FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission file number 1-5292
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MEM COMPANY, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK 13-5546930
- ------------------------------ --------------------------
State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
NORTHVALE, NEW JERSEY 07647
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(Address of principal executive offices, zip code)
(201) 767-0100
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
2,580,184 shares of Common Stock were outstanding at March 31, 1995.
<PAGE>
PART I
MEM COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
3/31/95 12/31/94
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<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash $ 346,765 $ 1,128,897
Accounts receivable, less allowance for
doubtful accounts of $719,542 at 3/31/95
and $661,654 at 12/31/94 5,886,354 12,843,943
Inventories at lower of cost (first-in,
first-out) or market:
Finished goods 7,429,677 6,095,908
Raw materials and work in process 9,286,173 9,228,083
Prepaid expenses 1,253,079 1,163,589
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Total current assets 24,202,048 30,460,420
Property, plant and equipment at cost 18,396,194 18,112,508
Less accumulated depreciation (13,074,100) (12,788,644)
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Net property, plant and equipment 5,322,094 5,323,864
Other Assets:
Advance royalty payments - net 674,370 710,010
Other Assets 207,567 193,729
Intangibles - net 10,453,933 10,572,940
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Total Assets $ 40,860,012 $ 27,260,963
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Loans payable to financial institutions and
banks $ 3,826,451 $ 6,528,016
Accounts payable 2,698,627 4,488,160
Accrued expenses 1,595,414 2,308,387
Notes payable-current portion 1,534,119 1,534,066
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Total current liabilities 9,654,611 14,858,629
Long term notes 4,685,871 4,906,624
Commitments and contingencies
<PAGE>
PART I
MEM COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Continued)
MARCH 31, 1995 AND DECEMBER 31, 1994 (Unaudited)
<CAPTION>
3/31/95 12/31/94
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<S> <C> <C>
STOCKHOLDERS' EQUITY
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Common stock, $.05 par value: 6,000,000 shares
authorized, 3,000,000 shares issued 150,000 150,000
Additional paid-in capital 3,090,110 3,090,110
Retained earnings 28,448,937 29,442,756
Less: Common stock in treasury at cost (4,607,180) (4,607,180)
Translation adjustment account (562,337) (579,976)
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Total stockholders' equity $ 40,860,012 $ 47,260,963
============ ============
</TABLE>
<PAGE>
MEM COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Net sales $ 6,281,534 $ 5,241,049
Cost of sales 3,468,544 3,081,717
Selling and shipping expense 2,280,774 2,087,815
General and administrative expense 1,215,078 1,184,013
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( 682,862) ( 1,112,496)
Other income (expense):
Royalties, interest and other income 104,765 124,765
Amortization of intangibles (119,331) (14,392)
Interest expense (263,994) (56,807)
Financing expense (32,397) (27,600)
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(Loss) before income taxes ( 993,819) (1,086,530)
Income tax (benefit) -- --
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Net (loss) $( 993,819) $(1,086,530)
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Net (loss) per share $ ( .39) $ ( .42)
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Dividends per share $ -- --
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Average shares outstanding 2,580,184 2,572,664
</TABLE>
Net income (loss) per share was determined by dividing net income (loss) by the
average number of shares outstanding during the respective period.
<PAGE>
MEM COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ (993,819) $(1,086,530)
Depreciation and amortization 421,385 351,380
Provision for losses on accounts receivable 54,426 46,350
(Increase) decrease in accounts receivable 6,930,584 4,396,584
(Increase) decrease in inventory (1,363,796) (1,082,902)
(Increase) decrease in other current assets (86,672) (131,476)
(Increase) decrease in other assets (13,838) (13,838)
Increase (decrease) in accounts payable (1,796,594) 164,299
Increase (decrease) in accrued expenses ( 717,703) ( 345,201)
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Net cash provided by operating
activities 2,433,973 2,298,666
Cash Flows from Investing Activities
Additions to plant and equipment (260,864) (146,753)
Collection of note receivable - 63,028
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Net cash (used in) investing
activities (260,864) ( 83,725)
Cash Flows from Financing Activities
Short-term borrowings 3,604,751 -
(Repayments of) short-term borrowings (6,316,076) (657,218)
(Payments) of long-term notes (222,547) (4,137)
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Net cash (used in) financing
activities (2,933,872) (661,355)
Effect of exchange rate changes on cash (21,369) (58,496)
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Net increase (decrease) in cash (782,132) 1,495,090
Cash at the beginning of the year 1,128,897 992,019
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Cash at the end of the period $ 346,765 $ 2,487,109
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</TABLE>
The information on pages 2-4 reflects all adjustments of a normal recurring
nature which the Company considers necessary for a fair presentation of the
results for those periods.
