fund Advisors, Inc.,
1299 Ocean Avenue, Santa Monica, CA 90401......... 338,900(12) 5.3%
</TABLE>
(1) Except as otherwise indicated, each of the persons named in the table has
sole voting power and sole investment power with respect to the shares set
forth opposite his name.
(2) An asterisk denotes beneficial ownership of less than 1%.
(3) Includes 53,803 shares subject to an option granted to Seth M. Lukash by
Alvin Lukash, which expires on December 31, 1998, and 26,666 shares
exercisable under the 1997 Plan. Mr. Lukash's address is care of the
Company at 61 Wilton Road, Westport, CT 06880.
(4) Includes 53,803 shares subject to an option granted to Seth M. Lukash by
Alvin Lukash, which expires on December 31, 1998, and 3,333 shares
exercisable under the 1997 Plan. Mr. Lukash's address is care of the
Company at 61 Wilton Road, Westport, CT 06880.
(5) Includes 2,000 shares held of record by Mr. Tanaka's sons, and 3,333
shares exercisable under the Company's Non-employee Directors' Stock Plan
(the "Directors' Plan").
(6) Includes 3,333 shares exercisable under the Company's Non-employee
Director's Stock Plan.
(7) Includes 25,000 shares exercisable under the 1997 Plan.
(8) Includes 15,000 shares exercisable under the 1997 Plan.
(9) Includes 11,666 shares exercisable under the 1997 Plan.
(10) Includes 106,665 shares exercisable under the 1997 Plan and 9,999 shares
exercisable under the Directors' Plan.
(11) On April 17, 1997, the Company issued and sold 285,714 shares of common
stock at $7.00 per share to Massachusetts Mutual Life Insurance Company,
MassMutual Corporate Investors, MassMutual Participation Investors and
MassMutual Corporate Value Partners Limited (the "MassMutual
Investors"). As set forth in this Proxy Statement under "Approval of
Issuance of Warrants," the Company proposes to issue to such
investors, upon approval by the shareholders at the Annual Meeting,
warrants to purchase an additional 350,931 shares of common stock,
exercisable at $7.00 per share from April 17, 1999 through April 17,
2007. Although these investors do not at this time beneficially own in
the aggregate more than five percent of the Company's common stock, if the
shareholders approve the issuance of the warrants, the MassMutual
Investors in the aggregate would, as of February 18, 1999, beneficially
own approximately 9.5% of the Company's common stock.
(12) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 338,900 shares of Tridex
Corporation stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group, Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
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Compliance with Section 16(a).
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and Executive Officers and persons who beneficially own more
than 10% of a registered class of the Company's equity securities ("10% Owners")
to file with the Securities and Exchange Commission ("SEC") and the Nasdaq
Stock Market reports of ownership and reports of changes in ownership
of common stock and other equity securities of the Company. Directors, Executive
Officers and 10% Owners are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, or written representations that no other
reports were required for those persons, the Company believes that, during the
fiscal year ended December 31, 1997, all Section 16(a) filing requirements
applicable to Directors, Executive Officers and 10% Owners were complied with,
except that Seth Lukash filed one Form 5 seven days late, Alvin Lukash filed one
Form 4 three days late and Mr. Tanaka file one Form 4 one day late.
ELECTION OF DIRECTORS
At the Annual Meeting, five persons are to be elected to hold office as
Directors, to serve until the next Annual Meeting or until their successors are
duly elected and qualified. In the absence of instructions to the contrary, the
persons named in the enclosed form of proxy as members of the Proxy Committee
will vote such proxy "FOR" fixing the number of Directors at five and the
election of the five nominees named below. Should any of the nominees become
unavailable, which is not anticipated, it is intended that proxies will be voted
for the election of such other person as the Board of Directors may recommend in
place of such nominee.
Seth M. Lukash
Paul J. Dunphy
Dennis J. Lewis
Graham Y. Tanaka
Thomas R. Schwarz
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
SETH M. LUKASH, 51, has been a senior executive officer of the Company
since 1977 and has been a Director since 1979. He has served as Chairman of the
Board of Directors of the Company since November 1988, Chief Executive Officer
since August 1987 and President and Chief Operating Officer since June 1989. Mr.
Lukash previously served as President of the Company from September 1983 to
August 1988 and as Chief Operating Officer from September 1983 to August 1987.
Mr. Lukash is the son of Alvin Lukash, Director Emeritus of the Company.
PAUL J. DUNPHY, 78, has been a Director of the Company since 1989. Mr.
Dunphy has been a management consultant from 1988 until the present. Mr. Dunphy
was Chairman of the Board, Chief Executive Officer and President of Towle
Manufacturing Company, from 1985 through 1988 and was Executive Vice President
of Anchor Hocking, a glass and metal manufacturer, from 1970 through 1984. Mr.
Dunphy is a Director of Midwest Fabricating Co. and Four Johns Corporation. He
also is a member of the Board of Trustees of Mt. Ida College, the President's
Advisory Council of Bentley College and the Executive Council for Ohio
University.
GRAHAM Y. TANAKA, 50, has been a Director of the Company since 1988.
Mr. Tanaka has been President of Tanaka Capital Management, Inc., an investment
management firm, since 1986. From 1980 to 1986, Mr. Tanaka served as Chairman of
Milbank, Tanaka & Associates. Mr. Tanaka is a director of TransAct Technologies
Incorporated ("TransAct"), a manufacturer of transaction based printers which
was a subsidiary of the Company through March 31, 1997. Mr. Tanaka is also a
member of the Board of Directors of the Japanese American National Museum.
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THOMAS R. SCHWARZ, 61, has been a Director of the Company since 1995.
Mr. Schwarz was Chairman of Grossman's Inc., a retailer of building materials,
from 1990 to 1994, when he retired. Mr. Schwarz was President, Chief Operating
Officer and a director of Dunkin' Donuts Incorporated, a food service company,
from 1980 to 1990. He is the Chairman of the Board of Directors of TransAct and
a director of Lebhar-Friedman Publishing Company and Foilmark, Inc., a
manufacturer of hot stamping equipment and supplies. Mr. Schwarz was a board
member of The Timberland Company, an overseer of WGBH Educational Foundation,
Inc. (New England Public Broadcasting), the David Littman Foundation, The Walnut
Hill School and co-chairman of the Inner City Scholarship Fund.
DENNIS J. LEWIS, 43, has been a Director of the Company since 1997 and
has been President of Ultimate Technology Corporation ("Ultimate") since its
acquisition by the Company in 1993. Prior to the acquisition, Mr. Lewis served
as Ultimate's President, Chief Executive Officer and Director since 1988. Mr.
Lewis founded Serv Tech, Inc. and served as its Chairman and Chief Executive
Officer from 1981 to 1983. Mr. Lewis has held senior management positions
related to the sales, engineering and service of computer peripherals with Add
Electronics, RG Engineering, Naum Brothers and Digital Equipment Corporation.
INFORMATION CONCERNING NON-DIRECTOR EXECUTIVE OFFICERS
DANIEL A. BERGERON, 38, has been a Vice President of the Company since
March 19, 1998 and Chief Financial Officer of the Company since April 1, 1998.
Prior to joining Tridex, Mr. Bergeron served as Vice President and Chief
Financial Officer of Dorr-Oliver Incorporated, an international manufacturing
and engineering company. Prior to 1987, Mr. Bergeron held various financial
management positions with Akzo America Inc. and United Brands Company.
GEORGE T. CRANDALL, 51, has been Vice President of the Company since
1992, Treasurer since 1990 and Corporate Controller since 1989. Prior to joining
Tridex in 1988, Mr. Crandall served as an independent consultant at Northeast
Manufacturing Companies, Inc. from 1987 until 1988. From 1979 through 1987, Mr.
Crandall was Assistant Corporate Controller and Assistant Secretary of Revere
Copper and Brass Incorporated.
THOMAS F. CURTIN, JR., 40, has been an executive officer of the Company
since May 1997 and Vice President of Human Resources since April 1995. Prior to
joining Tridex as Director of Human Resources in 1994, Mr. Curtin held human
resource management positions with Lone Star Industries, Berol Corporation, and
Brockway Glass Company.
GARY GERMAN, 43, has been Vice President of Sales and Marketing of
Ultimate since 1992. He joined Ultimate in 1991 as Director of Sales and
Marketing. Mr. German has held senior sales positions with Apollo Computer,
Prime Computer and MIPS Computer Systems.
PAUL WOLF, 37, has been Vice President of Engineering of Ultimate since
1993. He joined Ultimate in 1990 as Director of Engineering. Mr. Wolf has
completed quality designs for companies such as Hughes Network Systems, Federal
Express and Tokheim Security Pacific.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to 1997, the Company made a personal loan to Seth M. Lukash,
Chairman of the Board, President, Chief Executive Officer, Chief Operating
Officer and a Director of the Company. During 1997, the highest outstanding
balance of the loan to Seth M. Lukash was $125,000. The loan is evidenced by a
demand note and bears interest at an annual rate equal to the rate charged by
the Company's senior lender on its line of credit. The Company's Board of
Directors has agreed to defer payment of the principal balance of the loan until
after December 31, 1998. Interest on the loan is paid quarterly. As of April 20,
1998 the principal amount outstanding under the loan was $125,000.
On March 14, 1997, the Company accepted a note in the amount of
$801,375.00 from Seth M. Lukash in payment of the exercise price of options and
warrants. The note is a full recourse note, due June 30, 1998, bearing interest
payable quarterly at 6.08% and secured by a pledge of the shares acquired
through the exercise of the options and warrants.
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Alvin Lukash and the Company entered into a Retirement Agreement as of
December 31, 1995. Pursuant to the agreement, as amended in 1996, the Company
provides Mr. Lukash with a lifetime retirement benefit of $100,000 per year, a
$400 per month automobile allowance, an annual life insurance premium ($2,625 in
1997) and health insurance coverage for Mr. Lukash under the Company's health
insurance plan. If a change of control of the Company occurs, the Company will
establish a trust and immediately deposit funds with the trustee equal to the
present value of the remaining retirement benefit.
On July 19, 1995, the Board of Directors of the Company appointed Mr.
Alvin Lukash to the position of Director Emeritus. In that capacity, Mr. Lukash
is entitled to attend and participate in all meetings of the Board of Directors,
but he is not entitled to vote as a member of the Board. Mr. Lukash is not
compensated for his services as a Director Emeritus, but is reimbursed for
expenses incurred to attend Board of Directors meetings.
Pursuant to a Corporate Services Agreement (the "Services Agreement")
between the Company and TransAct, the Company provided to TransAct certain
services, including certain employee benefit administration, human resource and
related services, administrative services, risk management, preparation of tax
returns, and certain other services. The Services Agreement provided for a
transition by TransAct to independent corporate administrative and financial
staffing. During 1997, certain employees of the Company and TransAct were made
available for stated percentages of their working time to TransAct and the
Company, respectively. TransAct paid the Company approximately $103,000 during
1997 for the services of the Company's designated employees, net of the
Company's payments to TransAct. The Services Agreement expired on December 31,
1997.
