INTERPOINT CORPORATION
10301 Willows Road, PO Box 97005
Redmond, Washington 98073-9705
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 21, 1996
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Interpoint Corporation,
a Washington corporation (the Company), will be held on
Wednesday, February 21, 1996, at 10:00 a.m., local time, at the
Hyatt Regency Bellevue at Bellevue Place, 900 Bellevue Way N.E.,
Bellevue, Washington, for the following purposes.
1. To elect four directors, three to hold office for three-
year terms and one to hold office for a two-year term;
2. To consider and vote upon a proposal to approve the
adoption of the Interpoint Corporation 1995 Stock Option
and Award Plan;
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements
thereof.
Only holders of record of shares of Interpoint Common Stock at
the close of business on January 5, 1996, the record date for the
Annual Meeting, are entitled to notice of and to vote at the
Annual Meeting and adjournments or postponements thereof.
Shareholders are cordially invited to attend the meeting in
person.
By Order of the Board of Directors
/s/Leslie S. Rock
Leslie S. Rock
Secretary-Treasurer
Redmond, Washington
January 25, 1996
PLEASE COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY
IN THE RETURN ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING.
<PAGE>
INTERPOINT CORPORATION
10301 Willows Road
P.O. Box 97005
Redmond, Washington 98073-9705
PROXY STATEMENT
This Proxy Statement, which was first mailed to shareholders
of Interpoint Corporation (the Company) on January 25, 1996, is
furnished to Shareholders of the Company (Shareholders) in
connection with the solicitation of proxies by the Board of
Directors of the Company for the Annual Meeting of Shareholders
to be held February 21, 1996, and any adjournment or postponement
thereof (the Annual Meeting). A proxy may be revoked in writing
at any time before it is exercised by filing with the Secretary
of the Company a written revocation or a duly executed proxy
bearing a later date. A proxy may also be revoked by attending
the Annual Meeting and voting in person. If the enclosed form of
proxy is properly executed and returned, it will be voted in
accordance with the instructions given, but may be revoked at any
time to the extent it has not been exercised. There were
3,839,100 shares of the Company's Common Stock (Common Stock),
the only security of the Company entitled to vote at the Annual
Meeting, outstanding at January 5, 1996. Holders of a majority
of those shares, present in person or represented by proxy, will
constitute a quorum. Shareholders are entitled to one vote for
each share of Common Stock held of record at the close of
business on January 5, 1996, the record date for the Annual
Meeting.
The cost of soliciting proxies will be borne by the Company.
Proxies will be solicited by certain of the Company's directors,
officers and regular employees (team members), without additional
compensation, personally or by telephone or telefax. In
addition, the Company may reimburse brokerage firms and other
persons representing beneficial owners of shares of Common Stock
for their expenses in forwarding solicitation materials to such
beneficial owners.
Each shareholder will be entitled to one vote for each share
of Common Stock held. Directors will be elected by a plurality
of the shares of Common Stock present by proxy or in person at
the Annual Meeting. Holders of Common Stock are not entitled to
cumulate votes in the election of directors. Abstention from
voting and broker nonvotes on the election of directors will have
no impact on the outcome of this proposal. The affirmative vote
of holders of a majority of the shares of Common Stock present
and entitled to vote at the Annual Meeting is required for
approval of the Interpoint Corporation 1995 Stock Option and
Award Plan. Abstention from voting will have the practical
effect of voting against this proposal since such shares are
present at the meeting and entitled to vote but are not voting in
favor of the proposal. Broker nonvotes will have no effect on
the outcome of this proposal since they are not considered shares
entitled to vote on the proposal.
The Company is not aware, as of the date hereof, of any
matters to be voted upon at the Annual Meeting other than as
stated in the accompanying Notice of Annual Meeting of
Shareholders. The enclosed Proxy gives discretionary authority
to the persons named therein to vote the shares in their best
judgment if any other matters are properly brought before the
Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. At the
Annual Meeting, three directors will be elected to serve for
terms of three years, expiring on the date of the Annual Meeting
of Shareholders in 1999, and one director will be elected to
serve for a term of two years, expiring on the date of the Annual
Meeting of Shareholders in 1998. Each director elected will
continue in office until a successor has been elected or until
resignation or removal in the manner provided by the Bylaws of
the Company. The nominee, Walter F. Walker, was appointed
effective November 20, 1995, to fill a vacancy on the Board of
Directors and is being nominated for a shorter term in order to
keep the director classes as equal in size as possible, as
required by Washington law. The names of nominees to the Board
of Directors, each of whom is presently a director of the
Company, and the names of directors whose terms will continue
after the Annual Meeting are listed below.
<PAGE>
Unless otherwise instructed, the persons named in the
accompanying proxy intend to vote shares represented by properly
executed proxies for the four nominees named below. If any
nominee becomes unavailable for any reason or if a vacancy occurs
before the election (which events are not anticipated), the
proxies may be voted for a person to be selected by the Board of
Directors.
Nominees
Name and Age Director Since
Christopher T. Bayley, age 57 1987
Chairman, Dylan Bay Companies, since 1995; Chairman, New Pacific
Partners (Seattle and Hong Kong-based investment bank), 1992 to
1995; President and Chief Executive Officer, Glacier Park Company
(real estate development), and Senior Vice President, Corporate
Affairs, Burlington Resources Inc. (oil and gas exploration and
production company), 1985 to 1992 and 1989 to 1992, respectively;
Director, The Commerce Bank; Board of Governors, The Nature
Conservancy; Board of Governors, The Bush School.
John W. Stanton, age 40 1988
Chairman and Chief Executive Officer, Western Wireless
Corporation and predecessors, since 1992; Vice Chairman and
Director, McCaw Cellular Communications, Inc. (mobile
communications company), 1988 to 1991; Trustee, Whitman College.
Peter H. van Oppen, age 43 1984
Chairman of the Board of Directors, Interpoint, since 1995;
President and Chief Executive Officer, Interpoint, since 1989;
President and Chief Operating Officer, Interpoint, 1987 to 1989;
Executive Vice President for Finance and Operations, Interpoint,
1985 to 1987; Director, Seattle FilmWorks, Inc.; Member, Advisory
Council on Small Business and Agriculture of the Federal Reserve
Bank of San Francisco.
Walter F. Walker, age 41 1995
President, Seattle SuperSonics National Basketball Association
basketball team (a subsidiary of Ackerley Communications, Inc.)
since 1994; President, Walker Capital (a money management firm),
from March 1994 to September 1994; Vice President, Goldman Sachs
& Co. (an investment banking firm), from 1987 to 1994. Director,
Redhook Ale Brewery, Incorporated and Gargoyles Inc. (eyeware
manufacturer).
Continuing Directors
Name and Age Term Expires Director Since
Russell F. McNeill, age 84 1997 1977
Secretary Emeritus, Interpoint, since 1992; Secretary,
Interpoint, 1977 to 1992; former President, Old National Bank of
Washington; Trustee Emeritus, Whitman College.
David A. Uvelli, Ph.D., age 48 1997 1991
Senior Vice President and General Manager, Power Products
Division, Interpoint, since 1991; Vice President, Marketing and
Major Programs, Power Products Division, Interpoint, 1990 to
1991; Director, Marketing, Interpoint, 1989 to 1990; Marketing
Manager, Major Programs, Interpoint, 1988 to 1989; former
Associate Professor, University of Washington.
<PAGE>
Walter P. Kistler, age 76 1998 1972
Chairman of the Board of Directors, Kistler Aerospace
Corporation, since 1993; Chairman Emeritus of the Board of
Directors, Interpoint, since 1987; Chairman, Interpoint, 1974 to
1987; Chairman, Kistler-Morse Corporation (electronic equipment
manufacturer), since 1972.
Calvin A.H. Waller, age 58 1998 1991
Lieutenant General, United States Army, Retired; Vice President,
Site Operations and Integration, Kaiser Hill Company, L.L.C.,
since 1995; Senior Vice President, Environment and Energy Group,
ICF Kaiser International, Inc. (engineering, construction and
consulting company), 1994 to 1995; President and Chief Executive
Officer, RKK, Ltd. (environmental technology company), 1991 to
1994; former Deputy Commander-in-Chief, Operations Desert
Shield/Storm; former Commanding General, I Corps and Fort Lewis,
Washington, 1989 to 1991; 32 years active service in the U.S.
Army; Chairman, Nonprofit "Fund for the Next Generation";
Director, Bank One, Colorado Springs, Colorado; Trustee, Colorado
College; Trustee, Florida International University Foundation.
Board of Directors Meetings and Committees
During the last fiscal year there were four meetings of the
Board of Directors. All directors attended at least 75% of
meetings held.
The Board of Directors maintains an Audit Committee, a
Nominating Committee and a Compensation and Stock Option
Committee. The Audit Committee, composed of Messrs. Kistler and
McNeill, reviewed with the Company's independent auditors the
scope, results and costs of the audit engagement. During the
past year there were two meetings of the Audit Committee. All
committee members attended the meetings held.