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
First Quarter Ended March 31, 1995 and 1994
Net sales for the first quarter of 1995 were 20% ahead of the prior year.
The increase is the result of new sales revenue from the British Sterling men's
fragrance line which was acquired in May, 1994 and also from sales of
Timberline, which was introduced in mid 1994. Sales of Tinkerbell products were
very strong in the United Kingdom, but were lower in the United States due to
lower orders received from Toys 'R Us, one of the major customers for the brand.
Modest sales price increases on various products were effective at the beginning
of the year. The effects of inflation and exchange rate fluctuations were not
material.
Cost of sales decreased from 59% of sales in 1994 to 55% in 1995. This
resulted from lower cost of goods of the Timberline brand than other products,
the effects of lower anticipated returns on current sales volume, and the higher
volume of production during the quarter. Selling and shipping expense declined
from 40% of sales in 1994 to 36% in 1995. Shipping, distribution and selling
expenses declined in relation to sales as a result of the higher sales volume.
Marketing expenses in 1995 were higher by $56,000, but lower in relation to
sales as a result of lower budgeted marketing expenses in relation to sales
budgets for the year. General and administrative expense increased $31,000,
primarily due to compensation expenses.
Royalties, interest and other income declined principally due to the
absence of interest income from a note receivable which was paid in full in
October 1994. Amortization of intangibles increased $105,000 as a result of the
inclusion of amortization of the British Sterling trademark which was acquired
in May, 1994. Interest expense increased $207,000, of which $143,000 resulted
from interest on long-term notes issued in connection with the British Sterling
acquisition. The remainder of the increase is due to higher short-term
borrowings outstanding during the quarter compared to the prior year. The
Company has significant tax loss carryforwards available to offset future
taxable income.
<PAGE>
Liquidity and Capital Resources
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The Company's business is highly seasonal. In the first nine months of
the year, cash is required to buy and manufacture inventories. The peak shipping
months are from August through November and funds are required to finance
accounts receivable from shipment date to December and January, when the Company
receives significant cash collections. To finance these needs, the Company uses
its working capital, which was $15,602,000 at the end of 1994 and a revolving
credit agreement with financial institutions. This agreement provides for total
borrowings (including the outstanding term loan) of $17,500,000. At March
31,1995, the term loan outstanding was $3,630,000.
In the first quarter of the year, the Company collects accounts
receivable from the previous Holiday season and begins to acquire inventory for
the upcoming season. This is the reason for the positive cash flow provided by
operations despite the loss for the period. These funds are then used to repay
short-term borrowings.
The financing agreement contains a prohibition on the payment of
dividends if the Company operates at a loss. There are no material commitments
for property, plant and equipment expenditures.
<PAGE>
PART II
MEM COMPANY, INC.
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Item 6a. Exhibits
10.1 1987 Non-Qualified Stock Option Plan
10.2 MEM Company, Inc. 1991 Stock Incentive Plan
10.3 MEM Company, Inc. 1993 Non-Employee Stock
Incentive Plan
Item 6b. Reports - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEM COMPANY, INC.
BY: /S/ Michael G. Kazimir, Jr.
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MICHAEL G. KAZIMIR, JR.
Executive Vice President
Duly Authorized Officer &
Chief Financial Officer
May 10, 1995
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
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10.1 1987 Non-Qualified Stock Option Plan
10.2 MEM Company, Inc. 1991 Stock Incentive Plan
10.3 MEM Company, Inc. 1993 Non-Employee Stock Incentive Plan
EXHIBIT 10.1
MEM COMPANY, INC.
1987 NON-QUALIFIED STOCK OPTION PLAN
1. Purpose
The purpose of this 1987 Non-Qualified Stock Option Plan (the "Plan")
is to encourage and enable selected management and other key employees of MEM
Company, Inc. (the "Company") and its subsidiaries to acquire a proprietary
interest in the Company through the ownership of common stock of the Company.
Such ownership will provide such employees with a more direct stake in the
future welfare of the Company, and encourage them to remain with the Company and
its subsidiaries. It is also expected that the Plan will encourage qualified
persons to seek and accept employment with the Company and its subsidiaries.