The Company and TransAct entered into a Tax Sharing Agreement (the "Tax
Agreement") which provides the terms under which TransAct is to be included
in the Company's consolidated federal income tax return. During the period from
August 22, 1996, the date of the initial public offering of 1,322,500 shares of
the common stock of TransAct, until March 31, 1997, for financial accounting
purposes, TransAct has computed for 1996 and for the applicable portion of 1997
its income tax expense or benefit as if it filed separate returns using those
elements of income and expense as reported in TransAct's financial statements.
To the extent that TransAct incurred losses or realized tax credits during 1996,
TransAct paid to Tridex the amount of any tax reduction realized by utilization
those losses or credits in its consolidated income tax return. In addition, at
the time of the utilizing of any existing tax attributes, TransAct paid the
Company the tax benefit obtained by utilizing such tax attributes. Any tax
deficiencies or refunds resulting from amending prior year tax returns or
examinations by the taxing authorities were the responsibility of or inured to
the benefit of TransAct to the extent they related to TransAct or its
predecessor entities. For the year ended December 31, 1997, TransAct paid to the
Company approximately $410,000 under the Tax Agreement.
The Printer Supply Agreement (the "Printer Agreement"), which has an
initial term expiring on December 31, 1999, provides for TransAct to sell to
Ultimate, a subsidiary of the Company, and for Ultimate to purchase from
TransAct, point-of-sale ("POS") printers at discounts from list prices
comparable to discounts historically offered to Ultimate as a subsidiary under
common ownership with TransAct. In consideration for these favorable price
terms, the Printer Agreement requires Ultimate to purchase from TransAct at
least three quarters of its total POS printer requirements. TransAct may, in its
discretion, increase its list prices from time to time, and the prices offered
to Ultimate will reflect the discount rate applied to such increased list
prices. During the year ended December 31, 1997, Ultimate purchased from
TransAct approximately $2,675,000 of POS printers.
The Company and Magnetec, a wholly-owned subsidiary of TransAct,
entered into an agreement regarding the transfer by Magnetec to the Company of
substantially all of the assets used in connection with a line of business
involving the manufacture, marketing and sale of ribbon for use in certain
printers manufactured by TransAct (the "Tridex Ribbon Division"). Under the
agreement, the Company became the owner of the Tridex Ribbon Division and
employs the manufacturing and supervisory personnel required to conduct such
business, and TransAct provides the Company with space within its Wallingford,
Connecticut manufacturing facility and certain support services. In connection
with the transfer of assets, which took place in 1996, the Company canceled
intercompany indebtedness of TransAct to the Company in an amount equal to the
book value of the Ribbon Business on the date of the transfer,
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approximately $197,000. As a monthly fee for the space and support services
provided to the Company for the Tridex Ribbon Division, the Company pays
TransAct an amount equal to the direct and indirect costs incurred by TransAct
to provide the space and render such services, plus certain related costs. For
the year ended December 31, 1997, the Company paid approximately $254,000 to
TransAct for the provision of such space and services.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1997, the Board of Directors held 11 meetings. Each incumbent
Director attended more than 75% of (a) the total number of meetings of the Board
of Directors, and (b) the total number of meetings of all committees of the
Board of Directors on which he served.
The Board of Directors has an Audit Committee, which held 2 meetings
during 1997. The Audit Committee is comprised of Messrs. Paul J. Dunphy
(Chairman), Graham Y. Tanaka and Thomas R. Schwarz. The functions of the
Audit Committee are to participate in the selection and review the findings
of independent public accountants, review internal audit activities, consider
accounting policies selected by management and review internal accounting
controls and such other matters relating to the Company's financial and
accounting practices as such Committee deems appropriate.
The Board of Directors has a Compensation and Stock Option Committee
comprised of Messrs. Thomas R. Schwarz (Chairman), Graham Y. Tanaka and Paul
J. Dunphy, which has the responsibility for approving the compensation
arrangements for senior management of the Company. The Compensation and Stock
Option Committee approves the adoption of any compensation plans in which
Executive Officers and Directors of the Company are eligible to participate,
as well as the granting of stock options or other benefits under such plans
and under the Company's 1997 Plan. The Compensation and Stock Option
Committee held 5 meetings during 1997.
The Board of Directors has a Nominating Committee comprised of
Messrs. Graham Y. Tanaka (Chairman), Paul J. Dunphy and Thomas R. Schwarz.
The Nominating Committee has the responsibility for recommending to the Board
of Directors nominees for election to the Board. The Nominating Committee
will not consider nominees recommended by shareholders. The Nominating
Committee held one meeting during 1997.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
Pursuant to requirements under federal securities laws, the
Compensation and Stock Option Committee of the Company is required to provide a
report on the compensation and benefits provided to the Company's Executive
Officers. The following report describes the function and composition of the
Compensation and Stock Option Committee, sets forth the compensation policies
and goals of the Company, and provides a description of how compensation for
executive officers is determined.
The Compensation and Stock Option Committee
There are three members of the Compensation and Stock Option
Committee, all of whom are outside directors: Thomas R. Schwarz, Chairman,
Graham Y. Tanaka and Paul J. Dunphy. The Compensation and Stock Option
Committee: (a) establishes the general compensation policies of the Company;
(b) approves the hiring and firing of all officers, subsidiary and division
Presidents and all staff reporting directly to the Chief Executive Officer of
the Company; and (c) approves the compensation plans and specific
compensation levels for all Executive Officers, including subsidiary and
division Presidents and all staff reporting directly to the Chief Executive
Officer of the Company, except that the compensation of any employee director
is determined by the full Board based on the recommendation of the
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee also approves the issuance of all options to employees of the
Company and its subsidiaries under the Company's 1997 Plan. The Compensation
and Stock Option Committee met 5 times during the year.
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Compensation Policies and Goals
The primary goals of the Company's compensation policies are to help
retain, motivate and reward management of the Company and its subsidiaries,
while, at the same time, aligning their interests closely with those of the
Company and its shareholders. The Company seeks to attract and retain management
by offering a competitive total compensation package. The Company also believes
it is important to the retention of its management that it provide benefits
which accrue to the benefit of, and provide security to, its management over the
long term. To align the interests of management more closely with those of the
Company as a whole and reward individual initiative and effort, the Company
seeks to promote performance-based compensation where contribution to the
Company as a whole is rewarded. Through the use of performance-based plans that
reward attainment of subsidiary, division or Company goals, the Company seeks to
foster an attitude of teamwork. The Company also believes that the use of equity
ownership is an important tool to ensure that the efforts of management are
consistent with the objectives of its shareholders and through the use of stock
options seeks to promote increased ownership by management of the Company.
The Company and the Compensation and Stock Option Committee have tried
to achieve the above goals utilizing publicly available information regarding
competitive compensation. The Compensation and Stock Option Committee retains an
independent consultant to ensure that compensation for the Company's management
is competitive, meets the above-stated objectives and is consistent for all
members of management of the Company and its subsidiaries.
Compensation Components
At present, the compensation of the executive officers of the Company
consists of a combination of salary, cash bonuses, stock options and
participation in the Company's 401(k) plan, as well as the provision of health
and other insurance benefits typically offered to corporate executives. Several
of the executive officers of the Company's subsidiaries are parties to
employment agreements entered into at the time of the Company's purchase of the
subsidiaries. Several other executive officers are parties to agreements with
the Company that provide for severance payments under certain circumstances.
These agreements are described under "Employment Contracts, Termination of
Employment and Change-In-Control Arrangements" for the officers listed in the
Summary Compensation Table.
Salaries: Base salaries were fixed at the beginning of the year for the
subsequent twelve months based on the Compensation and Stock Option
Committee's assessment of competitive base salaries. For 1997, Seth M.
Lukash, Chairman, President, Chief Executive Officer and Chief Operating
Officer of the Company, earned an annual base salary of $270,000.
Cash Bonuses: The Company maintains an incentive compensation plan for all
salaried employees of the Company and its subsidiaries, including key
executives, which provides for the payment of cash bonuses. Under the plan, an
incentive target, as well as individual goals and objectives, are fixed for each
employee at the beginning of the year and bonuses are paid shortly after the end
of the year. In order to earn any incentive compensation under the plan, certain
financial goals, including gross profit, operating profit, return on capital
employed and sales, must be met. The percentage of the incentive target to be
paid varies based on the level of attainment of the financial goals; the
incentive target to be paid ranges from 50% to 150%, except that for
corporate-based participants, the range is 50% to 100%. Other components of the
award calculation include the individual incentive target, which ranges from 20%
to 50% of base salary for key employees, and a rating of the participants
performance versus individual objectives during the plan period.
For 1997, the goals for Mr. Lukash related principally to the attainment of a
specific operating profit levels and the development of various strategic
acquisition and growth plans. His target bonus was 50% of base salary, which he
achieved for 1997. For 1998, Mr. Lukash's target bonus remains 50% of his base
salary.
For 1997, bonuses in varying amounts were paid to plan participants at the
corporate headquarters, Ultimate and the Tridex Ribbon Division.
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<PAGE>
Stock Options: Under the Company's 1997 Plan, options are granted by the
Compensation and Stock Option Committee. Under guidelines adopted by the
Committee in 1995, eligible employees (certain classifications of salaried
employees of the Company and its subsidiaries who have been determined by the
Committee to qualify for an incentive of equity ownership) are granted an
initial award on their date of hiring for a fixed number of shares depending
on their level, which vests over three years. In each year following the
initial award, eligible employees may be granted an annual award in varying
amounts depending on their level and individual performance.
During 1997, a total of 290,000 options were granted to Executive Officers of
the Company, of which Seth M. Lukash received options for 90,000 shares.
Other Benefit Plans: Executive Officers of the Company may participate in the
nondiscriminatory Tridex Corporation 401(k) Retirement Plan. No decisions with
respect to this plan are made by the Compensation and Stock Option Committee.
The Committee strives to assure that the executive compensation serves
the best interests of the shareholders and the Company.
Compensation and Stock Option Committee
Thomas R. Schwarz, Chairman
Graham Y. Tanaka
Paul J. Dunphy
Summary Compensation Table
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the four most highly compensated Executive Officers
whose compensation exceeded $100,000 for 1997 and for each of the prior two
fiscal years. Daniel A. Bergeron joined the Company as Vice President on March
19, 1998 and became Chief Financial Officer effective April 1, 1998, with an
annualized salary of $150,000. It is anticipated that he will appear in the
following table in subsequent years.