The Nominating Committee, composed of Messrs. Bayley, van
Oppen and Waller, nominates and recommends candidates for the
Board of Directors. During the past year there was one meeting
of the Nominating Committee. All committee members attended the
meeting held. The Nominating Committee will consider the names
and qualifications for candidates for the Board submitted by
Shareholders to the Secretary of the Company in writing on or
before the date specified below under "Shareholder Proposals for
1997 Annual Meeting."
The Compensation and Stock Option Committee, composed of
Messrs. Bayley, Kistler and Stanton, determines the salaries and
bonuses to be paid the President and Chief Executive Officer of
Interpoint and reviews the salaries and bonuses for those
reporting to the President and Chief Executive Officer. The
Committee also administers Interpoint's stock option plans and
meets either independently or in conjunction with the full
Interpoint Board to grant options to eligible individuals in
accordance with the terms of each plan. During the past year
there were four meetings of the Compensation and Stock Option
Committee. All Committee members attended at least 75% of the
meetings held.
In December 1995, the Board of Directors agreed to certain
reassignments among Committee memberships. For the upcoming
year, the Audit Committee will be comprised of Messrs. McNeill,
Kistler and Walker; the Nominating Committee will be comprised of
Messrs. Bayley, van Oppen and Waller; and the Compensation and
Stock Option Committee will be comprised of Messrs. Bayley,
Stanton and Walker.
<PAGE>
Directors' Compensation
In 1995, nonemployee directors were paid a retainer of $500
per quarter and $500 for each meeting attended. Mr. Bayley, who
served as Lead Director, received a retainer of $1,000 per
quarter. Employee directors of the Company are not paid any fees
for serving as members of the Interpoint Board. Audit Committee
members are paid $50 per hour up to a maximum of ten hours per
year for their services. In addition, each nonemployee director,
upon his or her first election or appointment, receives a
Nonqualified Stock Option for 5,500 shares of Interpoint Common
Stock. The Interpoint Corporation 1995 Stock Option and Award
Plan presented for approval at the Annual Meeting provides for an
annual grant of options to purchase 500 shares of stock to each
nonemployee director on the date of each annual meeting. Such
options will vest on the date of the next annual meeting and
expire after five years with the first grant effective February
22, 1995.
EXECUTIVE OFFICERS OF INTERPOINT
The following are executive officers of Interpoint who will
serve in the capacities noted until their successors are
appointed:
<TABLE>
<CAPTION>
Name Age Positions and Offices with Interpoint
---- --- -------------------------------------
<S> <C> <C>
Peter H. van Oppen 43 Chairman, President, and Chief Executive
Officer
David A. Uvelli 48 Senior Vice President and General
Manager, Power Products Division,
Director
Charles H. Stonecipher 34 Senior Vice President and Chief Operating
Officer, Advanced Digital Information
Corporation (ADIC)
Sally M. Veillette 34 Vice President and General Manager,
Custom Microelectronics Division
Leslie S. Rock 38 Vice President, Chief Accounting
Officer, Secretary-Treasurer
</TABLE>
Each executive officer of the Company is appointed annually by
the Board of Directors.
For biographical summaries of Mr. van Oppen and Dr. Uvelli,
see "ELECTION OF DIRECTORS."
Mr. Stonecipher has served as Senior Vice President and Chief
Operating Officer of Advanced Digital Information Corporation
since 1995, and Vice President, Finance and Administration, and
Chief Financial Officer, 1994 to 1995. Prior to that he worked
as a Manager at Bain & Company from 1992 to 1994 and a Consultant
at Bain & Company from 1989 to 1992.
Ms. Veillette has served as Vice President and General
Manager, Custom Microelectronics Division, since 1994; Director
and General Manager, Medical Microelectronics Division, 1993 to
1994; and Regional Sales Manager, 1990 to 1993.
Ms. Rock has served as Vice President, Treasurer and Secretary
since 1994; Vice President, Finance from 1989 to 1994; Chief
Financial Officer, 1987 to 1994; and Controller from 1986 to
1994.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation for services
rendered during the fiscal years ended October 31, 1995, 1994 and
1993 for the Chief Executive Officer and the Company's most
highly compensated executive officers whose annual salary and
bonus exceeded $100,000 in 1995.
<TABLE>
<CAPTION>
Name and Principal Awards/ All Other
Position Year Salary Bonus(2) Options(#) Compensation
- --------------------- ---- --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Peter H. van Oppen 1995 $ 212,493 $ 20,636 -- $ 150 (3)
Chairman, President, 1994 202,339 45,896 -- 150 (3)
CEO and Director(1) 1993 194,322 5,642 10,000 150 (3)
David A. Uvelli 1995 114,574 10,096 5,000 150 (3)
Senior Vice President 1994 102,573 20,575 -- 150 (3)
and General Manager, 1993 89,965 2,689 5,000 150 (3)
Power Products Division
and Director
Charles H. Stonecipher 1995 110,216 7,650 10,000 150 (3)
Senior Vice President, 1994 25,004 2,089 15,000 33,879 (4)
Chief Operating Officer,
ADIC(5)
Sally M. Veillette 1995 93,162 10,357 7,500 150 (3)
Vice President and 1994 66,955 13,633 -- 150 (3)
General Manager, 1993 46,939 1,398 6,000 150 (3)
Custom Microelectronics
Division
</TABLE>
(1) Salary excludes cash-out of unused sick days
and vacation days in accordance with Interpoint's flexible
time-off plan, which is applicable to all Interpoint Team
Members. Such cash-out amounted to $4,023, $8,420 and $5,358
in fiscal 1995, 1994 and 1993, respectively.
(2) Consists of profit bonus awards associated with
performance for that year and Management Incentive Plan (MIP)
awards for fiscal 1995 and 1994.
(3) Consists of matching contributions to the
401(k) plan.
(4) Includes a payment in the amount of $33,729 associated with
relocation expenses. The remainder consists of matching
contributions to the 401(k) plan.
(5) Mr. Stonecipher joined the Company in August, 1994.
<PAGE>
Option Grants Table
The following table sets forth certain information regarding
options granted during the fiscal year ended October 31, 1995 to
the Company's executive officers as to whom compensation is
reported in this Proxy Statement.
<TABLE>
<CAPTION>
------------------------------------------------ Potential Realizable
Number of Percent of Value at Assumed
Shares Total Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Team Members Exercise for Option Terms(3)
Granted in Price Expiration --------------------
Name (#) Fiscal Year ($/Share) Date 5% 10%
---- ---------- ------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Peter H. van Oppen -- -- -- -- -- --
David A. Uvelli 5,000 4.91% $8.875 2/22/00 (2) $12,260 $27,091
Charles H. Stonecipher 8,000 7.86% $8.875 2/22/00 (2) $19,616 $43,346
2,000 1.96% $11.00 8/16/05 (1) $13,836 $35,062
Sally M. Veillette 5,000 4.91% $8.875 2/22/00 (2) $12,260 $27,091
2,500 2.46% $11.00 8/16/05 (1) $17,295 $43,828
</TABLE>
(1) The options vest upon the earlier of July 16, 2005 and the
last day of the consecutive 40-day period during which the
market price of Interpoint Common Stock has been at or above
$15 per share. The per share exercise price represents the
fair market value of the Interpoint Common Stock on the date
of grant. The options expire ten years from the date of
grant.
(2) The options vest in four equal annual installments beginning
one year after the date of grant. The per share exercise
price represents the fair market value of the Interpoint
Common Stock on the date of grant. The options expire five
years from the date of grant.
(3) Future value of current year grants assuming appreciation of
5% and 10% per year over the five-year or ten-year option
period. The actual value realized may be greater than or less
than the potential realizable values set forth in the table.
Option Exercises and Year-End Value Table
The following table sets forth certain information as of
October 31, 1995, regarding options held by the Company's
executive officers as to whom compensation is reported in this
Proxy Statement. None of such executive officers exercised any
options during the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
Total Number of Value of Unexercised
Unexercised Options at in-the-Money Options
Fiscal Year-End(#) at Fiscal Year-End($)(1)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>>
Peter H. van Oppen 102,500 10,000 $ 656,735 $ 40,000
David A. Uvelli 12,000 11,000 $ 72,375 $ 36,125
Charles H. Stonecipher 3,750 21,250 $ 10,313 $ 50,438
Sally M. Veillette 3,000 11,000 $ 13,938 $ 27,125
</TABLE>
(1) Calculated on the basis of the fair market value of the
underlying securities as of October 31, 1995, less the option
exercise price times the number of shares.
<PAGE>
Report of the Compensation and Stock Option Committee on Annual Compensation
The policy of the Compensation and Stock Option Committee (the
Committee) with respect to executive officer compensation is that
such compensation should (i) assist Interpoint in attracting and
retaining key executives critical to the Company's long-term
success, (ii) align the interests of the executives with the
long-term interests of the shareholders, (iii) reflect
Interpoint's performance and (iv) reward executives for their
individual performance. Executive compensation includes base
salary, bonuses based on Company performance and stock option
grants. These programs are designed to provide incentives for
both short and long-term performance.