Pursuant to the Plan, such employees will be offered the opportunity to acquire
such common stock through the grant of non-qualified stock options.
As used herein, the term "subsidiary" shall mean any present or
future corporation which is or would be a "subsidiary corporation" of the
Company as the term is defined in Section 425 of the Internal Revenue Code of
1986, as amended.
2. Administration of the Plan
The Plan shall be administered by a Stock Option Committee (the
"Committee") as appointed from time to time by the Board of Directors of the
Company (the "Board"), which committee shall consist of not less than three (3)
members of such Board. None of the members of the Committee shall be eligible to
be granted options under the Plan.
In administering the Plan, the Committee may adopt rules and
regulations for carrying out the Plan. The interpretation and decision made by
the Committee with regard to any question arising under the Plan shall be final
and conclusive on all employees of the Company and its subsidiaries
participating or eligible to participate in the Plan. The Committee shall
determine the employees to whom, and the time or times at which, grants shall be
made, the number of options to be included in the grants, and the option price.
A majority of the entire Committee shall constitute a quorum, and the action of
a majority of the Committee members present at any meeting at which a quorum is
present shall be the action of the Committee.
3. Shares of Stock Subject to the Plan
Except as provided in subparagraphs 7(g) and 7(h) and paragraph 8,
the number of shares that may be issued or transferred pursuant to the exercise
of options granted under the Plan shall not exceed 240,000 shares of the $.05
par value common stock of the Company (the "Common Stock"). Such shares may be
authorized and unissued shares or previously issued shares acquired or to be
acquired by the Company and held in treasury. Any shares subject to an option
which for any reason expires or is terminated unexercised as to such shares may
again be subject to an option right under the Plan.
4. Eligibility
Options may be granted only to management and other key employees who
are employed by the Company or its subsidiaries. An option may be granted to a
director of the Company who is not also a member of the Committee, provided that
the director is also an officer or key employee. An employee who has been
granted an option may, if otherwise eligible, be granted additional options.
Notice shall be given to each employee to whom an option has been granted within
a reasonable time after the date of such grant.
5. Duration of the Plan
Subject to the provisions of paragraph 9, the Plan shall terminate
(the "Date of Termination") on the earlier of (i) when all shares subject or
which may become subject to the Plan shall have been purchased pursuant to the
exercise of options granted under the Plan or (ii) 10 years from the date the
Plan is adopted by the Board. No options may be granted or exercised after the
Date of Termination.
6. Options
Non-qualified options shall be evidenced by stock option agreements
in such form, not inconsistent with this Plan, as the Committee shall approve
from time to time, which agreements shall contain in substance the following
terms and conditions:
(a) Option Price. The purchase price under each option shall be 100%
of the fair market value (determined in good faith by the Committee) of the
Common stock at the time the option is granted, but in no case less than the par
value of such Common Stock.
(b) Procedure for Exercise. Options may be exercised in whole or in
part by written notice to the Secretary of the Company, which notice shall
specify the date the option to be exercised was granted and the number of whole
shares of stock to which such exercise applies.
(c) Medium and Time of Payment. Stock purchased pursuant to an option
agreement shall be paid for in full in cash at the time of purchase. Upon
receipt of payment the Company shall, without stock transfer tax to the optionee
or other person entitled to exercise the option, deliver to the person
exercising the option a certificate or certificates for such shares. It shall be
a condition to the performance of the Company's obligation to issue or transfer
Common Stock upon exercise of an option or options that the optionee pay, or
make provision satisfactory to the Company for the payment of, any taxes (other
than stock transfer taxes) which the Company is obligated to collect with
respect to the issue or transfer of Common Stock upon such exercise.
7. Provisions Relating to Options
Option rights granted under paragraph 6 shall be subject to the
following additional provisions:
(a) Waiting Period. The waiting period and time for exercising an
option shall be prescribed by the Committee in each particular case provided,
however, that no option may be exercised after the Date of Termination.
(b) Rights as a Stockholder. A recipient of options shall have no
right as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date a stock certificate is issued to him for such
shares. Except as otherwise expressly provided in the Plan, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
(c) Non-Assignability of Options. No option shall be assignable or
transferable by the recipient except by will or by the laws of descent and
distribution. During the life of a recipient, options shall be exercisable only
by him.