<TABLE>
<CAPTION>
Annual Compensation (1) Long Term Compensation Awards
-------------------------------------- -----------------------------------
Fiscal Stock All Other
Name and Year Salary Bonus (2) Options (3) Compensation (4)
Principal Position Ended ($) ($) (#) ($)
------------------ ----- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Seth M. Lukash 12/31/97 $ 270,000 $ 135,000 90,000 $ 1,055
Chairman of the Board, 12/31/96 $ 270,000 $ 135,000 30,000 $ 0
President, Chief Executive 12/31/95 $ 202,500 $ 0 25,000 $ 338
Officer and Chief Operating
Officer
Dennis J. Lewis 12/31/97 $ 144,905 $ 6,009 75,000 $378,063 (5)
President, Ultimate 12/31/96 $ 144,000 $ 43,200 0 $221,720 (6)
Technology Corporation 12/31/95 $ 108,000 $ 43,200 10,000 $151,774 (6)
Gary H. German 12/31/97 $ 132,598 $ 12,917 45,000 $239,833 (5)
Vice President, Sales and 12/31/96 $ 129,000 $ 32,250 0 $155,976 (6)
Marketing, Ultimate 12/31/95 $ 96,750 $ 32,250 5,000 $ 76,600 (6)
Technology Corporation
Paul C. Wolf 12/31/97 $ 120,713 $ 16,232 45,000 $206,820 (5)
Vice President, Engineering, 12/31/96 $ 117,000 $ 23,400 0 $ 83,800 (6)
Ultimate Technology 12/31/95 $ 87,750 $ 23,400 5,000 $ 41,532 (6)
Corporation
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation (1) Long Term Compensation Awards
-------------------------------------- -----------------------------------
Fiscal Stock All Other
Name and Year Salary Bonus (2) Options (3) Compensation (4)
Principal Position Ended ($) ($) (#) ($)
------------------ ----- --- --- --- ---
<S> <C> <C> <C> <C> <C>
George Crandall 12/31/97 $ 96,667 $ 24,250 35,000 $ 1,522
Vice President, Treasurer 12/31/96 $ 91,667 $ 18,600 3,000 $ 1,447
and Controller, Tridex 12/31/95 $ 66,750 $ 2,226 3,000 $ 1,258
Corporation
</TABLE>
(1) Neither the Chief Executive Officer nor any of the other Executive Officers
named in the table received perquisites or other personal benefits in an
amount which exceeded 10% of their salary plus bonus during 1997.
(2) The bonus amounts are payable pursuant to the Company's discretionary
incentive plan described more fully in the Report of the Compensation and
Stock Option Committee of the Board of Directors.
(3) Options granted in 1997 were granted under the Company's 1997 Long
Term Incentive Plan. Options granted in prior years were granted under
the Company's 1989 Long Term Incentive Plan.
(4) Unless otherwise indicated, these amounts consist entirely of Company
contributions under the Company's 401(k) Plan.
(5) During 1997, Messrs. Lewis, German and Wolf received 23,000 shares, 14,500
shares and 12,500 shares, respectively, of the Company's common stock
under the Stock Incentive Compensation Agreement. See "Employment
Contracts, Termination of Employment and Change-In-Control Arrangements."
Compensation includes $378,063, $238,344 and $205,469, respectively,
applicable to the issuance of such shares under the agreement.
(6) For years ended December 31, 1996 and December 31, 1995, Messrs. Lewis,
German and Wolf earned performance-based compensation under an Employee
Performance Compensation Agreement among Tridex, Ultimate, Messrs. Lewis,
German and Wolf. Mr. Lewis earned $220,765 and $151,317; Mr. German earned
$154,535 and $75,200; and Mr. Wolf earned $82,787 and $40,286
respectively under the agreement.
Option Grants in the Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rate of
Stock Price Appreciation for
Individual Grants Option Term (1)
- -------------------------------------------------------------------------------- ------------------------------
Percent of
Total
Options
Granted to
Employees in Exercise or
Option the Base Price Expiration
Name Granted (2) Year ($/share) Date 5% 10%
- --------------------- ---------------- --------------- ------------ ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Seth M. Lukash 90,000 20.4% $3.09375 5/14/02 $ 44,600 $ 129,200
Dennis J. Lewis 75,000 17.0% $ 2.8125 5/14/07 $ 132,700 $ 336,200
Gary H. German 45,000 10.2% $ 2.8125 5/14/07 $ 79,600 $ 201,700
Paul C. Wolf 45,000 10.2% $ 2.8125 5/14/07 $ 79,600 $ 201,700
George T. Crandall 35,000 7.9% $ 2.8125 5/14/07 $ 61,900 $ 156,900
- ------------------------------------
</TABLE>
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compared
rates of appreciation on the Company's common stock shares over the term of
the options. This hypothetical value is based entirely on assumed annual
growth rates of 5% and 10% in the value of the Company's stock price over
the term of the options granted in 1997. The assumed rates of growth were
selected by the Securities and Exchange Commission for illustration
purposes only, and are not intended to predict future stock prices, which
will depend upon market conditions and the Company's future performance and
prospects. These numbers do not take into account provisions of certain
options providing for termination of the option following termination of
employment, non-transferability or vesting over various periods.
(2) All options were granted under the Company's 1997 Plan. In general, options
granted under the 1997 Plan are at an exercise price equal to 100% of the
fair market value of the common stock on the date of grant, expire ten
years from the date of grant, and become exercisable on the first through
third anniversaries of the date of grant.
Aggregated Option Exercises in 1997 and Values at December 31, 1997
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money
Acquired Value Options At Options At
On Exercise (#) Realized($)(1) December 31, 1997 December 31, 1997 ($) (1)
--------------- -------------- ----------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Seth M. Lukash 105,000 $ 947,250 - 80,000 - $142,500
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money
Acquired Value Options At Options At
On Exercise (#) Realized($)(1) December 31, 1997 December 31, 1997 ($) (1)
--------------- -------------- ----------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis J. Lewis 41,500 $ 390,563 - 75,000 - $154,688
Gary H. German 25,500 $ 239,563 - 45,000 - $ 92,813
Paul C. Wolf 15,000 $ 150,625 - 45,000 - $ 92,813
George T. Crandall 29,300 $ 379,838 - 35,000 - $ 72,188
</TABLE>
(1) The closing price for the Company's common stock as reported by the Nasdaq
Stock Market on December 31, 1997 was $4.875. The Value of Unexercised
In-The-Money Options is calculated on the basis of the difference between
the option price and $4.875 multiplied by the number of shares of common
stock underlying the option.
Employment Contracts, Termination of Employment and Change-In-Control
Arrangements.
Under the terms of an Employment Agreement dated December 2, 1996
between Seth M. Lukash and the Company, Mr. Lukash serves as Chairman and Chief
Executive Officer for a term of two years. Under the terms of the agreement, if
Mr. Lukash's employment is terminated other than for cause or in connection with
a change in control of the Company, Mr. Lukash shall be entitled to continue to
receive his then current annual base salary, group insurance and other benefits
for a period of two years and target bonus for the year of termination, payable
in monthly installments. If Mr. Lukash's employment is terminated, other than
for cause, within one year of a change in control of the Company, Mr. Lukash
shall be entitled to receive his then current annual base salary and annual
target bonus for a period of three years, payable in monthly installments, and
continuation of all benefits. In addition, the Company shall cause immediate
vesting of all options and rights under the Company's stock plans.
Under the terms of separate Employment Agreements dated February 21,
1997 between Ultimate and each of Dennis J. Lewis, Gary H. German and Paul C.
Wolf, if any such officers' employment is terminated, other than for cause,
he shall be entitled to receive, for twelve months following the date of
termination, the salary and benefits which would otherwise have been payable
to him. On March 10, 1997, Mr. Lewis, Mr. German and Mr. Wolf, who were
shareholders of Ultimate prior to the acquisition (collectively the "Ultimate
Officers"), entered into a Stock Incentive Compensation Agreement (the "SIC
Agreement") which terminated the Employee Performance Compensation Agreement
entered into among the Ultimate Officers, Ultimate and the Company in January
1993, when the Company acquired Ultimate. Under the terms of the SIC
Agreement, 100,000 shares of the Company's common stock were issued to the
Ultimate Officers, of which 50,000 shares were pledged to Ultimate (the
"Pledged Stock") pursuant to a pledge agreement, which expires upon the
satisfaction of future service obligations. On January 2, 1998 the Company
released to the Ultimate Officers 25,000 shares from escrow. If the Ultimate
Officers remain employed by Ultimate, the balance of the Pledged Stock will
be released from the pledge on January 2, 1999. If the employment of any of
the Ultimate Officers is terminated for cause or an Ultimate Officer
voluntarily terminates his employment prior to January 3, 1999, the Pledged
Stock with respect to such Ultimate Officer not yet released shall become the
property of Ultimate free and clear of any claims thereto by such Ultimate
Officer.
Under terms of an Employment Agreement with the Company, if George
T. Crandall's employment is terminated, other than for cause, within one year
of a change in control of the Company, the Company shall pay in cash in
monthly installments an amount equal to two times Mr. Crandall's annual base
salary and annual target bonus.
Compensation of Directors
During 1997, each outside Director of the Company received as
compensation for services rendered and expenses incurred (a) $2,000 for each
fiscal quarter served as Director, (b) $750 for each Board of Directors' meeting
attended and (c) $300 for each Board of Directors' Committee meeting attended.
Directors receive $250 for each telephonic meeting, and Chairmen of Committees
receive $600 for each committee meeting attended.
CORPORATE PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
return on the Company's common stock from April 3, 1993 through December 31,
1997 with the CRSP Total Return Index for the NASDAQ Stock Market (US) and
the NASDAQ Computer Manufacturer Stocks. The graph assumes that $100 was
invested on April 3, 1993 in each of the Company's common stock, the CRSP
Total Return Index for the NASDAQ Stock Market (US) and the NASDAQ Computer
Manufacturer Stocks and that all dividends were reinvested.
12
<PAGE>
13
<PAGE>
Comparison of Five Year Cumulative Total Return Among
Tridex Corporation Common Stock,
the CRSP Total Return Index for the NASDAQ Stock Market (US),
and the NASDAQ Computer Manufacturer Stock
<TABLE>
<CAPTION>
4/3/93 4/2/94 4/1/95 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Tridex Corporation Common Stock $ 100.00 $ 86.15 $ 73.81 $ 86.15 $ 158.40 $ 293.50
CRSP Total Return Index for the
NASDAQ Stock Market (US) 100.00 107.94 120.07 155.77 191.59 235.16
NASDAQ Computer Manufacturer Stocks 100.00 97.10 115.95 173.25 232.63 281.61
</TABLE>
APPROVAL OF AMENDMENT TO 1997 LONG TERM INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE 1997
PLAN FROM 600,000 TO 1,000,000
On March 13, 1998, the Board of Directors, subject to shareholder
approval at the Annual Meeting, voted to amend the Tridex Corporation 1997 Long
Term Incentive Plan (the "1997 Plan") to increase the number of shares of common
stock authorized for issuance upon the exercise of options granted under the
1997 plan from 600,000 to 1,000,000. Except for this increase in the number of
shares authorized for issuance, all terms and provisions of the Incentive Plan
would remain identical to the existing Incentive Plan, which was approved by the
shareholders at the annual meeting in May 1997.