Base Salary. The base salary of the Chief Executive Officer
(CEO) is set at an amount the Committee believes is competitive
with salaries paid to executives of companies of comparable size
and of companies located within the local area. In evaluating
salaries, the Committee uses an American Electronics Association
survey which provides data by industry and size of company.
Additionally, a detailed review of the CEO's performance and a
general review of the Company's financial and stock price
performance are considered.
The base salary for executive officers and all other salaried
Team Members is reviewed once per year with adjustments effective
August 1. The CEO's base salary was increased from $210,000 to
$220,000 on August 1, 1995. This adjustment provided an increase
of 4.7 percent which is approximately equal to the average
adjustment granted to other executive officers and salaried Team
Members. Some, but not all, of the companies included this
survey are included in the Nasdaq Electronic Components Index
shown on the Performance Graph. Additionally, it places the
CEO's salary slightly below the average indicated in the survey
referred to above.
Bonuses. Bonuses are paid under Profit Sharing and Management
Incentive Plans. The Profit Sharing Plan is a noncontributory
plan that covers all U.S.-based Team Members. The plan, which
has been in place in substantially the same form since 1973,
provides for fifteen percent of pretax profits to be contributed
to the Plan which is then allocated among the Team Members,
including the CEO, based upon his or her monthly wage and length
of service.
The Management Incentive Plan (MIP) is also noncontributory
and covers approximately 60 key Team Members. Interpoint's Board
of Directors may set aside a portion of pretax profits for
payment under the MIP based upon achievement of certain corporate
performance goals which are established at the beginning of the
year. These goals are primarily tied to operating profit and in
1995 provided for significant growth in sales and profitability.
Upon achievement of these goals, MIP payment targets are set as a
percentage of base compensation depending on the Team Member's
level of responsibility. In 1995, based upon partial achievement
of these goals, the Committee determined that $85,000 should be
paid out in the form of MIP payments. This amount was
distributed based upon level of responsibility, with the CEO
receiving $6,500. Historically, the plan has distributed between
zero and ten percent of pretax profits.
Stock Option Grants. The Company provides its executive
officers with long-term incentives through the Stock Option
Plans, the objective of which is to provide incentives to
maximize shareholder value. There were no option grants made to
the CEO during 1995.
COMPENSATION AND STOCK OPTION COMMITTEE
John W. Stanton, Chairman
Christopher T. Bayley
Walter P. Kistler
<PAGE>
Performance Graph
Comparison of Five-Year Cumulative Return(1)
Among Interpoint Corporation, Nasdaq Electronic Components Index
and S&P 500 Index
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Interpoint Corporation 100.00 122.22 161.11 166.67 188.89 250.00
Nasdaq Electronic Components Index 100.00 144.27 202.40 345.85 382.36 779.19
Standard & Poor's 500 Index 100.00 129.10 137.72 153.89 155.38 191.28
</TABLE>
(1) Assumes $100 invested at the close of trading on October 31,
1990 in Interpoint Common Stock, in the Nasdaq Electronic
Components Index and in the S&P 500 Index.
NOTE: Stock price performance shown above for Interpoint Common
Stock is historical and not necessarily indicative of future
price performance.
Section 16 Reporting
Section 16(a) of the Exchange Act requires Interpoint's
officers and directors, and persons who own more than 10% of a
registered class of Interpoint's equity securities, to file
reports of ownership and changes in ownership with the
Commission. Officers, directors and greater than 10%
shareholders are required by Commission regulation to furnish
Interpoint with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting
persons that no Form 5s were required for those persons,
Interpoint believes that during fiscal 1995 all filing
requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with.
<PAGE>
PRINCIPAL SHAREHOLDERS
Principal Shareholders
The following table sets forth information as of January 5,
1996, with respect to all shareholders known by Interpoint to be
the beneficial owners of more than 5% of the outstanding shares
of Interpoint Common Stock. Except as noted, Interpoint believes
that the beneficial owners of the shares of Interpoint Common
Stock listed below, based on information furnished by such
owners, have sole voting and investment power with respect to
such shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Name and Address Number Percent
---------------- ----------- -----------
<S> <C> <C>
John W. Stanton 290,232 (1) 7.6%
10301 Willows Road
Redmond, Washington 98073-9705
Ernest G. Brown 251,400 6.5
Redmond, Washington
Walter P. Kistler 250,470 (1) 6.5
10301 Willows Road
Redmond, Washington 98073-9705
Kennedy Capital Management 224,000 5.8
St. Louis, Missouri
Peter H. van Oppen 204,176 (2) 5.3
10301 Willows Road
Redmond, Washington 98073-9705
</TABLE>
(1) Includes 5,500 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days. Also
includes 500 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days,
pending shareholder approval of the 1995 Stock Option and
Award Plan at the Annual Meeting of Shareholders.
(2) Does not include 5,150 shares that are held in trust for Mr.
van Oppen's minor children or 3,000 shares that are held in a
trust (as to which Mr. van Oppen serves as trustee) for the
benefit of certain minor relatives of Mr. van Oppen, as to
which he disclaims any beneficial ownership. Includes 91,241
shares subject to issuance upon exercise of Interpoint options
that are exercisable within 60 days.
<PAGE>
Security Ownership of Management
The following table sets forth information as of January 5,
1996, with respect to the beneficial ownership of shares of
Interpoint Common Stock of each director of Interpoint, each of
Interpoint's executive officers for whom compensation is reported
in this Proxy Statement, and all directors and executive officers
of Interpoint as a group. Except as noted, Interpoint believes
that the beneficial owners listed below, based on information
furnished by such owners, have sole voting and investment power
with respect to such shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned
_________________________
Name Number Percent
---- ------------ -----------
<S> <C> <C>
John W. Stanton(1) 290,232 7.6 %
Walter P. Kistler(1) 250,470 6.5
Peter H. van Oppen(2) 204,176 5.3
Christopher T. Bayley(1) 30,000 *
David A. Uvelli(3) 20,585 *
Russell F. McNeill(4) 4,900 *
Calvin A.H. Waller(1) 6,000 *
Charles H. Stonecipher(5) 6,750 *
Sally M. Veillette(6) 4,250 *
Walter F. Walker 10,000 *
All directors and executive officers
as a group (11 persons)(7) 837,098 21.8
</TABLE>
* Less than 1%
(1) Includes 5,500 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days. .
Also includes 500 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days,
pending shareholder approval of the 1995 Stock Option and
Award Plan at the Annual Meeting of Shareholders.
(2) Does not include 5,150 shares that are held in trust for Mr.
van Oppen's minor children or 3,000 shares that are held in a
trust (as to which Mr. van Oppen serves as trustee) for the
benefit of certain minor relatives of Mr. van Oppen, as to
which he disclaims any beneficial ownership. Includes 91,241
shares subject to issuance upon exercise of Interpoint options
that are exercisable within 60 days.
(3) Includes 13,250 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days.
(4) Includes 4,400 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days. Also
includes 500 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days,
pending shareholder approval of the 1995 Stock Option and
Award Plan at the Annual Meeting of Shareholders.
(5) Includes 5,750 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days.
(6) Includes 4,250 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days.
(7) Includes 151,441 shares subject to issuance upon exercise of
Interpoint options that are exercisable within 60 days.
<PAGE>
APPROVAL OF THE 1995 STOCK OPTION AND AWARD PLAN
The 1995 Plan as adopted by the Board on February 22, 1995 and
amended and restated by the Board on December 6, 1995, is
submitted to the Company's shareholders for approval at the
Annual Meeting. The 1995 Plan is the successor to the Company's
Amended 1985 Stock Option Plan and the Amended Non-Qualified
Stock Option Plan (the "1985 Plans"), both of which expired on
December 17, 1995. A copy of the 1995 Plan is attached to this
Proxy Statement as Exhibit A. The following description of the
1995 Plan is a summary and does not purport to be fully
descriptive. Reference is made to Exhibit A for more detailed
information.
Introduction
While similar to the 1985 Plans, in that the 1995 Plan
includes provisions for the same kinds of option awards that
could be made under the 1985 Plans, the 1995 Plan gives the
Company greater flexibility in certain respects. The 1995 Plan
also provides for automatic annual grants of options to purchase
500 shares to each nonemployee director, as well as one-time
automatic grants of options to purchase 5,500 shares to each
nonemployee director upon the director's initial election or
appointment to the Board. The Amended 1985 Stock Option Plan
provided only for one-time grants to new nonemployee directors.
Summary of the 1995 Plan
The 1995 Plan provides for grants of incentive stock options
and nonqualified stock options.
Stock Subject to the 1995 Plan. Subject to adjustment from
time to time as provided in the 1995 Plan, the maximum of 100,000
shares of Common Stock will be available for issuance under the
1995 Plan. As of January 5, 1996, options to purchase 392,554
shares were outstanding under the 1985 Plans and, subject to
shareholder approval of the 1995 Plan, options to purchase 2,500
shares were outstanding under the 1995 Plan. Shares issued
pursuant to the 1995 Plan will be drawn from authorized and
unissued shares or shares now held or subsequently acquired by
the company. The closing price of the Common Stock as reported
on the Nasdaq National Market on January 5, 1996 was $9.25 per
share.