(d) Effect of Termination of Employment or Death. No option shall be
exercisable after termination of employment with the Company or a subsidiary
unless such termination of employment occurs by reason of retirement with the
consent of the Company or death. In the event of the retirement of a recipient
of options with the consent of the Company, the options or unexercised portions
thereof which were otherwise exercisable on the date of retirement shall expire
unless exercised within a period of three (3) months after the date of
retirement. Option rights shall not be affected by any change of employment as
long as the recipient continues to be employed by either the Company or a
subsidiary. In the event of the death of a recipient of options while an
employee of the Company or any subsidiary of the Company or in the event of the
death of the recipient within the three (3) month period following termination
of employment by reason of retirement with the consent of the Company, the
options which were otherwise exercisable on the date of termination of
employment shall be exercisable by his personal representatives, heirs or
legatees at any time prior to the expiration of one (1) year from the date of
his death. In no event, however, shall an option be exercisable after the Date
of Termination. In the event that a recipient ceases to be an employee of the
Company or of any subsidiary of the Company for any reason, including death or
retirement, prior to the lapse of the applicable waiting period, his option
shall terminate and be null and void. Nothing in the Plan or in any option shall
confer any right to continue in the employ of the Company or any subsidiary or
interfere in any way with the right of the Company or any of its subsidiaries to
terminate employment at any time. The Committee's determination that the
employment of a recipient of options has terminated and the date thereof shall
be final and conclusive on all persons affected thereby.
(e) Leave of Absence. In the case of a recipient on an approved leave
of absence, the Committee may, if it determines that to do so would be in the
best interests of the Company, provide in a specific case for continuation of
options during such leave of absence, such continuation to be on such terms and
conditions as the Committee determines to be appropriate, except that in no
event shall an option be exercisable after the Date of Termination.
(f) Recapitalization. In the event that dividends payable in Common
Stock during any fiscal year of the Company exceed in the aggregate five percent
(5%) of the Common Stock issued and outstanding at the beginning of the year, or
in the event there is during any fiscal year of the Company one or more splits,
subdivisions, or combinations of shares of Common Stock resulting in an increase
or decrease by more than five percent (5%) of the shares outstanding at the
beginning of the year, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of any options theretofore
granted shall be increased or decreased proportionately, as the case may be
without change in the aggregate purchase price. Common Stock dividends, splits,
subdivisions or combinations during any fiscal year which do not exceed in the
aggregate five percent (5%) of the Common Stock issued and outstanding at the
beginning of such year shall be ignored for purposes of the Plan.
(g) Sale or Reorganization. In case the Company is merged or
consolidated with another corporation, or in case of a separation,
reorganization, or liquidation of the Company, the Board, or the board of
directors of any corporation assuming the obligations of the Company hereunder,
shall either (i) make appropriate provisions for the protection of any
outstanding options by the substitution on an equitable basis of appropriate
stock of the Company, or appropriate stock of the merged, consolidated, or
otherwise reorganized corporation, provided only that the excess of the
aggregate fair market value of the shares subject to options outstanding under
the Plan immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such options immediately before such substitution over the purchase
price thereof, or (ii) give written notice to recipients that their options,
which will become immediately exercisable notwithstanding any waiting period
otherwise prescribed by the Committee, must be exercised within sixty (60) days
of the date of such notice or they will be terminated.
(h) General Restrictions. Each option granted under the Plan shall be
subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration, or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in condition
with, the granting of such option or the issue, transfer, or purchase of shares
thereunder, such option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
The Company shall not be obligated to sell or issue any shares of
Common Stock in any manner in contravention of the Securities Act of 1933, as
amended, or any state securities law. The Board or the Committee may, in
connection with the granting of each option, require the individual to whom the
option is to be granted to enter into an agreement with the Company stating that
as a condition precedent to each exercise of the option, in whole or in part, he
shall if then required by the Company represent to the Company in writing that
such exercise is for investment only and not with a view to distribution, and
also setting forth such other terms and conditions as the Board or the Committee
may prescribe.
8. Termination and Amendment of the Plan
The Board shall have the right to amend, suspend, or terminate the
Plan at any time; provided, however, that no such action shall affect or in any
way impair the rights of a recipient under any option right theretofore granted
under the Plan; and, provided, further, that unless first duly approved by the
holders of Common Stock entitled to vote thereon at a meeting (which may be the
annual meeting) duly called and held for such purposes, except as provided in
subparagraphs 7(g) and 7(h), no amendment or change shall be made to the Plan
(a) increasing the total number of shares which may be issued or transferred
under the Plan; (b) changing the purchase price hereinbefore specified for the
shares subject to options; or (c) extending the period during which options may
be granted or exercised under the Plan.