RATIFICATION OF ESTABLISHMENT OF
1998 NON-EXECUTIVE LONG-TERM INCENTIVE PLAN
On April 9, 1998, the Board of Directors voted to establish the 1998
Non-Executive Long Term Incentive Plan (the "1998 Plan"). Participation in
the Plan will be limited to employees of the Company or its subsidiaries who
are not directors or officers of the Company or who are becoming employees of
the Company or a subsidiary by virtue of an acquisition. On April 17, 1998,
the date of the acquisition of Progressive Software, Inc. ("Progressive"),
the Company granted options to purchase 195,500 shares of common stock to the
non-officer employees of Progressive, the Company's newest subsidiary, under
the 1998 Plan. Options to purchase 65,000 shares of common stock were awarded
under the 1997 Plan to officers of Progressive. Under applicable rules of the
Nasdaq Stock Market, shareholder approval is not required to establish, or
to approve the options already granted under, the 1998 Plan. However,
shareholder approval of the 1998 Plan is required by the Internal Revenue
Code of 1985, as amended (the "Code"), in order for the options granted under
it to qualify as Incentive Stock Options (as defined below). If the
shareholders do not ratify the establishment of the 1998 Plan, the options
already granted will be Non-Qualified Options (as defined below) rather than
Incentive Stock Options.
14
<PAGE>
SUMMARY OF THE 1998 PLAN
Shares Subject to the 1998 Plan
The 1998 Plan, provides for the grant of awards covering a maximum of
600,000 shares of common stock, subject to adjustment in the event of any
merger, consolidation, recapitalization, stock dividend, stock split or other
similar transaction.
Eligibility
Non-officer employees of the Company and its subsidiaries and employees
who are becoming employees of the Company or a subsidiary as a result of such
subsidiary acquisition by the Company, and who are responsible for or contribute
to the management, growth or profitability of the Company or its subsidiaries
are eligible to be granted awards under the 1998 Plan. Only such employees of
the Company and its subsidiaries are eligible to be granted Incentive Stock
Options (as defined herein). Directors and officers of the Company are not
eligible to participate in the 1998 Plan.
Administration
The 1998 Plan will be administered by a committee (the "Committee")
appointed by and who shall be members of the Board of Directors of the Company,
consisting of not less than two Disinterested Persons (as defined in the 1998
Plan). The Committee shall have full authority to grant awards pursuant to the
1998 Plan.
Types of Awards
Awards under the 1998 Plan may be granted in the form of (i) incentive
stock options ("Options" or "Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii)
non-qualified stock options ("Options" or "Non-Qualified Options"), (iii) shares
of common stock subject to specified restrictions ("Restricted Shares"), (iv)
shares of deferred stock ("Deferred Stock"), (v) stock appreciation rights
("Rights") accompanying Options, (vi) limited stock appreciation rights
("Limited Rights") accompanying Options, (vii) stock purchase rights ("Stock
Purchase Rights"), or (viii) other stock-based awards ("Stock Based Awards").
Except for Incentive Stock Options, there will be no limitation on the aggregate
number of shares of common stock, which can be granted pursuant to such awards
to any one employee. Shares reserved for issuance, but never issued, such as
shares covered by expired or terminated Options, generally will be available for
subsequent awards.
Options
Stock options will have terms determined by the Committee, but no
Incentive Stock Option shall have a term exceeding ten years. Options will
become exercisable in three equal annual installments as determined by the
Committee, except that no Options may be exercised by directors or officers
within six months of the date of grant. The Committee may accelerate the
exercisability of any Option at any time. In addition, Options may be granted
which become immediately exercisable upon a Change of Control (as defined
herein) of the Company.
The Option price will not be less than the Fair Market Value (as defined
in the 1998 Plan), of common stock on the date of grant. An Option may be
exercised in whole or in part by payment of the Option price in cash, note, or,
subject to the approval of the Committee, by payment in already owned shares of
common stock or, in the case of exercise of a Non-Qualified Stock Option,
payment in full or in part may be made in Restricted Shares or Deferred Stock
granted under the 1998 Plan. The Committee, in its sole discretion, may
determine that, upon exercise of such Option, no shares of common stock will be
delivered and the employee will be entitled only to the amount of cash equal to
the "appreciation value" (i.e., the aggregate Fair Market Value of shares
subject to the Option less the aggregate exercise price of the Option).
15
<PAGE>
The Committee may, at any time, offer to purchase an Option for
consideration consisting of cash, common stock, Restricted Shares or Deferred
Stock. The Committee may require that all or a part of shares of common stock to
be issued with respect to the spread value of an exercised Option shall be in
the form of Restricted Shares or Deferred Stock, valued as of the date of
exercise.
Rights and Limited Rights
A Right may be awarded in connection with any Option granted under the
1998 Plan, either at the time of grant (in the case of an Incentive Stock Option
or a Non-Qualified Stock Option) or subsequently (in the case of a Non-Qualified
Option only). A Right will be subject, in general, to the same terms and
conditions as the related Option. Upon exercise, the holder will be entitled to
receive cash, shares of common stock or such combination thereof as the
Committee may determine, in an amount equal to the appreciation value of the
shares with respect to which the Right is exercised. No Right may be exercisable
during the first six months following the date of the award unless the grant has
been approved in accordance with Rule 16b-3, except in the event of death or
disability of the holder.
The 1998 Plan also authorizes the Committee to grant Limited Rights with
respect to all or any portion of the shares of common stock covered by Options
that become exercisable only in the event of a Change in Control of the Company.
Limited Rights shall be paid solely in cash, and the Committee may specify that
the amount paid may be based upon a Change in Control Price (as defined in the
1998 Plan).
When Rights or Limited Rights are exercised, the Option to which they
relate will cease to be exercisable to the extent of the number of shares with
respect to which the Rights and Limited Rights are exercised, but will be deemed
to have been exercised for purposes of determining the number of shares
available for the grant of further awards under the 1998 Plan.
Options, Rights and Limited Rights may not be transferred or assigned
otherwise than by will or the laws of descent and distribution. However, if
compliance of the 1998 Plan with Rule 16b-3 would not be adversely affected,
Options, Rights and Limited Rights may be transferred for no consideration to
members of the holder's immediate family, a trust for the benefit of members of
the holder's immediate family or a partnership whose only partners are members
of the holder's immediate family. If employment is terminated by reason of death
any previously granted Options, Rights and Limited Rights (to the extent
otherwise exercisable) may be exercised until the shorter of either one year
after termination by reason of death or expiration of the term of the Option,
Right or Limited Right (or as the Committee may determine). If employment is
terminated by reason of disability or retirement, any previously granted
Options, Rights or Limited Rights may be exercised (to the extent otherwise
exercisable) until the shorter of ninety days after termination by reason of
disability or retirement or until the expiration of the term of the Option,
Right or Limited Right (or as the Committee may determine); provided, however,
that if the holder dies within such ninety day period (or such other period as
the Committee may determine), the Option, Right or Limited Right may be
exercised, to the extent to which it was exercisable on the date of death, for
the shorter of twelve months from the date of death or the expiration of the
term of the Option, Right or Limited Right. In either case, the Option, Right or
Limited Right is subject to earlier expiration by its terms. If employment is
terminated, other than by reason of death, disability or retirement, an Option,
Right or Limited Right shall terminate. Except in the case of involuntary
termination without cause, the Option, Right or Limited Right shall be
exercisable (to the extent otherwise exercisable) at any time within the shorter
of ninety days after such termination or the balance of the term of the Option,
Right or Limited Right.
Restricted Shares
Awards of Restricted Shares may be alone or in addition to or in tandem
with other awards granted under the 1998 Plan and/or cash awards made outside
the 1998 Plan. A certificate for the number of Restricted Shares will be issued
in the name of the employee, but the certificate will be held in custody by the
Company for the employee's account. The shares of common stock evidenced by such
certificate may not be sold, transferred, otherwise disposed of or pledged
during the period in which the shares are restricted. The Committee shall
determine the factors, including but not limited to the attainment of specified
performance goals, upon which grants of Restricted Shares may be conditioned,
and such factors and awards need not be the same with respect to each recipient.
The purchase price for
16
<PAGE>
Restricted Shares shall be as determined by the Committee and may be zero.
Awards of Restricted Shares must be accepted within sixty days of the date of
grant (or such shorter period as the Committee may specify). Upon termination
for any reason, the Committee may determine whether the Restricted Shares will
vest or be forfeited. Upon expiration of all restrictions, the certificates
evidencing such Restricted Shares shall be delivered by the Company to the
holder.
Deferred Stock
Deferred Stock may be awarded alone, in addition to or in tandem with
other awards granted under the 1998 Plan and/or cash awards made outside the
1998 Plan. The same terms and conditions that apply to grants of Restricted
Shares shall apply to grants of Deferred Stock. Subject to Committee approval, a
holder may elect to further defer receipt of an award for a maximum of twelve
months prior to completion of the deferral period.
Stock Purchase Rights
The Committee has the authority to grant Stock Purchase Rights which may
be used to purchase the common stock of the Company, including but not limited
to Restricted Shares and Deferred Stock at either (i) Fair Market Value on the
date of grant; (ii) fifty percent of Fair Market Value on the date of grant;
(iii) book value on the date of grant; or (iv) par value. Stock Purchase Rights
shall be exercisable as determined by the Committee, for a term not to exceed
thirty days from the date of the grant, provided, however, that for persons
subject to Section 16(b) of the Exchange Act, Stock Purchase Rights shall be
exercisable six months and one day after the date of grant for a period of ten
trading days at a purchase price determined by the Committee.
Other Stock-Based Awards
The Committee may, alone, in addition to or in tandem with Options,
Rights, Restricted Shares, Deferred Stock or Stock Purchase Rights, grant other
awards of stock or awards that are valued based upon the value of stock,
including but not limited to performance shares, convertible preferred stock,
convertible debentures or exchangeable securities. The Committee shall determine
the recipients and timing, amount and payment provisions for these awards,
subject to certain conditions. These awards may not be sold, assigned,
transferred, pledged or otherwise encumbered. In the event of retirement,
disability or death, the Committee may waive any and all remaining restrictions
on such an award. Stock issued as a Stock-Based Award may be issued for no cash
consideration. The price of common stock (including securities convertible into
common stock) purchased pursuant to a Stock-Based Award shall be at least fifty
percent of the Fair Market Value of the common stock on the date of grant.