Subject to adjustment from time to time as provided in the
1995 Plan, not more than 50,000 shares of Common Stock may be
subject to grants of options under the 1995 Plan to any
participant in any one fiscal year of the Company, to the extent
required for compliance with certain exemptive provisions of
Section 162(m) of the Code, which precludes the Company from
taking a tax deduction for compensation payments to executives in
excess of $1 million, unless such payments qualify for the
"performance-based" exemption from the $1 million limitation.
Any shares of Common Stock that have been made subject to an
award that cease to be subject to the award (other than by reason
of exercise), including, without limitation, in connection with
the cancellation of an award and the grant of a replacement
award, will be available for issuance in connection with future
grants of awards under the 1995 Plan.
Eligibility to Receive Awards. Discretionary awards may be
granted under the 1995 Plan to those officers and key employees
(including directors who are also employees) of the Company and
its subsidiaries as the plan administrator from time to time
selects. Awards may also be made to consultants, advisors and
agents who provide services to the Company and its subsidiaries.
Nonemployee directors are eligible to receive only the automatic
awards specified in the 1995 plan.
Terms and Conditions of Stock Option Grants. Options granted
under the 1995 Plan may be "incentive stock options" (as
defined in Section 422 of the Code) or "nonqualified stock
options." The option price for each option granted under the
1995 Stock Option Plan will be determined by the plan
administrator, but will be not less than 100% of the Common
Stock's fair market value on the date of grant. For purposes of
the 1995 Stock Option Plan, "fair market value" means the
closing price of the Common Stock as reported by Nasdaq National
Market for a single trading day.
<PAGE>
The exercise price for shares purchased under options must be
paid in cash, already-owned Common Stock held by the optionee for
at least six months and/or delivery of a properly executed
exercise notice, together with irrevocable instructions to a
broker. The optionee must pay to the Company applicable
withholding taxes upon exercise of the option as a condition to
receiving the stock certificates.
The option term will be fixed by the plan administrator and if
not so fixed will be five years. Each option will be exercisable
pursuant to a vesting schedule determined by the plan
administrator. If not so determined, each option will be
exercisable in four equal installments beginning one year after
the date of grant. The plan administrator will also determine
the circumstances under which an option will be exercisable in
the event the optionee ceases to provide services to the Company
or one of its subsidiaries. If not so established, options
generally will be exercisable for three months after termination
of services. An option will not be exercisable if the optionee's
services are terminated for cause, as defined in the 1995 Plan.
Nonemployee Director Grants. Nonemployee directors of the
Company are eligible to receive option awards under the 1995 Plan
only in the form of automatic grants. Each nonemployee director
automatically received an option to purchase 500 shares of Common
Stock on February 22, 1995, subject to shareholder approval of
the 1995 Plan, and automatically will receive an option to
purchase 500 shares immediately after each subsequent Annual
Meeting of Shareholders after that date. Such options vest upon
the optionee's continued service as a director until the next
Annual Meeting of Shareholders after the date of grant. Each
newly elected or appointed nonemployee director automatically
will receive an option to purchase 5,500 shares on the date of
his or her initial election or appointment to the Board. Such
options will vest in four equal annual installments of 1,375
shares each beginning one year after the date of grant. Options
granted to nonemployee directors are nonqualified stock options
and have a term of five years from the date of grant. The
options are exercisable at a price equal to the fair market value
of the Common Stock on the date of grant. Any options granted to
nonemployee directors are subject to the availability of Common
Stock under the 1995 Plan. Except as otherwise provided, options
to nonemployee directors are subject to the terms and conditions
of the 1995 Plan applicable to other optionees.
Loans, Loan Guarantees and Installment Payments. To assist a
holder (including a holder who is an officer or director of the
Company, but not a nonemployee director) in acquiring shares of
Common Stock pursuant to an award granted under the 1995 Plan,
the plan administrator may authorize (a) the extension of a loan
to the holder by the Company, (b) the payment by the holder of
the purchase price, if any, of the Common Stock in installments,
or (c) the guarantee by the Company of a loan obtained by the
grantee from a third party. The terms of any loans, installment
payments or guarantees, including the interest rate and terms of
repayment, will be subject to the plan administrator's
discretion, and may be granted with or without security.
Transferability. No option will be assignable or otherwise
transferable by the holder other than by will or the laws of
descent and distribution and, during the holder's lifetime, may
be exercised only by the holder, except to the extent permitted
by the plan administrator, Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
Section 422 of the Code. Options held by nonemployee directors
may be transferred only to certain family members and trusts, to
the extent permitted by Rule 16b-3 under the Exchange Act.
<PAGE>
Adjustment of Shares. In the event of any changes in the
outstanding stock of the Company by reason of stock dividends,
stock splits, spin-offs, combinations or exchanges of shares,
recapitalizations, mergers, consolidations, distributions to
stock holders other than a normal cash dividend, or other changes
in the Company's corporate or capital structure, the plan
administrator shall make proportional adjustments in (a) the
maximum number and class of securities subject to the 1995 Plan,
(b) the number and class of securities that may be made subject
to automatic awards to nonemployee directors, and (c) the number
and class of securities subject to any outstanding award granted
to a nonemployee director and the per share price of such
securities, without any change in the aggregate price to be paid
therefor, and the plan administrator, in its sole discretion, may
make any equitable adjustments it deems appropriate for awards
other than those granted to nonemployee directors, in (x) the
maximum number and class of securities that may be made subject
to awards to any participants, and (y) the number and class of
securities that are subject to any outstanding award and the per
share price of such securities, without any changes in the
aggregate price to be paid therefor.
Corporate Transaction. In the event of certain mergers or
consolidations or a sale of substantially all the assets or a
liquidation of the Company, each option that is at the time
outstanding will automatically accelerate so that each such award
will, immediately prior to such corporate transaction, become
100% vested, except that with respect to awards other than those
granted to nonemployee directors, such award will not so
accelerate if and to the extent: (a) such award is, in connection
with the corporate transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a
comparable award for the purchase of shares of the capital stock
of the successor corporation or its parent corporation or (b)
such award is to be replaced with a cash incentive program of the
successor corporation that preserves the spread existing at the
time of the corporate transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to
such award. Any such awards that are assumed or replaced in the
corporate transaction and do not otherwise accelerate at that
time shall be accelerated in the event the holder's employment or
services should subsequently terminate within two years following
such corporate transaction, unless such employment or services
are terminated by the successor corporation for cause or by the
holder voluntarily without good reason.
Further Adjustment of Awards. The plan administrator shall
have the discretion, exercisable at any time before a sale,
merger, consolidation, reorganization, liquidation or change in
control of the Company, as defined by the plan administrator, to
take such further action as it determines to be necessary or
advisable, and fair and equitable to holders, with respect to
awards other than those granted to nonemployee directors. Such
authorized action may include (but is not limited to)
establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, awards so as to provide for
earlier, later, extended or additional time for exercise,
alternate forms and amounts of payments and other modifications,
and the plan administrator may take such actions with respect to
all holders, to certain categories of holders or only to
individual holders. The plan administrator may take such actions
before or after granting awards to which the action relates and
before or after any public announcement with respect to such
sale, merger, consolidation, reorganization, liquidation or
change in control that is the reason for such action.
Administration. The 1995 Plan will be administered by a
committee or committees appointed by, and consisting of two or
more members of, the Company's Board of Directors. The board may
delegate the responsibility for administering the 1995 Plan with
respect to designated classes of eligible participants to
different committees, or with respect to grants made to newly
hired individuals other than persons subject to Section 16(b) of
the Exchange Act, to one or more of the Company's officers,
subject to such limitations as the Board deems appropriate.
Committee members will serve for such term as the Board may
determine, subject to removal by the Board at any time. The
administration of the 1995 Plan with respect to officers and
directors of the Company who are subject to Section 16 of the
Exchange Act with respect to securities of the Company will
comply with the requirements of Rule 16b-3 promulgated under
Section 16(b) of the Exchange Act, or any successor provision.
Amendment and Termination. The 1995 Plan may be terminated,
modified or amended by the shareholders of the Company. The
Company's Board of Directors may also terminate the 1995 Plan, or
modify or amend it, subject to shareholder approval in certain
instances, as set forth in the 1995 Plan. No incentive stock
options may be granted under the 1995 Stock Option Plan more than
10 years after the date the 1995 Plan is adopted by the Board.
<PAGE>
Federal Income Tax Consequences
The federal income tax consequences to the Company and to any
person granted an award of options under the 1995 Plan under the
existing applicable provisions of the Code and the regulations
thereunder are substantially as follows. Under present law and
regulations, no income will be recognized by a participant upon
the grant of stock options.
On the exercise of a nonqualified stock option, the optionee
will recognize taxable ordinary income in an amount equal to the
excess of the fair market value of the shares acquired over the
option price. Upon a later sale of those shares, the optionee
will have a short-term or long-term capital gain or loss, as the
case may be, in an amount equal to the difference between the
amount realized on such sale and the tax basis of the shares
sold. If payment of the option price is made entirely in cash,
the tax basis of the shares will be equal to their fair market
value on the exercise date (but not less than the option price),
and the shares' holding period will begin on the day after the
exercise date.