9. Effective Date of the Plan
The Plan shall become effective on the date of its adoption by the
Board, subject, however, to approval of the Plan by the vote of the holders of a
majority of the shares of stock of the Company outstanding, entitled to vote,
and voting at the annual meeting of the stockholders of the Company held in
1987, provided that the total vote cast represents over 50% in interest of all
stock entitled to vote. Subject to the express provisions of the Plan, options
may be granted under the Plan at any time and from time to time after the
adoption of the Plan by the Board, and prior to termination of the Plan,
provided, however, that in the event that the Plan is not approved by
stockholders of the Company as aforesaid, the Plan and all options granted
thereunder shall be and become null and void.
EXHIBIT 10.2
MEM COMPANY, INC.
1991 STOCK INCENTIVE PLAN
I. Establishment of the Plan.
MEM Company, Inc. (hereinafter called the "Corporation") hereby
establishes the MEM Company, Inc. 1991 Stock Incentive Plan (hereinafter called
the "Plan"), subject to the terms and conditions hereinafter stated.
II. Purposes of the Plan.
The purposes of the Plan are:
(a) to encourage stock ownership by employees of the Corporation and
its Subsidiaries so that they will have a proprietary interest in the
Corporation;
(b) to provide an incentive for such employees to expand and improve
the growth and prosperity of the Corporation and its Subsidiaries;
(c) to provide greater incentives to selected key employees of the
Corporation and its Subsidiaries in the form of wards that are contingent upon
and vary with the individual performance of the employee; and
(d) to assist the Corporation and its Subsidiaries in attracting and
retaining employees.
III. Definitions.
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Article III.
Wherever used in the Plan, words in the masculine gender shall be deemed to
refer to females as well as to males; words in the singular number shall be
deemed to refer also to the plural number; and references to a statute or
statutory provisions shall be construed as if they referred also to that
provision (or to a successor provision of similar import) as currently amended
or reenacted.
(a) "Award" means an Option or a Contingent Option granted under the
Plan. Unless the context clearly indicates otherwise, the term "Award" shall
include both Options and Contingent Options.
(b) "Board" means the board of directors of the Corporation.
(c) "Change of Control" means the occurrence of any of the following
events:
(i) any person (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "1934 Act")), other than the
Corporation, any of its Subsidiaries, any employee stock ownership plan or any
other employee benefit plan of the Corporation or any Subsidiary, any person
holding securities of the Corporation for or pursuant to the terms of any such
employee benefit plan, or the Mayer Family, becomes the beneficial owner (within
the meaning of Rule 13d-3 under the 1934 Act) of 30% or more of the combined
voting power of the Corporation's then outstanding voting securities; or
(ii) a tender offer or exchange offer (other than an offer
by the Corporation, any of its Subsidiaries, any employee stock ownership plan
or any other employee benefit plan of the Corporation or any Subsidiary, any
person holding securities of the Corporation for or pursuant to the terms of any
such employee benefit plan, or the Mayer Family), pursuant to which shares of
the Corporation's Common Stock were purchased, expires; or
(iii) the shareholders of the Corporation approve an
agreement to merge or consolidate with another corporation and the surviving
corporation is neither the Corporation nor a corporation that was, prior to the
merger or consolidation, a Subsidiary nor is controlled, after the merger or
consolidation, by any employee stock ownership plan or any other employee
benefit plan of the Corporation or the Mayer Family; or
(iv) the shareholders approve an agreement (including a plan
of liquidation) to sell or otherwise to dispose of all or substantially all of
the Corporation's assets; or
(v) during any period of two consecutive years, individuals
who, at the beginning of such period, constituted the Board cease for any reason
to constitute at least a majority thereof, unless the election or the nomination
for the election by the Corporation's shareholders of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(d) "Committee" means the Stock Option Committee established by the
Board.
(e) "Common Stock" means shares of the Corporation's common stock,
par value $0.05 per share.
(f) "Contingent Option" means a contingent right, subject to the
satisfaction of certain conditions, granted to purchase Common Stock under
Article IX of the Plan. (g) "Corporation" means MEM Company, Inc.