Amendment or Termination
The Board of Directors may amend, alter or terminate the 1998 Plan;
provided, however, that any amendment that would increase the aggregate number
of shares of common stock that may be issued, decrease the price of an Option to
less than one hundred percent of Fair Market Value, change the pricing terms of
Stock Purchase Rights, extend the maximum Option period or materially modify the
requirements as to eligibility for participation will be subject to stockholder
approval. No suspension, termination, modification or amendment of the 1998 Plan
may, without the consent of a participant, adversely affect the participant's
rights under an award previously granted.
Change in Control Provisions
Under the 1998 Plan, the Committee has the discretion to provide that,
upon the occurrence of certain events involving a Change in Control or a
Potential Change in Control of the Company, outstanding Rights and Limited
Rights which have been outstanding for at least six months and Options shall
become fully vested and exercisable. Outstanding Restricted Shares, Deferred
Stock, Stock Purchase Rights and other Stock-Based Awards shall vest in full.
All outstanding Options, Rights, Restricted Shares, Deferred Stock, Stock
Purchase Rights and other Stock-Based Awards shall be cashed out at the Change
in Control Price, unless otherwise determined by the Committee. Such provisions
of the 1998 Plan may have an anti-takeover effect.
17
<PAGE>
For purposes of the 1998 Plan, a Change in Control event includes (i)
any person or group, with certain exceptions, acquiring the beneficial ownership
of 20% or more of the voting securities of the Company, (ii) any purchase of
common stock pursuant to a tender offer or exchange offer (other than one by the
Company or its subsidiaries), (iii) approval by the Company's stockholders of a
consolidation, a merger in which the Company does not survive, or the sale of
all or substantially all of the Company's assets or (iv) a change in the
composition of a majority of the Board over a two-year period unless the
selection or nomination of each of the new members was approved by two-thirds of
those remaining members of the Board who were members at the beginning of the
two-year period. The Committee may also, in its discretion, waive any conditions
for the lapse or termination of restrictions with respect to all or any of the
Restricted Shares and upon the recipient's request, permit deferral of payment
of Deferred Stock.
For purposes of the 1998 Plan, a Potential Change in Control shall mean,
(i) the approval by shareholders of an agreement which would result in the
consummation of a Change in Control or (ii) any person or group, with certain
exceptions, acquiring the beneficial ownership of 5% or more of the voting
securities of the Company and the adoption by the Board of Directors of a
resolution that a Potential Change in Control has occurred for purposes of the
1998 Plan. A Change in Control Price, for purposes of the 1998 Plan, shall mean
the highest price per share paid or offered during the sixty-day period
preceding a Change in Control or Potential Change in Control.
Federal Income Tax Consequences
There will be no federal income tax consequences to either the employee
or the Company on the grant of a Non-Qualified Option. On the exercise of a
Non-Qualified Option, the employee has taxable ordinary income equal to the
excess of the Fair Market Value of the shares of common stock received on the
exercise date (or the date on which any substantial risk of forfeiture lapses)
over the option price of the shares. The Company will be entitled to a federal
income tax deduction in an amount equal to such excess. Upon a subsequent sale
or taxable exchange of shares acquired upon exercise of an Option, an employee
will recognize long-term or short-term capital gain or loss equal to the
difference between the amount realized on the sale and the tax basis of such
shares.
Grants of Incentive Stock Options under the 1998 Plan will have no
immediate tax consequences to the Company or the employee. If the employee
exercises an Incentive Stock Option and does not dispose of the acquired shares
within two years after the grant of the Option or within one year after the date
of the transfer of such shares to him (a "disqualifying disposition"), he will
realize no compensation income, and any gain or loss that he realizes on his
subsequent disposition of such shares will be treated as long-term capital gain
or loss. For purposes of the alternative minimum tax, however, the amount by
which the Fair Market Value of the acquired shares at the time of exercise
exceeds the option price will be included in alternative minimum taxable income.
If an employee makes a disqualifying disposition of shares acquired by
the exercise of an Incentive Stock Option, he will be required to include in
income, as compensation, the lesser of (i) the difference between the Option
price and the Fair Market Value of the acquired shares on the exercise date (or
the date on which any substantial risk of forfeiture lapses), and (ii) the
amount of gain realized. In addition, depending upon the amount received as the
result of such disposition, the employee may realize long-term or short-term
capital gain or loss.
The Company will be entitled to a deduction at the same time and in the
same amount as the employee is in receipt of compensation income as a result of
a disqualifying disposition. If there is no disqualifying disposition, no
deduction will be available to the Company.
In the event common stock is used to pay the Option price for an Option,
gain or loss is not normally recognized in connection with such exchange
(although the employee will have taxable ordinary income equal to the excess of
the Fair Market Value of the common stock received on the exercise date (or the
date on which any substantial risk of forfeiture lapses) over the option price
of the common stock). To the extent that the number of shares of stock received
on exercise does not exceed the number of shares surrendered, the employee's
basis in these shares is equal to the basis of the stock surrendered
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and the employee's holding period therefor is the same holding period as for the
stock surrendered. To the extent the employee receives an amount of shares in
excess of the number of shares surrendered, the employee's basis in such
additional shares is zero (plus any cash paid in connection with the exercise)
and the holding period for such additional shares will begin from the date of
such exchange.
If the Company delivers cash or common stock to an employee in lieu of
accepting payment from him upon his exercise either of an Incentive Stock Option
or Non-Qualified Option, the employee will recognize ordinary income, and the
Company will be entitled to a deduction in an amount equal to the cash paid and
the fair market value as of the date of exercise of any shares delivered to him.
There will be no federal income tax consequences to either the employee
or the Company on the grant of a Right or Limited Right or during the period
that the unexercised Right or Limited Right remains outstanding. On the exercise
of a right or limited right, the amount that the employee is paid, whether in
common stock or cash, is taxable to the employee as ordinary income and the
Company is entitled to a corresponding deduction.
Under the Code, an employee normally will not realize taxable income and
the Company will not be entitled to a deduction upon the grant of Restricted
Shares, until the shares are no longer subject to a substantial risk of
forfeiture (as defined in the Code), at which time the employee will realize
taxable ordinary income in an amount equal to the Fair Market Value for such
number of shares of common stock at that time, and the Company will be entitled
to a deduction in the same amount. However, an employee may make an election to
recognize taxable ordinary income in the year the Restricted Shares is awarded
in an amount equal to their Fair Market Value at the time of the award,
determined without regard to the restrictions and, in that event, the Company
will be entitled to a deduction in such year in the same amount.
The termination of restrictions on Restricted Shares, or the exercise of
any portion of an option or related right that is accelerated as a result of a
change of control event, or the exercise of a Limited Right, may cause payments
with respect to such Restricted Shares, accelerated Options, related Rights or
related Limited Rights to be treated as "parachute payments" as defined in the
Code. Any such parachute payments may be non-deductible to the Company, in whole
or in part, and may subject the employee to a non-deductible 20% federal excise
tax on all or a portion of such payment (in addition to other taxes ordinarily
payable).
Withholding Taxes
The Company may deduct any Federal, state or local withholding taxes
from shares or other payment due to the holder pursuant to the 1998 Plan.
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APPROVAL OF ISSUANCE OF WARRANTS
On April 17, 1998, the Company completed the previously announced
acquisition of all of the outstanding capital stock of Progressive. Total
consideration of $48.5 million consisted of approximately $33.9 million in
cash, approxiamtely $5.0 million in common stock of the Company (714,000
shares valued at $7.00 per share) and the assumption of approximately $9.6
million of indebtedness. Financing for the transaction consisted of a $12.0
million senior term loan from Fleet Bank, N.A. ("Fleet"), $2.2 million of
borrowing under a new $8.0 million working capital facility from Fleet, the
issuance to the MassMutual Investors of $11.0 million of senior subordinated
notes due April 17, 2005 (the "Senior Notes"), the issuance to the MassMutual
Investors of 285,714 shares in the aggregate of common stock of the Company
at $7.00 per share (for approximately $2.0 million in the aggregate) and
$16.3 million of cash from the Company. The Senior Notes bear interest at the
rate of 19%, which, at the option of the Company, may be paid in quarterly
payments of cash equal to 12% of the principal amount outstanding and by
adding to the existing notes an amount equal to the 7% difference not then
paid in cash. In lieu of making the 7% payment-in-kind ("PIK"), the Company
may issue to the MassMutual Investors warrants to purchase shares of common
stock.
Issuance of these warrants to the MassMutual Investors requires the
prior approval of the stockholders of the Company. The warrants proposed to
be issued would have an exercise price of $7.00 per share for a total of
350,931 shares of common stock, would become exercisable on April 17, 1999
and would remain exercisable until April 17, 2008. The number of shares
purchasable and the exercise price would be subject to adjustment based on
customary anti-dilution provisions, which are intended to adjust the number
of shares purchasable (and the exercise price paid therefor) for any
subsequent issuances by the Company, other than certain issuances under stock
option plans, of shares and rights to acquire shares of common stock at
prices below the exercise price of the warrants. If the warrants are
approved, the Senior Notes will bear interest at 12%, and the MassMutual
Investors will receive the warrants, which would represent approximately 5%
of the outstanding shares of common stock of the Company, assuming exercise
of such warrants. If the issuance of the warrants is approved, the MassMutual
Investors will also have certain registration rights beginning on April 17,
1999. If the warrants are not approved, the Company will pay (or became
obligated to pay) amounts equal to an additional 7% per annum of the
principal amount outstanding from time to time ($770,000 on an annual basis,
initially). The Board of Directors recommends the approval of issuance of the
warrants. Proxies solicited by the Company will be voted "FOR" this approval
unless shareholders specify a contrary choice in their proxies.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
At the Annual Meeting, approval and ratification of the Board of
Directors' selection of Price Waterhouse LLP as independent public accountants
to perform the audit of the financial statements of the Company and its
subsidiaries for the year ending December 31, 1998 will be considered. The Board
of Directors recommends the approval of Price Waterhouse LLP. Proxies solicited
by the Company will be voted "FOR" this approval unless shareholders specify a
contrary choice in their proxies. Representatives of the firm of Price
Waterhouse LLP are expected to be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement if they
so desire.
SECURITY HOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals for inclusion in the 1999 Proxy Statement and
form of proxy for the Annual Meeting of Shareholders to be held in 1999 must be
received by the Secretary of the Company on or before January 8, 1999. If the
date of the next Annual Meeting is subsequently advanced by more than thirty
calendar days or delayed by more than ninety calendar days from the date such
meeting is scheduled to be held under the Company's By-laws, the Company will
inform shareholders of such change and the date by which proposals of
shareholders must be received. It is suggested that such proposals be sent by
Certified Mail-Return Receipt Requested.