If the optionee uses already-owned shares to exercise an
option in whole or in part, the transaction will not be
considered to be a taxable disposition of the already-owned
shares. The optionee's tax basis and holding period of the
already-owned shares will be carried over to the equivalent
number of shares received upon exercise. The tax basis of the
additional shares received upon exercise will be the fair market
value of the shares on the exercise date (but not less than the
amount of cash, if any, used in payment), and the holding period
for such additional shares will begin on the day after the
exercise date.
The same rules apply to an incentive stock option that is
exercised more than three months after the optionee's termination
of employment (or more than 12 months thereafter in the case of
permanent and total disability, as defined in the Code).
Upon the exercise of an incentive stock option during
employment or within three months after the optionee's
termination of employment (12 months in the case of permanent and
total disability, as defined in the Code), for regular tax
purposes the optionee will recognize no income at the time of
exercise (although the optionee will have income for alternative
minimum income tax purposes at that time as if the option were a
nonqualified stock option) and no deduction will be allowed to
the Company for federal income tax purposes in connection with
the grant or exercise of the option. If the acquired shares are
sold or exchanged after the later of (a) one year from the date
of exercise of the option and (b) two years from the date of
grant of the option, the difference between the amount realized
by the optionee on that sale or exchange and the option price
will be taxed to the optionee as a long-term capital gain or
loss. If the shares are disposed of before such holding period
requirements are satisfied, then the optionee will recognize
taxable ordinary income in the year of disposition in an amount
equal to the excess, on the date of exercise of the option, of
the fair market value of the shares received over the option
price paid (or generally, if less, the excess of the amount
realized on the sale of the shares over the option price), and
the optionee will have capital gain or loss, long-term or short-
term, as the case may be, in an amount equal to the difference
between (i) the amount realized by the optionee upon that
disposition of the shares and (ii) the option price paid by the
optionee increased by the amount of ordinary income, if any, so
recognized by the optionee.
Special rules apply to a director or officer subject to
liability under Section 16(b) of the Exchange Act.
In all the foregoing cases the Company will be entitled to a
deduction at the same time and in the same amount as the
participant recognizes ordinary income, subject to the following
limitations. Under Section 162(m) of the code, certain
compensation payments in excess of $1 million are subject to a
limitation on deductibility for the Company. The limitation on
deductibility applies with respect to that portion of a
compensation payment for a taxable year in excess of $1 million
to either the Company's Chief Executive Officer or any one of the
other four most highly compensated executive officers. Certain
performance-based compensation is not subject to the limitation
on deductibility. Options can qualify for this performance-based
exception, but only if they are granted at fair market value, the
total number of shares that can be granted to an executive for
any period is stated, and stockholder and Board approval is
obtained. The 1995 Plan has been drafted to allow compliance
with those performance-based criteria.
<PAGE>
New Plan Benefits
Since awards under the 1995 Plan are discretionary, except for
the specified grants to nonemployee directors, the Company cannot
currently determine the number of awards which will be issued
pursuant to the 1995 Plan during the fiscal year ending October
31, 1996. During 1995, options to purchase an aggregate of
22,500 shares at an average exercise price of $9.30 per share
were granted under the 1985 Plans to all executive officers of
the Company as a group, options to purchase an aggregate of
79,300 shares at an average exercise price of $9.184 per share
were granted to all other employees of the Company as a group
(including officers who are not executive officers), and options
to purchase an aggregate of 5,500 shares at an exercise price of
$11.00 per share were granted to all nonemployee directors of the
Company as a group. Also during 1995, options to purchase an
aggregate of 2,500 shares at an exercise price of $8.875 per
share were granted under the 1995 Plan to all nonemployee
directors of the Company as a group, subject to shareholder
approval of the 1995 Plan. Options granted during 1995 to the
Company's Named Executive Officers under the 1985 Plans are set
forth under "EXECUTIVE COMPENSATION--Option Grants Table."
The Board of Directors recommends a vote FOR approval of the 1995 Plan.
CERTAIN TRANSACTIONS
The Company leases space from K-M Properties, a general
partnership in which Walter P. Kistler is a partner, to house its
data storage operations. Rent payments for fiscal 1995 were
$96,069.
INDEPENDENT AUDITORS
Price Waterhouse was Interpoint's independent auditor in 1995.
A representative of Price Waterhouse will be present at the
Annual Meeting to respond to appropriate questions and will have
the opportunity to make a statement, if desired.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals for Shareholder action that eligible Shareholders
wish to have included in the Company's Annual Meeting to be held
in February 1997 must be received by the Company at its principal
executive offices on or before September 27, 1996.
OTHER MATTERS
The Board of Directors of the Company knows of no other
matters that may come before the Annual Meeting. If any other
matters should properly come before the Annual Meeting or any
adjournment, the persons named in the proxy intend to vote the
proxy in accordance with their best judgment.
By Order of the Board of Directors
/s/Leslie S. Rock
Leslie S. Rock
Secretary-Treasurer
Redmond, Washington
January 25, 1996
PROXY
INTERPOINT CORPORATION
10301 WILLOWS ROAD
P.O. BOX 97005
REDMOND, WA 98073-9705
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS FEBRUARY 21, 1996
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints Peter H. van Oppen and Leslie S. Rock, and either of
them, with full powers of substitution, attorneys and proxies to vote all
shares of stock of the undersigned entitled to vote at the Annual meeting of
Shareholders of Interpoint Corporation ("Interpoint") to be held at the
Hyatt Regency Bellevue at Bellevue Place, 900 Bellevue Way N.E., Bellevue,
Washington on February 21, 1996 at 10:00 am and any adjournment or
postponements thereof with all powers the undersigned would possess if
personally present.
(Continued and to be signed on reverse side)
<PAGE>
The Board of Directors recommends a vote
"FOR " ELECTION OF DIRECTORS
1. ELECTION OF DIRECTORS / / FOR all nominees listed
Nominees: Christopher T. Bayley (except as indicated)
John W. Stanton
Peter H. van Oppen / / WITHHOLD AUTHORITY to vote
Walter F. Walker for all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below)
_______________________________________________
2. Approve the adoption of the Interpoint Corporation 1995 Stock Option
and Award Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Such other matters as may properly come before the Meeting. The Board
of Directors at present know of no other matters to be brought before
the Meeting.
The proxy will be voted in accordance with the instructions given. Unless
revoked or otherwise instructed, the shares represented by this proxy will
be voted for proposals 1 and 2 and will be voted in accordance with the
discretion of the proxies upon all other matters which may come before the
Meeting or any adjournment or postponement thereof.
PLEASE DATE AND MAIL IN ENCLOSED POSTAGE-PAID ENVELOPE.
Signature(s)____________________________________ Date____________________
Please sign as your name appears hereon. Trustees, Guardians, Personal and
other Representatives, please indicate full titles.
EXHIBIT A
INTERPOINT CORPORATION
1995 STOCK OPTION AND AWARD PLAN
As Amended and Restated on December 6, 1995
SECTION 1. PURPOSE
The purpose of the Interpoint Corporation 1995 Stock Option
and Award Plan, as amended and restated (the "Plan"), is to
enhance the long-term profitability and shareholder value of
Interpoint Corporation, a Washington corporation (the "Company"),
by offering incentives and rewards to those employees, directors,
officers, consultants, agents, advisors and independent
contractors of the Company and its Subsidiaries (as defined in
Section 2 below) who are key to the Company's growth and success,
and to encourage them to remain in the service of the Company and
its Subsidiaries and to acquire and maintain stock ownership in
the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be
defined as set forth below:
2.1 Award
"Award" means an award or grant made to a Participant
pursuant to the Plan.
2.2 Board
"Board" means the Board of Directors of the Company.
2.3 Cause
"Cause" means dishonesty, fraud, misconduct, unauthorized
use or disclosure of confidential information or trade secrets,
or conviction or confession of a crime punishable by law (except
minor violations), in each case as determined by the Plan
Administrator, and its determination shall be conclusive and
binding.
2.4 Code
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.5 Common Stock
"Common Stock" means the common stock, no par value, of the
Company.
2.6 Corporate Transaction
"Corporate Transaction" means any of the following events:
(a) Approval by the holders of the Common Stock of any
merger or consolidation of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which
shares of the Common Stock are converted into cash, securities or
other property, other than a merger of the Company in which the
holders of the Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of
the surviving corporation immediately after the merger;
<PAGE>
(b) Approval by the holders of the Common Stock of any
sale, lease, exchange or other transfer in one transaction or a
series of related transactions of all or substantially all of the
Company's assets other than a transfer of the Company's assets to
a majority-owned subsidiary corporation (as the term "subsidiary
corporation" is defined in Section 8.3 of the Plan) of the
Company; or
(c) Approval by the holders of the Common Stock of any
plan or proposal for the liquidation or dissolution of the
Company.