(h) "Disability" means a condition that, in the judgment of the
Committee, has rendered a Grantee completely and presumably permanently unable
to perform any and every duty of his regular occupation.
(i) "Employee" means any common-law employee of the Corporation or a
Subsidiary, including an employee who is a director or officer.
(j) "Grantee" means an individual to whom an Award is granted under
the Plan.
(k) "Mayer Family" means Elizabeth C. Mayer, Gay A. Mayer, Laurette
M. Beach and any entity over which any of them has direct or indirect control.
(l) "Option" means a right granted to purchase Common Stock under
Article VIII of the Plan.
(m) "Plan" means the MEM Company, Inc. 1991 Stock Incentive Plan, as
set forth herein and as amended from time to time.
(n) "Restriction Period" means a period beginning on the date on
which a Contingent Option is granted and ending at the expiration of the earlier
of (i) one year from that date or (ii) any other date determined by the
Committee in its discretion. The Committee may exercise its discretion pursuant
to clause (ii) of the preceding sentence from time to time, either at the time
of grant or after a Contingent Option is granted, and may exercise its
discretion with respect to one or more Grantees but not with respect to others
and with respect to certain Contingent Options held by a Grantee but not with
respect to others; provided, that after the Contingent Options have been
granted, the Committee may not defer the expiration of the Restriction Period
applicable to such Contingent Option.
(o) "Retirement" means retirement from the Corporation or a
Subsidiary pursuant to the provisions of the MEM Company Pension Plan (or, if
applicable, the provisions of a pension plan of a Subsidiary), as amended from
time to time.
(p) "Subsidiary" means a subsidiary of the Corporation that meets
the definition of a "subsidiary corporation" in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
IV. Administration of the Plan.
The Plan shall be administered by the Stock Option Committee of the
Board (the "Committee"), which shall consist of not less than two members of the
Board who are disinterested persons within the meaning of Rule 16(b)-3(c)(2)(ii)
promulgated under the Securities Exchange Act of 1934, as amended from time to
time, who shall be appointed by and shall serve at the pleasure of the Board. No
member of the Committee shall be eligible to receive an Award under the Plan.
The Committee shall have and may exercise all of the powers granted
to it by the provisions of the Plan. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules, regulations, and
procedure as it deems advisable for the conduct of its affairs, and may appoint
one of its members to be its chairman and any person, whether or not a member,
to be its secretary or agent. The Committee shall have full authority to direct
the proper officers of the Corporation to issue or transfer shares of the
Corporation's Common Stock pursuant to the exercise of an Option or a Contingent
Option granted under the Plan.
The Committee shall act by vote or written consent of a majority of
its members. The decisions of the Committee shall be final and binding unless
otherwise determined by the Board. Each member of the Committee and each member
of the Board shall be without liability, to the fullest extent permitted by law,
for any action taken or determination made in good faith in connection with the
Plan.
V. Capital Stock Subject to Awards.
The aggregate number of shares of Common Stock that may be issued
pursuant to Awards granted under the Plan shall not exceed 200,000, which number
of shares is subject to adjustment as hereinafter provided in Article XI. Shares
of Common Stock issued pursuant to Awards shall be provided from shares in the
Corporation's treasury or from shares authorized but unissued. If an Option or a
Contingent Option as to any shares is surrendered before exercise, or expires or
terminates for any reason without having been exercised in full, or for any
other reason ceases to be exercisable, the number of unpurchased shares covered
thereby shall become available for the granting of Awards under the Plan (unless
the Plan has been terminated) within the aggregate maximum stated above.
VI. Eligibility.
The individuals eligible to receive Awards shall be those Employees
who are not members of the Committee and who are determined by the Committee to
be eligible.
VII. Designation of Grantees.
The Committee shall determine from time to time which of those
eligible Employees will be granted Awards under the Plan, how many shares of
Common Stock may be purchased under each Option, and how many shares may be
purchased under each Contingent Option, if any. In making such determinations,
the Committee shall take into account the duties and responsibilities of each
Employee, his present and potential contributions to the growth and success of
the Corporation or of a Subsidiary, and such other factors as the Committee
shall deem consistent with the purposes of the Plan. The Committee shall not be
precluded from granting an Award to any eligible Employee solely because such
Employee has previously received an Award under the Plan.
VIII. Terms of Options.
Each Option granted under the Plan shall be subject to the following
terms and conditions:
(a) Number of Shares and Option Price.