ANNUAL REPORT
A COPY OF THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN
REQUEST. REQUESTS SHOULD BE ADDRESSED TO: TRIDEX CORPORATION, SHAREHOLDER
RELATIONS DEPARTMENT, 61 WILTON ROAD, WESTPORT, CONNECTICUT 06880.
GENERAL
The accompanying proxy will be voted as specified thereon. Unless
otherwise specified, proxies will be voted for the slate of Directors nominated
by management as set forth in this Proxy Statement, and for each of the other
matters to be presented to the shareholders at the Annual Meeting as set forth
in this Proxy Statement. A majority of the votes cast is required for the
approval of the proposals to be considered by the shareholders at the Annual
Meeting. Abstentions are treated as present and entitled to vote and therefore
have the effect of a vote against a matter. A broker non-vote on a matter is
considered not entitled to vote on the matter and is not counted in determining
whether a matter requiring approval of a majority of the shares present and
entitled to vote has been approved.
The Board of Directors is not aware of any matter, which is to be
presented for action at the Annual Meeting other than the matters set forth
herein. Should any other matter arise that requires a vote of the shareholders,
the proxies confer upon the Proxy Committee the authority to vote in respect of
any such other matter in accordance with the recommendation of management.
The cost of preparing, assembling and mailing this proxy material
will be borne by the Company. The Company has engaged MacKenzie Partners,
Inc. ("MacKenzie"), for a fee of $5,000 plus expenses, to assist the Company
in soliciting proxies. The Company and MacKenzie may solicit proxies
otherwise than by use of the mail, in that certain officers and regular
employees of the Company may use their personal efforts, without additional
compensation, and MacKenzie may, seek to obtain proxies. The Company will
also request persons, firms and corporations holding shares in their names,
or owned by others, to send this proxy material to and obtain proxies from
such beneficial owners and will reimburse such holders for their reasonable
expenses in doing so.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE. PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION IS APPRECIATED.
May 7, 1998
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Exhibit A
TRIDEX CORPORATION
1998 NON-EXECUTIVE LONG TERM INCENTIVE PLAN
SECTION 1. Purpose.
The purpose of Tridex Corporation's 1998 Non-Executive Long Term
Incentive Plan (the "Plan") is to promote the interests of the Company and its
subsidiaries, affiliates and shareholders by enabling Tridex Corporation (the
"Company") to attract, retain and reward employees, officers and directors of
the Company and its Subsidiaries and Affiliates, and strengthening the mutuality
of interests between such employees, officers and directors and the Company's
shareholders, by offering such employees, officers and directors
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as performance-based incentives payable in
cash.
Certain terms used herein are defined in Section 17 of the Plan.
SECTION 2. Stock Subject to the Plan.
The maximum aggregate number of shares of Stock reserved and available
for distribution under the Plan shall be 600,000 shares of Stock; provided,
however, that at no time may the aggregate number of Incentive Stock Options
issued hereunder exceed said maximum aggregate number of shares. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
Subject to Section 6(b)(iv) below, if any shares of Stock that have
been optioned under the 1989 Plan, or the Plan cease to be subject to a Stock
Option, or if any such shares of Stock that are subject to any Restricted Stock
or Deferred Stock award, Stock Purchase Right or Other Stock-Based Award granted
hereunder are forfeited or any such award otherwise terminates, without a
payment being made to the participant in the form of Stock, such shares shall be
available for distribution in connection with future awards under the Plan to
the extent permitted under Rule 16b-3 of the Exchange Act of 1934 (the "Exchange
Act"). Notwithstanding any other provision of the Plan, shares issued under the
Plan and later repurchased by the Company shall not become available for future
distribution under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Options granted under
the Plan, in the number and purchase price of shares subject to outstanding
Stock Purchase Rights under the Plan, and in the number of shares subject to
other outstanding awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any award shall always be a whole number. Such adjusted
option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right or Limited Stock Appreciation
Right associated with any Stock Option.
SECTION 3. Eligibility.
Employees of the Company and its Subsidiaries and Affiliates (but
excluding members of the Committee, any person who serves only as a director and
any person who serves as an officer of the Company) who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or its Subsidiaries and Affiliates are eligible to be granted awards
under the Plan; provided, however, that only Employees of the Company and its
Subsidiaries are eligible to be granted Incentive Stock Options under the Plan.
SECTION 4. Administration.
The Plan shall be administered by a Committee of not less than two (2)
Disinterested Persons, who shall be appointed by and shall be members of the
Board and who shall serve at the pleasure of the
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Board. If no Committee has been appointed to administer the Plan, the functions
of the Committee specified in the Plan shall be exercised by the Board.
The Committee shall have full authority to grant, pursuant to the terms
of the Plan, to Employees eligible under Section 3: (i) Stock Options, (ii)
Stock Appreciation Rights, (iii) Limited Stock Appreciation Rights, (iv)
Restricted Stock, (v) Deferred Stock, (vi) Stock Purchase Rights and/or (vii)
Other Stock-Based Awards.
In particular, the Committee shall have the authority:
(i) to select the Employees of the Company and its Subsidiaries and
Affiliates to whom Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights
and/or Other Stock-Based Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights
and/or Other Stock-Based Awards, or any combination thereof, are to be granted
hereunder to one or more eligible Employees;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Stock Option or
other award;
(v) to determine whether and under what circumstances a Stock Option
may be settled in cash, Restricted Stock and/or Deferred Stock under Sections
5(k) or (1), as applicable, instead of Stock;
(vi) to determine whether, to what extent and under what circumstances
grants and/or other awards under the Plan and/or other cash awards made by the
Company are to be made, and operate, on a tandem basis vis-a-vis other awards
under the Plan and/or cash awards made outside of the Plan, or on an additive
basis;
(vii) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the participant
(including providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period); and
(viii) to determine the terms and restrictions applicable to Stock
Purchase Rights and the Stock purchased by exercising such Rights.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interrupt the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
Each Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
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Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options, and (ii) Non-Qualified Stock Options. The Committee shall have
the authority to grant to any optionee Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights or Limited Stock Appreciation Rights).
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
a. Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant but
shall not be less than one hundred percent (100%) of the Fair Market Value of
the Stock at the date of grant.
b. Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Option is granted.
c. Exercisability. Stock Options shall be exercisable in three (3)
equal annual installments and subject to such terms and conditions as shall be
determined by the Committee at or after grant and the Committee may accelerate
the exercisability of an option at any time; provided, however, that, except as
provided in Sections 5(f), 5(g) and 11, unless and otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable prior to the
six-month anniversary date of the granting of the Option. If the Committee
provides, in its sole discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time at or after grant in whole or in part, based on such factors as the
Committee shall determine in its sole discretion.
d. Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in whole or
in part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the optionee or, in the case of the exercise of a
Non-Qualified Stock Option, payment in full or in part may be made in the form
of Restricted Stock or Deferred Stock subject to an award hereunder (based, in
each case, on the Fair Market Value of the Stock on the date the option is
exercised, as determined by the Committee).
If payment of the option exercise price of Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock or Deferred Stock,
such Restricted Stock or Deferred Stock (and any replacement shares relating
thereto) shall remain (or be) restricted or deferred, as the case may be, in
accordance with the original terms of the Restricted Stock award or Deferred
Stock award in question, and any additional Stock received upon the exercise
shall be subject to the same forfeiture restrictions or deferral limitations,
unless otherwise determined by the Committee, in its sole discretion, at or
after grant.
No shares of Stock shall be issued until full payment therefor has been
made. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Stock, and compliance with the applicable
requirements, if any, of Section 14(a), no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to such Stock Option.
The Committee, in its sole discretion, may elect, in lieu of accepting
full payment from the Employee and delivering all or a portion of the shares of
Stock for which a Stock Option has been exercised, to pay the Employee an amount
in cash and/or shares of Stock equal in value to the excess of the Fair Market
Value of one share of Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares in respect of which the
Stock Option shall have been exercised, with the Committee having the right to
determine the form of payment. When payment is to be made in shares of Stock,
the number of shares to be paid shall be calculated on the basis of the average
of the highest and lowest quoted selling price, regular way, of the Stock on
NASDAQ as of the date the Stock
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Option is exercised. The Committee's election pursuant to this subparagraph
shall be made by giving written notice of such election to the employee (or
other person exercising the option).
e. Non-Transferability of Options. No Stock Option shall be
transferable by the optionee other than as provided below:
(i) Incentive Stock Options: Any Stock Option issued pursuant
to and intended to be an Incentive Stock Option under the Plan shall not be
transferable by the optionee other than by will or the laws of descent and
distribution.
(ii) Non-Qualified Stock Options: Any Stock Option issued
pursuant to the Plan which is not intended to qualify as an Incentive Stock
Option, shall not be transferable by the optionee other than by will or the laws
of descent and distribution; provided, however, that to the extent that
transferability pursuant to the following provisions would not adversely affect
the compliance of the Plan with Rule 16b-3, such Stock Option may also be
transferred, for no consideration, by the optionee to the following transferees
("Transferee"):
(A) a member of the optionee's immediate family. For this
purpose, "immediate family" shall include only brothers and sisters (whether by
the whole or half blood) spouse, parents, and natural or adopted children;
(B) a trust for the benefit of members of the optionee's
immediate family; or
(C) a partnership whose only partners are members of the
Optionee's immediate family if the Transferee shall agree to be subject to the
same restrictions and conditions as relate to the optionee pursuant to the Plan.
f. Termination by Death. Subject to Section 5(j), if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by reason
of death, any Stock Option held by such optionee may thereafter be exercised, to
the extent such option was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant (or as may be
determined in accordance with procedures established by the Committee), by the
legal representative of the estate or by the legatee of the optionees under the
will of the optionee, for a period of one year (or such other period as the
Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
g. Termination by Reason of Disability. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Disability, any Stock Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may determine at or
after grant (or as may be determined in accordance with procedures established
by the Committee), for a period of ninety (90) days (or such other period as the
Committee may specify at grant) from the date of such termination of employment
or until the expiration of the stated term of such Stock Option, whichever
period is the shorter, provided, however, that, if the optionee dies within such
ninety (90) days period (or such other period as the Committee shall specify at
grant), any unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of twelve (12) months, from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability, if
an Incentive Stock Option is exercisable after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock Option
shall be treated as a Non-Qualified Stock Option.
h. Termination by Reason of Retirement. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Normal or Early Retirement, any Stock Option held by such optionee
may thereafter be exercised by the optionee, to the extent it was exercisable at
the time of such Retirement or on such accelerated basis as the Committee may
determine at or after grant (or as may be determined in accordance with
procedures established by the Committee), for a period of ninety (90) days (or
such other period as Committee may specify at grant) from the date of such
termination of employment or the expiration of the stated term of such Stock
Option,
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whichever period is the shorter; provided, however, that, if the optionee dies
within such ninety-day period (or such other period as the Committee may specify
at grant), any unexercised Stock Option held by such optionee shall thereafter
be exercisable, to the extent to which it was exercisable at the time of death,
for a period of twelve (12) months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Retirement, if
an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the option will
thereafter by treated as a Non-Qualified Stock Option.
i. Other Termination. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
for any reason other than death, Disability or Normal or Early Retirement, the
Stock Option shall thereupon terminate, except that such Stock Option may be
exercised, to the extent otherwise then exercisable, for the lesser of ninety
(90) days or the balance of such Stock Option's term if the optionee is
involuntarily terminated without Cause by the Company and any Subsidiary or
Affiliate. For purposes of the Plan, "Cause" means a felony conviction of a
participant or the failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty, any of which is directly
and materially harmful to the business or reputation of the Company or any
Subsidiary or Affiliate.
j. Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422. Incentive Stock
Options shall not be treated as "incentive stock options" to the extent that the
aggregate Fair Market Value (determined at the time the Incentive Stock Option
is granted) of Stock with respect to which Incentive Stock Options meeting the
requirements of Section 422(b) of the Code are exercisable for the first time by
any participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, and such excess shall be treated as a
Non-Qualified Stock Option.