2.7 Disability
"Disability" means "disability" as that term is defined for
purposes of Section 22(e)(3) of the Code.
2.8 Eligible Director
"Eligible Director" means a member of the Board who is not
also an employee of the Company or any "parent corporation" or
"subsidiary corporation" (as those terms are defined in Section
8.3 of the Plan) of the Company.
2.9 Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 Fair Market Value
"Fair Market Value" shall be as established in good faith by
the Plan Administrator or (i) if the Common Stock is listed on
the Nasdaq National Market, the closing price for the Common
Stock as reported by the Nasdaq National Market for a single
trading day or (ii) if the Common Stock is listed on the New York
Stock Exchange, the mean of the high and low per share trading
prices for the Common Stock as reported in The Wall Street
Journal for the New York Stock Exchange--Composite Transactions
(or similar successor consolidated transactions reports) for a
single trading day.
2.11 Good Reason
"Good Reason" means the occurrence of any of the following
events or conditions:
(a) a change in the Holder's status, title, position
or responsibilities (including reporting responsibilities) that,
in the Holder's reasonable judgment, represents a substantial
reduction of the status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to the Holder
of any duties or responsibilities that, in the Holder's
reasonable judgment, are inconsistent with such status, title,
position or responsibilities; or any removal of the Holder from
or failure to reappoint or reelect the Holder to any of such
positions, except in connection with the termination of the
Holder's employment for Cause, for Disability or as a result of
his or her death, or by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Company's requiring the Holder (without the
Holder's consent) to be based at any place outside a 35-mile
radius of his or her place of employment prior to a Corporate
Transaction, except for reasonably required travel on the
Company's business that is not materially greater than such
travel requirements prior to the Corporate Transaction;
<PAGE>
(d) the Company's failure to (i) continue in effect
any material compensation or benefit plan (or the substantial
equivalent thereof) in which the Holder was participating at the
time of a Corporate Transaction, including, but not limited to,
the Plan, or (ii) provide the Holder with compensation and
benefits at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each employee benefit
plan, program and practice as in effect immediately prior to the
Corporate Transaction (or as in effect following the Corporate
Transaction, if greater);
(e) any material breach by the Company of any
provision of the Plan; or
(f) any purported termination of the Holder's
employment or service for Cause by the Company that does not
comply with the terms of the Plan.
2.12 Grant Date
"Grant Date" means (i) the date designated in a resolution
of the Plan Administrator as the date an Award is granted, (ii)
if the Plan Administrator does not designate the Grant Date in
the resolution, the date the Plan Administrator adopted the
resolution, or (iii) the date an option is automatically granted
pursuant to Section 9 of the Plan.
2.13 Holder
"Holder" means the Participant to whom an Award is granted,
or the personal representative of a Holder who has died.
2.14 Incentive Stock Option
"Incentive Stock Option" means an option to purchase Common
Stock granted under Section 7 of the Plan with the intention that
it qualify as an "incentive stock option" as that term is defined
in Section 422 of the Code.
2.15 Nonqualified Stock Option
"Nonqualified Stock Option" means an option to purchase
Common Stock granted under Section 7 of the Plan other than an
Incentive Stock Option.
2.16 Option
"Option" means the right to purchase Common Stock granted
under Sections 7 or 9 of the Plan.
2.17 Participant
"Participant" means an individual who is a Holder of an
Award.
2.18 Plan Administrator
"Plan Administrator" means the Board or any committee of the
Board designated to administer the Plan under Section 3.1 of the
Plan
2.19 Subsidiary
"Subsidiary," except as expressly provided otherwise, means
any entity that is directly or indirectly controlled by the
Company or in which the Company has a significant ownership
interest, as determined by the Plan Administrator, and any entity
that may become a direct or indirect parent of the Company.
<PAGE>
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board or a committee
or committees (which term includes subcommittees) appointed by,
and consisting of two or more members of, the Board; provided,
however, that so long as the Company is subject to Rule 16b-3
promulgated under Section 16(b) of the Exchange Act as in effect
prior to May 1, 1991, such committee shall consist of at least
three members of the Board. The Board may delegate the
responsibility for administering the Plan with respect to
designated classes of eligible Participants to different
committees or, with respect to grants made to newly hired
individuals other than persons subject to Section 16(b) of the
Exchange Act, to one or more officers of the Company, subject to
such limitations as the Board deems appropriate. Committee
members shall serve for such term as the Board may determine,
subject to removal by the Board at any time. Notwithstanding the
foregoing, the administration of the Plan with respect to
officers and directors of the Company who are subject to Section
16 of the Exchange Act with respect to securities of the Company
shall comply with the requirements of Rule 16b-3 under the
Exchange Act as then applicable to the Company's employee benefit
plans.
3.2 Administration and Interpretation by the Plan Administrator
Except for the terms and conditions explicitly set forth in
the Plan, the Plan Administrator shall have exclusive authority,
in its discretion, to determine all matters relating to Awards
under the Plan, including the selection of individuals to be
granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions,
restrictions and limitations, if any, of an Award and the terms
of any instrument that evidences the Award. The Plan
Administrator shall also have exclusive authority to interpret
the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration.
The Plan Administrator's interpretation of the Plan and its rules
and regulations, and all actions taken and determinations made by
the Plan Administrator pursuant to the Plan, shall be conclusive
and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in
Section 12.1 of the Plan, a maximum of 100,000 shares of Common
Stock shall be available for issuance under the Plan. Shares
issued under the Plan shall be drawn from authorized and unissued
shares.
4.2 Limitations
Subject to adjustment from time to time as provided in
Section 12.1 of the Plan, not more than 50,000 shares of Common
Stock may be made subject to Awards under the Plan to any
individual Participant in the aggregate in any one fiscal year of
the Company, such limitation to be applied in a manner consistent
with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on
deductibility of compensation under Section 162(m) of the Code.
4.3 Reuse of Shares
Any shares of Common Stock that have been made subject to an
Award that cease to be subject to the Award (other than by reason
of exercise), including, without limitation, in connection with
the cancellation of an Award and the grant of a replacement
Award, shall again be available for issuance in connection with
future grants of Awards under the Plan.
<PAGE>
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers,
directors and key employees of the Company and its Subsidiaries
as the Plan Administrator from time to time selects; provided,
however, that Eligible Directors shall be eligible to receive
Awards only under Section 9 of the Plan. Awards may also be made
to consultants, agents, advisors and independent contractors who
provide services to the Company and its Subsidiaries.
SECTION 6. AWARDS
6.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be made
under the Plan. Such Awards shall consist of Incentive Stock
Options and Nonqualified Stock Options.
6.2 Acquired Company Awards
Notwithstanding anything in the Plan to the contrary, the
Plan Administrator may grant Awards under the Plan in
substitution for awards issued under other plans, or assume under
the Plan awards issued under other plans, if the other plans are
or were plans of other entities ("Acquired Entities")(or the
parent of the Acquired Entity) and the new Award is substituted,
or the old award is assumed, by reason of a merger,
consolidation, acquisition of property or of stock,
reorganization or liquidation (the "Acquisition Transaction").
In the event that a written agreement pursuant to which the
Acquisition Transaction is completed is approved by the Board and
said agreement sets forth the terms and conditions of the
substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be
the action of the Plan Administrator without any further action
by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such Awards shall be deemed to be Participants
and Holders.
SECTION 7. AWARDS OF OPTIONS
7.1 Grant of Options
The Plan Administrator is authorized under the Plan, in its
sole discretion, to issue Options as Incentive Stock Options or
as Nonqualified Stock Options, which shall be appropriately
designated.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option
shall be as determined by the Plan Administrator, but shall not
be less than 100% of the Fair Market Value of the Common Stock on
the Grant Date.
7.3 Term of Options
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be five years from
the Grant Date.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option the time at which or the
installments in which the Option shall become exercisable, which
provisions may be waived or modified by the Plan Administrator at
any time. If not so established in the instrument evidencing the
Option, the Option will become exercisable according to the
following schedule, which may be waived or modified by the Plan
Administrator at any time:
<PAGE>
<TABLE>
<CAPTION>
Period of Holder's Continuous Percent of
Employment or Service with the Total Option
Company or Its Subsidiaries That Is
From the Option Grant Date Exercisable
<S> <C>
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
</TABLE>
To the extent that the right to purchase shares has accrued
thereunder, an Option may be exercised from time to time by
written notice to the Company, in accordance with procedures
established by the Plan Administrator, setting forth the number
of shares with respect to which the Option is being exercised and
accompanied by payment in full as described in Section 7.5 of the
Plan.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option
shall be paid in full to the Company by delivery of consideration
equal to the product of the Option exercise price and the number
of shares purchased. Such consideration must be paid in cash or
check and/or one or more of the following alternative forms: (i)
Common Stock already owned by the Holder for at least six months
(or any shorter period necessary to avoid a charge to the
Company's earnings for financial reporting purposes) having a
Fair Market Value on the day prior to the exercise date equal to
the aggregate Option exercise price or (ii) if the Common Stock
is publicly traded, delivery of a properly executed exercise
notice, together with irrevocable instructions, to (a) a
brokerage firm designated by the Company to deliver promptly to
the Company the aggregate amount of sale or loan proceeds to pay
the Option exercise price and any withholding tax obligations
that may arise in connection with the exercise and (b) the
Company to deliver the certificates for such purchased shares
directly to such brokerage firm, all in accordance with the
regulations of the Federal Reserve Board.