Each Option shall state the total number of shares of Common
Stock to which it pertains. The purchase price for shares subject to the Option
shall be one hundred percent (100%) of the fair market value of the Common Stock
at the close of business on the day prior to the day on which such Option is
granted.
(b) Duration of Option.
No Option shall be exercisable after the expiration of five
years from the date on which it is granted, or of such shorter term as the
Committee may establish for any or all shares subject to such Option. Except as
provided in this Paragraph B, an Option shall terminate on the date on which the
Grantee ceases to be employed by the Corporation or a Subsidiary.
If a Grantee ceases to be employed by the Corporation or a
Subsidiary owing to his Disability or Retirement, he may, at any time within six
months after his employment ceases, exercise any Option to the extent that he
was entitled to exercise it on the date his employment ceased; but in no event
shall any Option be exercisable after the expiration of the term of the Option
established in accordance with the first sentence of this Paragraph B.
If a Grantee dies while in the employ of the Corporation or
a Subsidiary (or if he dies within six months after he has ceased to be employed
by the Corporation or a Subsidiary owing to his Disability or Retirement), and
the Grantee has not fully exercised all of his Options at the time of his death,
his personal representative, or those persons who receive the Options by bequest
or inheritance, shall have the right, during the six-month period following his
death, to exercise such Options. An Option shall be exercisable during such
six-month period only for that number of shares, if any, that the Grantee could
have purchased under such Option on the date of his death. In no event shall any
Option be exercisable after the expiration of the term of the Option established
in accordance with the first sentence of this Paragraph B.
(c) Nonassignability.
Options shall not be transferable other than by will or by
the laws of descent and distribution. During a Grantee's lifetime, Options shall
be exercisable only by such Grantee.
(d) Limitations on Exercise of Option.
The Committee shall specify at the time of grant whether (i)
an Option is immediately exercisable in full or (ii) an Option may not be
exercised in whole or in part during the twelve-month period commencing with the
date on which it was granted and thereafter shall become exercisable in two
annual installments. In the case of Options which become exercisable in
installments, each such installment shall consist of 50 percent of the number of
shares covered by the Option. The first installment may be exercised in whole or
in part on or after the first anniversary date of the grant of the Option, and
the second installment may be exercised in whole or in part on or after the
second anniversary date.
At the time an Option is granted or at any time thereafter,
the Committee may stipulate that the limitations set forth above in this
Paragraph D shall lapse with respect to such Option, and that such Option shall
be immediately exercisable, if a Change of Control occurs.
To the extent that any installment has become exercisable,
it may thereafter be exercised at any time prior to the expiration or earlier
termination of the Option. Notwithstanding the foregoing, no Option shall be
exercisable by a Grantee except at a time when the Grantee is employed by the
Corporation or by a Subsidiary, or, to the extent permitted by Paragraph B of
this Article, at a time following the Grantee's Retirement or Disability.
(e) Manner of Exercise.
Subject to the provisions of Paragraph D of this Article,
the Option may be exercised at one time or from time to time, except that each
partial exercise of an Option shall be for 100 shares or a multiple thereof, or,
if fewer than 100 shares remain outstanding under the Option, for all the
remaining shares. The procedures for exercise shall be set forth in the written
Option certificate provided for in Paragraph 1 of this Article.
(f) Payment for Shares.
Payment in full of the purchase price in United States
currency for the shares purchased pursuant to the exercise of the Option. All
shares sold under the Plan pursuant to the exercise of an Option shall be fully
paid and nonassessable.
(g) Payment of Withholding Taxes.
Payment in full of any federal, state or local taxes of any
kind required by law to be withheld with respect to the exercise of the Option
shall be made to the Corporation in cash upon exercise of the Option. A Grantee
may irrevocably elect to have any withholding tax obligation satisfied by (a)
having the corporation withhold shares otherwise deliverable to the Grantee with
respect to the exercise of the Option, or (b) delivering to the Corporation
shares received upon the exercise of the Option or delivering to the Corporation
other shares of Common Stock; provided, that the Committee may, in its sole
discretion, disapprove any such election.
(h) Voting and Dividend Rights.
No Grantee of an Option shall have any voting or dividend
rights or any other rights of a shareholder with respect to any shares of Common
Stock covered by an Option before he exercises the Option with respect to such
shares and his name is recorded on the Corporation's shareholder ledger as the
holder of record of such shares.