To the extent permitted under Section 422 of the Code or the applicable
regulations thereunder or any applicable Internal Revenue Service pronouncement:
(i) if (x) a participant's employment is terminated by reason
of death, Disability or Normal or Early Retirement, and (y) the portion of any
Incentive Stock Option that is otherwise exercisable during the post-termination
period specified under Sections 5(f), (g) or (h) is greater than the portion of
such option that is immediately exercisable as an "incentive stock option"
during such post-termination period under Section 422, such excess shall be
treated as a Non-Qualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option is
accelerated by reason of a Change in Control, any portion of such option that is
not exercisable as an Incentive Stock Option by reason of the $100,000
limitation contained in Section 422(d) of the Code shall be treated as a
Non-Qualified Stock Option.
k. Buyout Provisions. The Committee may at any time offer to purchase
an Option previously granted for a payment in cash, Stock, Deferred Stock or
Restricted Stock, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is made.
l. Settlement Provisions. If the option agreement so provides at grant
or is amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the shares to
be issued with respect to the spread value of an exercised Option take the form
of Deferred or Restricted Stock, which shall be valued on the date of exercise
on the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
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SECTION 6. Stock Appreciation Rights.
a. Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Stock Option. A Stock Appreciation Right or applicable portion thereof granted
with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
subject to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number of
shares covered by a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such purpose. Upon such exercise, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be exercisable
to the extent that the related Stock Appreciation Rights have been exercised.
b. Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that Stock Options to which they relate
shall be exercisable in accordance with the provisions of Section 5 and this
Section 6 of the Plan; provided, however, that any Stock Appreciation Right
granted to an optionee subject to Section 16(b) of the Exchange Act subsequent
to the grant of the related Stock Option shall not be exercisable during the
first six (6) months of its term unless the grant has been approved in
accordance with the approval requirements of Rule 16b-3(d)(1) or (2), except
that this special limitation shall not apply in the event of death or Disability
of the optionee prior to the expiration of the six-month period. The exercise of
Stock Appreciation Rights held by optionees who are subject to Section 16(b) of
the Exchange Act shall comply with Rule 16b-3 promulgated thereunder, to the
extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or shares of Stock
equal in value to the excess of the Fair Market Value of one share of Stock over
the option price per share specified in the related Stock Option multiplied by
the number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment. When payment is to be made in shares of Stock, the number of shares to
be paid shall be calculated on the basis of the average of the highest and
lowest quoted selling price, regular way, of the Stock on NASDAQ as of the date
of exercise.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be transferable
under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation set
forth in Section 2 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares issued under the
Stock Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
(v) In its sole discretion, the Committee may grant "Limited"
Stock Appreciation Rights under this Section 6, i.e., Stock Appreciation Rights
that become exercisable only in the event of a Change in Control and/or a
Potential Change in Control, subject to such terms and conditions as the
Committee may specify at grant. Such Limited Stock Appreciation Rights shall be
settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide
that, in the event of a Change in Control and/or a Potential Change in Control,
the amount to be paid upon the exercise of a Stock Appreciation Right or Limited
Stock Appreciation Right shall be based on the Change of Control Price, subject
to such terms and conditions on the Committee may specify at grant.
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SECTION 7. Restricted Stock.
a. Administration. Shares of Restricted Stock may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 7(b)), the time or
times within with such awards may be subject to forfeiture, and all other terms
and conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient.
b. Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
equal to, less than or greater than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a
period of sixty (60) days (or such shorter period as the Committee may specify
at grant) after the award date, by executing a Restricted Stock award agreement
and paying whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
c. Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of the Plan and the award
agreement, during a period set by the Committee commencing with the date of such
award (the "Restricted Period"), the participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock awarded under the Plan.
Within these limits, the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restriction in whole or in part, based on service, performance and/or such other
factors or criteria as the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the right to
vote the shares, and the right to receive any cash dividends. The Committee, in
its sole discretion, as determined at the time of award, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested, subject to Section 14(e), in additional Restricted Stock
to the extent shares are available under Section 2, or otherwise reinvested.
Pursuant to Section 2 above, Stock dividends issued with respect to Restricted
Stock shall be treated as additional shares of Restricted Stock that are subject
to the same restrictions and other terms and conditions that apply to the shares
with respect to which such dividends are issued.
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(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a participant's employment
with the Company and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.
(iv) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction Periods,
certificates for an appropriate number of unrestricted shares shall be delivered
to the participant promptly.
d. Minimum Value Provision. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Restricted Stock award, subject to such
performance, future service deferral and other terms and conditions as may be
specified by the Committee.
SECTION 8. Deferred Stock.
a. Administration. Deferred Stock may be awarded either alone, in
additions to or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom and the time or times at which Deferred Stock shall be awarded, the
number of shares of Deferred Stock to be awarded to any person, the duration of
period (the "Deferral Period") during which, and the conditions under which,
receipt of the Stock will be deferred, and the other terms and conditions of the
award in addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Stock upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.
The provisions of Deferred Stock awards need not be the same with
respect to each recipient.
b. Terms and Conditions. The shares of Deferred Stock awarded pursuant
to this Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the award
agreement referred to in Section 8(b)(vi) below, Deferred Stock awards may not
be sold, assigned, transferred, pledged or otherwise encumbered during the
Deferral Period. At the expiration of the Deferral Period (or the Elective
Deferral Period referred to in Section 8(b)(v), where applicable), share
certificates shall be delivered to the participant, or his legal representative,
in a number equal to the shares covered by the Deferred Stock award.
(ii) Unless otherwise determined by the Committee at grant,
amounts equal to any dividends declared during the Deferral Period with respect
to the number of shares covered by a Deferred Stock award will be paid to the
participant currently, or deferred and deemed to be reinvested in additional
Deferred Stock, or otherwise reinvested, all as determined at or after the time
of the award by the Committee, in its sole discretion.
(iii) Subject to the provision of the award agreement and this
Section 8, upon termination of a participant's employment with the Company and
any Subsidiary or Affiliate for any reason during the Deferral Period for a
given award, the Deferred Stock in question will vest, or be forfeited, in
accordance with the terms and conditions established by the Committee at or
after grant.
(iv) Based on service, performance and/or such other factors
or criteria as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Deferred Stock award
and/or waive the deferral limitations for all or any part of such award.
(v) A participant may elect to further defer receipt of an
award (or an installment of an award) for a specified period or until a
specified event (the "Elective Deferral Period"), subject in each case to the
Committee's approval and to such terms as are determined by the Committee, all
in its sole discretion. Subject to any exceptions adopted by the Committee, such
election must generally be made
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at least twelve (12) months prior to completion of the Deferral Period for such
Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock agreement executed by the Company and the
participant.
c. Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Deferred Stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
SECTION 9. Stock Purchase Rights.
a. Awards and Administration. Subject to Section 2 above, the Committee
may grant eligible participants Stock Purchase Rights which shall enable such
participants to purchase Stock (including Deferred Stock and Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at fifty percent (50%) of such Fair Market Value on such date;
(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such Stock on such date.
The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Stock Purchase Rights or the exercise thereof.
The terms of Stock Purchase Rights awards need not be the same with
respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and be subject
to the terms of, a Stock Purchase Rights Agreement.
b. Exercisability. Stock Purchase Rights shall generally be exercisable
for such period after grant as is determined by the Committee not to exceed
thirty (30) days. However, the Committee may provide, in its sole discretion,
that the Stock Purchase Rights of persons potentially subject to Section 16(b)
of the Exchange Act shall not become exercisable until six (6) months and one
(1) day after the grant date, and shall become exercisable for ten (10) trading
days at the purchase price specified by the Committee in accordance with Section
9(a).
SECTION 10. Other Stock-Based Awards.
a. Administration. Other awards of Stock and other awards that are
valued in whole or in part by reference to, or are otherwise based on, Stock
("Other Stock-Based Awards"), including, without limitation, performance shares,
convertible preferred stock, convertible debentures, exchangeable securities and
Stock awards or options valued by reference to Book Value or Subsidiary
performance, may be granted alone, in addition to or in tandem with Stock
Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock or Stock
Purchase Rights granted under the Plan and/or cash awards made outside of the
Plan.
Subject to the provision of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Stock, or units in the case of
Other Stock-Based Awards, to be awarded pursuant to such awards, and all other
conditions of the awards. The Committee shall also have the authority to provide
for the payment of any such award upon the completion of a specified performance
period, in cash or Stock, or a combination of cash or Stock.
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The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
b. Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 10(b)(v) below, shares subject to awards made
under this Section 10 may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date on which the shares are issued, or, if
later, the date on which any applicable restriction, performance or deferral
period lapses.
(ii) Subject to the provisions of the Plan and the award
agreement and unless otherwise determined by the Committee at grant, the
recipient of an award under this Section 10 shall be entitled to receive,
currently or on a deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by award, as determined
at the time of the award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Stock or otherwise reinvested.
(iii) Any award under Section 10 and any Stock covered by any
such award shall vest or be forfeited to the extent so provided in the award
agreements, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability
or death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining limitations
imposed hereunder (if any) with respect to any or all of an award under this
Section 10.
(v) Each award under this Section 10 shall be confirmed by,
and subject to the terms of, an agreement or other instrument by the Company and
by the participant.
(vi) Stock (including securities convertible into Stock)
issued on a bonus basis under this Section 10 may be issued for no cash
consideration. Stock (including securities convertible into Stock) purchased
pursuant to a purchase right awarded under this Section 10 shall be priced at
least fifty percent (50%) of the Fair Market Value of the Stock on the date of
grant.