7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option will
continue to be exercisable, and the terms and conditions of such
exercise, if a Holder ceases to be employed by, or to provide
services to, the Company or its Subsidiaries, which provisions
may be waived or modified by the Plan Administrator at any time.
If not so established in the instrument evidencing the Option,
the Option will be exercisable according to the following terms
and conditions, which may be waived or modified by the Plan
Administrator at any time. In case of termination of the
Holder's employment or services other than by reason of death or
Cause, the Option shall be exercisable, to the extent of the
number of shares purchasable by the Holder at the date of such
termination, only within three months after the date of such
termination for reasons other than Disability and only within one
year after the date of such termination by reason of Disability,
but in no event later than the remaining term of the Option. Any
Option exercisable at the time of the Holder's death may be
exercised, to the extent of the number of shares purchasable by
the Holder at the date of the Holder's death, by the personal
representative of the Holder's estate entitled thereto at any
time or from time to time within one year after the date of
death, but in no event later than the remaining term of the
Option. In case of termination of the Holder's employment or
services for Cause, the Option shall automatically terminate upon
first notification to the Holder of such termination, unless the
Plan Administrator determines otherwise. If a Holder's
employment or services with the Company are suspended pending an
investigation of whether the Holder shall be terminated for
Cause, all the Holder's rights under any Option likewise shall be
suspended during the period of investigation. A transfer of
employment or services between or among the Company and its
Subsidiaries shall not be considered a termination of employment
or services. Unless the Plan Administrator determines otherwise,
a leave of absence approved in accordance with Company procedures
shall not be considered a termination of employment or services,
except that with respect to Incentive Stock Options such leave of
absence shall be subject to any requirements of Section 422 of
the Code.
<PAGE>
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive
Stock Options shall be subject to the following additional terms
and conditions:
8.1 Dollar Limitation
To the extent the aggregate Fair Market Value (determined as
of the Grant Date) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time during
any calendar year (under the Plan and all other stock option
plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option, unless
such annual limitation is modified or eliminated under Code
Section 422. In the event the Participant holds two or more such
Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of
the order in which such Options are granted.
8.2 10% Shareholders
If a Participant owns 10% or more of the total voting power
of all classes of the Company's stock, then the exercise price
per share of an Incentive Stock Option shall not be less than
110% of the Fair Market Value of the Common Stock on the Grant
Date and the Option term shall not exceed five years.
8.3 Eligible Employees
Individuals who are not employees of the Company or one of
its parent corporations or subsidiary corporations may not be
granted Incentive Stock Options. For purposes of this Section
8.3 of the Plan, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms
for purposes of Section 422 of the Code.
8.4 Term
The term of an Incentive Stock Option shall not exceed 10
years.
8.5 Exercisability
An Option designated as an Incentive Stock Option must be
exercised within three months after termination of employment for
reasons other than death to qualify for Incentive Stock Option
tax treatment, except that in the case of termination of
employment due to Disability, such Option must be exercised
within one year after such termination.
8.6 Taxation of Incentive Stock Option
In order to obtain certain tax benefits afforded to
Incentive Stock Options under Section 422 of the Code, the
Participant must hold the shares issued upon the exercise of an
Incentive Stock Option for two years after the date of grant of
the Incentive Stock Option and one year from the date of
exercise. A Participant may be subject to the alternative
minimum tax at the time of exercise of an Incentive Stock Option.
The Committee may require a Participant to give the Company
prompt notice of any disposition of shares acquired by the
exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
<PAGE>
SECTION 9. AWARDS OF OPTIONS TO
NONEMPLOYEE DIRECTORS
Notwithstanding any other provision of the Plan to the
contrary, grants to Eligible Directors shall be made only
pursuant to the terms and conditions set forth below. All grants
made under this Section 9 prior to shareholder approval of the
Plan shall be subject to such shareholder approval.
9.1 Original Grants
Each Eligible Director who is in office on the date the Plan
is adopted by the Board shall automatically receive a grant of an
Option to purchase 500 shares of Common Stock immediately
following the Board's adoption of the Plan ("Original Grants").
Original Grants shall vest and become exercisable upon the
optionee's continued service as a director until the Company's
first Annual Meeting of Shareholders after the Grant Date.
9.2 Annual Grants
Commencing with the Company's 1996 Annual Meeting of
Shareholders, each Eligible Director shall automatically receive
a grant of an Option to purchase 500 shares of Common Stock
immediately following each year's Annual Meeting of Shareholders
("Annual Grants"). Annual Grants shall vest and become
exercisable upon the optionee's continued service as a director
until the next Annual Meeting of Shareholders after the Grant
Date.
9.3 Initial Grants
Each Eligible Director shall automatically receive a grant
of an Option to purchase 5,500 shares of Common Stock immediately
following his or her initial election or appointment to the Board
("Initial Grants"). Initial Grants shall vest and become
exercisable as follows: Options for 1,375 shares shall become
exercisable on and after one year after the Grant Date, and
Options for an additional 1,375 shares shall become exercisable
on and after each of the three succeeding anniversaries of the
Grant Date.
9.4 Nonqualified Stock Options; Term of Options
Options granted to an Eligible Director under the Plan shall
constitute Nonqualified Stock Options. The term of each Option
granted under this Section 9 shall be five years from the Grant
Date.
9.5 Option Exercise Price
The exercise price for shares purchased under an Option
granted under this Section 9 shall be the Fair Market Value of
the Common Stock on the Grant Date.
9.6 Post-Termination Exercises
In case of termination of the Holder's services other than
by reason of death or Cause, the Option shall be exercisable, to
the extent of the number of shares purchasable by the Holder at
the date of such termination, only within three months after the
date the Holder ceases to be director of the Company if such
termination is for reasons other than Disability and only within
one year if such termination is by reason of Disability, but in
no event later than the remaining term of the Option. Any Option
exercisable at the time of the Holder's death may be exercised,
to the extent of the number of shares purchasable by the Holder
at the date of the Holder's death, by the personal representative
of the Holder's estate entitled thereto at any time or from time
to time within one year after the date of death, but in no event
later than the remaining term of the Option. In case of
termination of the Holder's services for Cause, the Option shall
automatically terminate upon first notification to the Holder of
such termination. If a Holder's services with the Company are
suspended pending an investigation of whether the Holder shall be
terminated for Cause, all the Holder's rights under any Option
likewise shall be suspended during the period of investigation.
<PAGE>
9.7 Corporate Transaction
In the event of any Corporate Transaction, each Option that
is at the time outstanding shall automatically accelerate so that
each such Option shall, immediately prior to the specified
effective date for the Corporate Transaction, become 100% vested,
except that such acceleration will not occur if, in the opinion
of the Company's accountants, it would render unavailable
"pooling of interests" accounting for a Corporate Transaction
that would otherwise qualify for such accounting treatment. All
such Options not exercised prior to that time shall terminate and
cease to remain outstanding immediately following the
consummation of the Corporate Transaction.
9.8 Availability of Shares
The Options provided for in this Section 9 are subject to
the availability of shares under the Plan. If at the date of any
grant under this Section 9 there are insufficient shares of
Common Stock available to satisfy the grants in whole, then the
shares available shall be divided by the number of Eligible
Directors then entitled to a grant and each such Eligible
Director shall be granted an Option for that number of shares.
9.9 Other Terms Applicable
Except as otherwise provided in this Section 9, Options
granted to Eligible Directors shall be subject to the terms and
conditions of the Plan applicable to other Participants.
SECTION 10. LOANS, LOAN GUARANTEES AND INSTALLMENT
PAYMENTS
To assist a Holder (including a Holder who is an officer or
director of the Company) in acquiring shares of Common Stock
pursuant to an Award granted under the Plan other than an Option
granted pursuant to Section 9 of the Plan, the Plan Administrator
may authorize, either at the Grant Date or at any time before the
acquisition of Common Stock pursuant to the Award, (i) the
extension of a loan to the Holder by the Company, (ii) the
payment by the Holder of the purchase price, if any, of the
Common stock in installments, or (iii) the guarantee by the
Company of a loan obtained by the grantee from a third party.
The terms of any loans, installment payments or guarantees,
including the interest rate and terms of repayment, will be
subject to the Plan Administrator's discretion. Loans,
installment payments and guarantees may be granted with or
without security. The maximum credit available is the purchase
price, if any, of the Common Stock acquired plus the maximum
federal and state income and employment tax liability that may be
incurred in connection with the acquisition.
SECTION 11. ASSIGNABILITY
No Option granted under the Plan may be assigned or
transferred by the Holder other than by will or by the laws of
descent and distribution, and during the Holder's lifetime, such
Awards may be exercised only by the Holder. Notwithstanding the
foregoing, with respect to Awards other than Options granted
pursuant to Section 9 of the Plan, and to the extent permitted by
Rule 16b-3 under the Exchange Act and Section 422 of the Code,
the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Holder
of such Awards to designate a beneficiary who may exercise the
Award after the Holder's death. With respect to Options granted
pursuant to Section 9 of the Plan, and to the extent permitted by
Rule 16b-3 under the Exchange Act as then applicable to the
Company's employee benefit plans, such Options may be transferred
or assigned by gift or other transfer to either (i) any trust or
estate in which the original award recipient or such person's
spouse or other immediate family member has a substantial
beneficial interest or (ii) a spouse or other immediate family
member, provided that such a transfer would continue to require
such awards to be disclosed pursuant to Item 403 of Regulation S-
K under the Securities Act of 1933, as amended.
<PAGE>
SECTION 12. ADJUSTMENTS
12.1 Adjustment of Shares
In the event that at any time or from time to time a stock
dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to
shareholders other than a normal cash dividend, or other change
in the Company's corporate or capital structure results in (i)
the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number
or class of securities of the Company or of any other corporation
or (ii) new, different or additional securities of the Company or
of any other corporation being received by the holders of shares
of Common Stock of the Company, then the Plan Administrator shall
make proportional adjustments in (a) the maximum number and class
of securities subject to the Plan as set forth in Section 4.1 of
the Plan, (b) the number and class of securities that may be made
subject to individual Awards as set forth in Section 9 of the
Plan, and (c) the number and class of securities subject to any
outstanding Award made pursuant to Section 9 of the Plan and the
per share price of such securities, without any change in the
aggregate price to be paid therefore, and the Plan Administrator,
in its sole discretion, shall make such equitable adjustments as
it shall deem appropriate in the circumstances in (y) the maximum
number and class of securities that may be made subject to Awards
to any individual Participant as set forth in Section 4.2 of the
Plan and (z) the number and class of securities that are subject
to any outstanding Award (other than Options granted pursuant to
Section 9 of the Plan) and the per share price of such
securities, without any change in the aggregate price to be paid
therefor. The determination by the Plan Administrator as to the
terms of any of the foregoing adjustments shall be conclusive and
binding.
12.2 Corporate Transaction
Except as otherwise provided in the instrument that
evidences the Award, in the event of any Corporate Transaction,
each Option that is at the time outstanding shall automatically
accelerate so that each such Award shall, immediately prior to
the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur
if in the opinion of the Company's accountants it would render
unavailable "pooling of interest" accounting for a Corporate
Transaction that would otherwise qualify for such accounting
treatment. Except for Options granted pursuant to Section 9 of
the Plan, such Award shall not so accelerate if and to the
extent: (i) such Award is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable award for the
purchase of shares of the capital stock of the successor
corporation or its parent corporation, (ii) such Award is to be
replaced with a cash incentive program of the successor
corporation that preserves the spread existing at the time of the
Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such
Award, or (iii) the acceleration of such Award is subject to
other limitations imposed by the instrument evidencing the Award.
The determination of Award comparability under clause (i) above
shall be made by the Plan Administrator, and its determination
shall be conclusive and binding. All such Awards shall terminate
and cease to remain outstanding immediately following the
consummation of the Corporate Transaction, except to the extent
such Awards (other than Options granted pursuant to Section 9 of
the Plan) are assumed by the successor corporation or its parent
corporation. Any such Awards that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that
time shall be accelerated in the event the Holder's employment or
services should subsequently terminate within two years following
such Corporate Transaction, unless such employment or services
are terminated by the Company for Cause or by the Holder
voluntarily without Good Reason. Notwithstanding the foregoing,
no Incentive Stock Option shall become exercisable pursuant to
this Section 12.2 without the Holder's consent, if the result
would be to cause such Option not to be treated as an Incentive
Stock Option (whether by reason of the annual limitation
described in Section 8.1 of the Plan or otherwise).
12.3 Further Adjustment of Awards
Subject to the preceding Section 12.2 of the Plan, the Plan
Administrator shall have the discretion, exercisable at any time
before a sale, merger, consolidation, reorganization, liquidation
or change in control of the Company, as defined by the Plan
Administrator, to take such further action as it determines
necessary or advisable, and fair and equitable to Participants,
with respect to Awards (other than Options granted pursuant to
Section 9 of the Plan). Such authorized action may include (but
shall not be limited to) establishing, amending or waiving the
type, terms, conditions or duration of, or restrictions on,
Awards so as to provide for earlier, later, extended or
additional time for exercise, alternate forms and amounts of
payments and other modifications, and the Plan Administrator may
take such actions with respect to all Participants, to certain
categories of Participants or only to individual Participants.
The Plan Administrator may take such actions before or after
granting Awards to which the action relates and before or after
any public announcement with respect to such sale, merger,
consolidation, reorganization, liquidation or change in control
that is the reason for such action.
12.4 Limitations
The grant of Awards will in no way affect the Company's
right to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or
assets.
SECTION 13. WITHHOLDING OF TAXES
The Company may require the Holder to pay to the Company the
amount of any withholding taxes that the Company is required to
withhold with respect to the grant or exercise of any Award
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
14.1 Amendment of Plan
The Plan may be amended by the shareholders of the Company.
The Board may also amend the Plan in such respects as it shall
deem advisable; however, to the extent required for compliance
with Rule 16b-3 under the Exchange Act, Section 422 of the Code
or any applicable law or regulation, shareholder approval will be
required for any amendment that will (i) increase the total
number of shares as to which Awards may be granted under the
Plan, (ii) materially modify the class of persons eligible to
receive Awards, (iii) materially increase the benefits accruing
to Participants under the Plan, or (iv) otherwise require
shareholder approval under any applicable law or regulation.
Notwithstanding the foregoing, to the extent required for
compliance with Rule 16b-3 under the Exchange Act or any
applicable law or regulation, no amendment with respect to
Section 9 of the Plan shall be made more than once every six
months that would change the amount, price, timing or vesting of
the Options, other than to comport to the changes in the Code, or
the rules and regulations promulgated thereunder.
14.2 Termination of the Plan
The Company's shareholders or the Board may suspend or
terminate the Plan at any time. The Plan will have no fixed
expiration date; provided, however, that no Incentive Stock
Options may be granted more than 10 years after the Plan's
effective date.
14.3 Consent of Holder
The amendment or termination of the Plan shall not, without
the consent of the Holder of any Award under the Plan, alter or
impair any rights or obligations under any Award theretofore
granted under the Plan.
SECTION 15. GENERAL
15.1 Notification
The Plan Administrator shall promptly notify a Participant
of an Award, and a written grant shall promptly be executed and
delivered by or on behalf of the Company.
<PAGE>
15.2 Continued Employment or Services; Rights in Awards
Neither the Plan, participation in the Plan as a Participant
nor any action of the Plan Administrator taken under the Plan
shall be construed as giving any Participant, including any
employee, officer or director of the Company any right to be
retained in the employ of the Company or to continue service as
an officer or director of the Company, or limit the Company's
right to terminate the employment or services of the Participant.
15.3 Registration; Certificates for Shares
The Company shall be under no obligation to any Participant
to register for offering or resale under the Securities Act of
1933, as amended, or register or qualify under state securities
laws, any shares of Common Stock issued under the Plan. The
Company may issue certificates for shares with such legends and
subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or
desirable for compliance by the Company with federal and state
securities laws.
15.4 No Rights as a Shareholder
No Award shall entitle the Holder to any dividend, voting or
other right of a shareholder unless and until the date of
issuance under the Plan of the shares that are the subject of
such Awards, free of all applicable restrictions.
15.5 Compliance With Laws and Regulations
It is the Company's intention that, so long as any of the
Company's equity securities are registered pursuant to Section
12(b) or 12(g) of the Exchange Act, the Plan shall comply in all
respects with Rule 16b-3 under the Exchange Act and, if any Plan
provision is later found not to be in compliance with such Rule,
the provision shall be deemed null and void, and in all events
the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3. Notwithstanding anything in the Plan
to the contrary, the Board, in its sole discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any
provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to
other Participants. Additionally, in interpreting and applying
the provisions of the Plan, any Option granted as an Incentive
Stock Option pursuant to the Plan shall, to the extent permitted
by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
15.6 Severability
If any provision of the Plan or any Award is determined to
be invalid, illegal or unenforceable in any jurisdiction, or as
to any person, or would disqualify the Plan or any Award under
any law deemed applicable by the Plan Administrator, such
provision shall be construed or deemed amended to conform to
applicable laws, or, it if cannot be so construed or deemed
amended without, in the Plan Administrator's determination,
materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or
Award, and the remainder of the Plan and any such Award shall
remain in full force and effect.
SECTION 16. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted
by the Board, so long as it is approved by the Company's
shareholders at any time within 12 months of such adoption or, if
earlier, and to the extent required for compliance with Rule 16b-
3 under the Exchange Act, at the next annual meeting of the
Company's shareholders after adoption of the Plan by the Board.