SECTION 11. Change in Control Provisions.
a. Impact of Event. In the event of:
(1) a Change in Control; or
(2) a Potential Change in Control, but only if and to the
extent so determined by the Committee or the Board at or after grant (subject to
any right of approval expressly reserved by the Committee or the Board at the
time of such determination); the following acceleration and valuation provisions
shall apply:
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Appreciation Rights) outstanding for at least six (6)
months and any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations
applicable to any Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards, in each case to the extent not already vested under
the Plan, shall lapse and such shares shall be deemed fully vested.
(iii) The value of all outstanding Stock Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and Other Stock-Based Awards, in each case to the extent vested, shall,
unless otherwise determined by the Committee in its sole discretion at or after
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grant but prior to any Change in Control, be cashed out on the basis of the
Change in Control Price as of the date such Change in Control or such Potential
Change in Control is determined to have occurred or such other date as the
Committee may determine prior to the Change in Control.
b. Definition of "Change in Control". For purposes of Section ll(a), a
"Change in Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Section 13(d) and 14(d) thereof, other than Alvin
Lukash, Leslie Lukash, Mildred Lukash, Seth Lukash, Laura Lukash Knee or Samuel
Knee and their respective heirs (collectively, the "Lukash Group"), including a
"group" as defined in Section 13(d) of the Exchange Act but excluding the
Company and any Subsidiary and any employee benefit plan sponsored or maintained
by the Company or any Subsidiary (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the "beneficial owner" (as defined in
Rule 13(d)-3 under the Exchange Act, of securities of the Company representing
twenty percent (20%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) When, during any period of twenty-four (24) consecutive
months during the existence of the Plan, the individuals who, at the beginning
of such period, constitute the Board (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof, provided,
however, that a director who was not a director at the beginning of such
twenty-four (24) month period shall be deemed to have satisfied such twenty-four
(24) month requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendations or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such twenty-four (24)
month period) or by prior operations of this Section ll(b)(ii); or (iii) The
occurrence of a transaction requiring shareholder approval for the acquisition
of the Company by an entity other than the Company or a Subsidiary through
purchase of assets, or by merger, or otherwise.
c. Definition of Potential Change in Control. For purposes of Section
ll(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The approval by shareholders of an agreement by the
Company, the consummation of which would result in a Change in Control of the
Company as defined in Section ll(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by an entity, person or group (other than the Company or a
Subsidiary or any Company employee benefit plan (including any trustee or such
plan acting as such trustee), any member or members of the Lukash Group or the
Lukash Group) or securities of the Company representing five percent (5%) or
more of the combined voting power of the Company's outstanding securities and
the adoption by the Board of Directors of a resolution to the effect that a
Potential Change in Control of the Company has occurred for the purposes of the
Plan.
d. Change in Control Price. For purposes of this Section 11, "Change
Control Price" means the highest price per share paid in any transaction
reported on the NASDAQ, or paid or offered in any bona fide transaction related
to a potential or actual Change in Control of the Company at any time during the
sixty (60) day period immediately preceding the occurrence of the Change in
Control period immediately preceding the occurrence of the Change in Control
(or, where applicable, the occurrence of the Potential Change in Control event),
in each case as determined by the Committee except that, in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Stock Options,
such price shall be based only on transactions reported for the date on which
the optionee exercises such Stock Appreciation Rights (or Limited Stock
Appreciation Rights) or, where applicable, the date on which a cashout occurs
under Section ll(a)(ii).
SECTION 12. Amendment and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right, Limited
Stock Appreciation Right, Restricted or Deferred Stock award,
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Stock Purchase Right or Other Stock-Based Award theretofore granted, without the
optionee's or participant's consent.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 2
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 13. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that, unless the Committee determines otherwise
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
SECTION 14. General Provisions.
a. The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other award under the Plan to represent to and
agree with the Company in writing that the optionee or participant is acquiring
the shares without a view to distribution thereof. The certificates for such
shares may include any legend, which the Committee deems appropriate to reflect
any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to compliance with such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
law, and shall further be subject to the approval of counsel for the Company
with respect to such compliance. The Committee may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions.
b. Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
c. The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continue employment with the
Company or a Subsidiary or Affiliate, as the case may be, nor shall it interfere
in any way with the right of the Company or a Subsidiary or Affiliate to
terminate the employment of any of its employees at any time.
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d. No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company and its Subsidiaries or Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment or any kind otherwise due to the participant.
e. The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other types
of Plan awards) at the time of any dividend payment shall only be permissible if
sufficient shares of Stock are available under Section 2 for such reinvestment
(taking into account then outstanding Stock Options, Stock Purchase Rights and
other Plan awards).
f. The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Connecticut.
SECTION 15. Effective Date of Plan.
The Plan shall be effective as of April 9, 1998. However,
shareholder approval of the Plan is required by the Internal Revenue Code of
1986, as amended (the "Code"), in order for options granted under the Plan to
qualify as Incentive Stock Options. Any grants made under the Plan prior to
such approval shall be effective when made (unless otherwise specified by the
Committee at the time of grant), but shall be conditioned on, and subject to,
such approval of the Plan by such shareholders.
SECTION 16. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock award,
Deferred Stock award, Stock Purchase Right or Other Stock-Based Award shall be
granted pursuant to the Plan on or after the tenth anniversary of the date of
shareholder approval, but awards granted prior to such tenth anniversary may
extend beyond that date.
SECTION 17. Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least twenty
percent (20%) of the combined voting power of all classes of stock of such
entity or at least twenty percent (20%) of the ownership interests in such
entity.
b. "Board" means the Board of Directors of the Company.
c. "Book Value" means, as of any given date, on a per share basis, (i)
the shareholders' equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding shares of Stock as of such
year-end date (as adjusted by the Committee for subsequent events).
d. "Cause" shall have the meaning set forth in Section 5(i).
e. "Change in Control" shall have the meaning set forth in Section
ll(b).
f. "Change in Control Price" shall have the meaning set forth in
Section ll(d).
g. "Code" means the Internal Revenue Code of 1986, as from time to time
amended.
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h. "Commission" means the Securities and Exchange Commission.
i. "Committee" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
j. "Company" means Tridex Corporation, a Connecticut corporation.
k. "Deferral Period" shall have the meaning set forth in Section 8(a).
l. "Deferred Stock" means an award made pursuant to Section 8 below of
the right to receive Stock at the end of a specified deferral period.
m. "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.
n. "Elective Deferral Period" shall have the meaning set forth in
Section 8(b)(v).
o. "Employee" means any person, excluding officers and directors,
employed by the Company or any Affiliate or Subsidiary of the Company.
p. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
q. "Early Retirement" means retirement, with the express consent of the
Company at or before the time of such retirement, from active employment with
the Company and any Subsidiary or Affiliate pursuant to the early retirement
provisions of the applicable pension plan of such entity.
r. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the closing price of the Stock on
NASDAQ or, if no such sale of Stock was made on NASDAQ on such date, the fair
market value of the Stock as determined by the Committee in good faith.
s. "Incentive Stock Option" means any Stock Option intended to qualify
as an "Incentive Stock Option" within the meaning of Section 422 of the Code.
t. "Incumbent Directors" shall have the meaning set forth in Section
ll(b)(ii).
u. "Limited Stock Appreciation Right" shall have the meaning set forth
in Section 6(b)(v).
v. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3)(i) as promulgated by the Commission under the Exchange Act, or any
successor definition adopted by the Commission.
w. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
x. "Normal Retirement" means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65.
y. "Other Stock-Based Award" means an award under Section 10 below that
is valued in whole or in part by reference to, or is otherwise based on, Stock.
z. "Plan" means this Tridex Corporation 1998 Non-Executive Long Term
Incentive Plan, as amended from time to time.
aa."Potential Change in Control" shall have the meaning set forth in
Section ll(c).
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bb. "Restricted Period" shall have the meaning set forth in Section
7(c)(i).
cc. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7.
dd. "Retirement" means Normal or Early Retirement.
ee. "Stock" means the common stock, no par value, of the Company.
ff. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 to surrender to the Company all (or a portion) of a
Stock Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such Stock Option (or portion thereof) is
surrendered, of the shares of Stock covered by such Stock Option (or such
portion thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii), and (ii) the aggregate exercise price of such Stock Option (or
such portion thereof).
gg. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5.
hh. "Stock Purchase Right" means the right to purchase Stock pursuant
to Section 9.
ii. "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 425(f) of the Code.
In Witness Whereof, the Company has caused this Plan to be executed by
its duly authorized officer as of the 8th of April 1998.
TRIDEX CORPORATION
By:
----------------------
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TRIDEX CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD, MAY 27, 1998
This proxy is solicited on behalf of the
Board of Directors of Tridex Corporation
The undersigned shareholder of Tridex Corporation, Westport, Connecticut,
does hereby nominate, constitute and appoint Seth M. Lukash, Paul J. Dunphy
and Thomas R. Schwarz, or any of them, with full power to act alone, my true
and lawful attorney with full power of substitution, for me and in my name,
place and stead to vote all of the Common Stock of Tridex Corporation
standing in my name on its books on April 20, 1998, at the Annual Meeting of
its shareholders to be held at The Inn at Longshore, Westport, Connecticut,
on May 27, 1998 at 10:00 a.m., or at any adjournment thereof, with all powers
the undersigned would posses if personally present as follows:
(To be signed on Reverse Side)
/X/ Please mark your votes as in this example.
FOR AGAINST
1. ELECTION OF DIRECTORS / / / /
Nominees: Seth M. Lukash
Paul J. Dunphy
Dennis J. Lewis
Thomas R. Schwarz
Graham Y. Tanaka
For, except vote withheld from the following
nominee(s):
----------------------------------------------------
FOR AGAINST ABSTAIN
2. To consider and act upon a proposal to amend the 1997 / / / / / /
Long Term Incentive Plan for employees, officers and
employee directors of the Company.
3. To consider and act upon a proposal to ratify the / / / / / /
establishment by the Company of the 1998 Non-Executive
Long Term Incentive Plan
4. To consider and act upon a proposal to authorize the / / / / / /
issuance of warrants to purchase 350,931 shares of
common stock of the Company.
5. APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS / / / / / /
A proposal to approve and ratify the selection
of Price Waterhouse LLP as independent public
accounts of Tridex Corporation for the fiscal
year ending December 31, 1998.
6. In their discretion, Seth M. Lukash, Paul J. Dunphy and Thomas R. Schwarz,
or any of them are authorized to vote upon such other business as may
properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED FOR THE UNDERSIGNED AS
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1,2,3,4 AND 5.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.
SIGNATURES:_________________DATE:______ SIGNATURES:_________________DATE:______
NOTE: Please sign exactly as name appears on the mailing label. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If signing on behalf of a corporation, please sign the full corporate name by
president or other authorized officer. If signing on behalf of a partnership,
please sign the partnership name by authorized person.