(i) Option Agreements.
The proper officers of the Corporation shall execute and
deliver written Option Agreements, which shall contain such provisions as are
expressly provided herein and such additional provisions as the Committee in
each instance shall deem appropriate and not inconsistent with any of the
express provisions of the Plan.
IX. Terms of Contingent Options.
Each Contingent Option granted under the Plan shall be subject to
the following terms and conditions, and to such additional terms and conditions
as the Committee shall deem appropriate; provided that none of these additional
terms and conditions shall be more favorable to a Grantee than the terms and
conditions set forth herein:
(a) Conditions to Exercise of Contingent Options.
A Contingent Option shall not be exercisable in whole or in
part during the Restriction Period; thereafter, it shall be exercisable, if at
all, in whole or in part to the extent based upon an evaluation, in the sole
opinion of the Committee after consultation with management, of the personal
performance of the Grantee for the fiscal year ending during the related
Restriction Period. Each Grantee's personal performance shall be so determined
subsequent to the related fiscal year to be (i) No More than Standard, (ii)
Above Standard, (iii) Well Above Standard, or (iv) Excellent, and the related
portion of the Contingent Option which shall be exercisable after the
Restriction Period shall be 0%, 33-1/3%, 66-2/3% or 100%, respectively. To the
extent that a Contingent Option does not become exercisable at the end of the
Restriction Period, it shall terminate.
(b) Number of Shares and Contingent Option Price.
Each Contingent Option shall state the total number of
shares of Common Stock to which it pertains. The purchase price for shares
subject to the Contingent Option shall be one hundred percent (100%) of the fair
market value of the Common Stock at the close of business on the day prior to
the day on which such Contingent Option is granted.
(c) Other Terms and Conditions.
Paragraphs (b) through (i) of Article VIII shall apply to
Contingent Options as though they were Options.
X. Compliance with Law and Other Conditions.
(a) Restrictions on Grant of Awards.
The listing on any securities exchange or the registration
or qualification under any federal or state law of any shares of Common Stock to
be granted pursuant to Awards may be necessary or desirable as a condition of or
in connection with such Awards (in order to permit the exercise of Options or
Contingent Options or the resale or other disposition of any shares of Common
Stock by or on behalf of the Grantees). If the Board in its sole discretion
determines that such listing, registration, or qualification is necessary or
desirable, delivery of the certificates for such shares of Common Stock shall
not be made until such listing, registration, or qualification shall have been
completed. The Corporation agrees that it will use its reasonable efforts to
effect any such listing, registration, or qualification; provided, however, that
the Corporation shall not be required to use its reasonable efforts to effect
such registration under the Securities Act of 1933 other than by providing the
information called for by Form S-3 and Form S-8, as presently in effect, or such
other forms as may be in effect from time to time calling for information
comparable to that presently required to be furnished under Form S-3 and Form
S-8.
(b) Restrictions on Resale of Unregistered Shares.
If the shares of Common Stock that have been awarded or
issued to a Grantee pursuant to the terms of the Plan are not registered under
the Securities Act of 1933, as amended, pursuant to an effective registration
statement, such Grantee may be required, if the Committee shall deem it
advisable, to agree in writing (i) that any shares of Common Stock acquired by
such Grantee pursuant to the Plan will not be sold except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or pursuant to an exemption from registration under said Act, and (ii) that such
Grantee is acquiring such shares of Common Stock for his own account and not
with a view to the distribution thereof.
XI. Adjustment.
The number of shares of Common Stock of the Corporation reserved for
Awards under the Plan and the Option price and Contingent Option price under any
outstanding Options and Contingent Options, respectively, shall be subject to
adjustment by the Committee, in its sole discretion, to reflect any stock split,
stock dividend, recapitalization, merger, consolidation, reorganization,
combination, or exchange of shares or other similar event. All determinations
made by the Committee with respect to adjustments under this Article XI shall be
conclusive and binding for all purposes of the Plan.
XII. Miscellaneous Provisions.
(a) No Right to Receive Award.
Nothing in the Plan shall be construed to give any Employee
any right to receive an Award under the Plan.
(b) Expenses of Plan.
The expenses of the Plan shall be borne by the Corporation.
XIII. Amendment, Suspension or Termination.
(a) Amendment.
The Plan may be amended at any time and from time to time by
the Board, but no amendment that materially increases the benefits accruing to
participants under the Plan, materially modifies the requirements as to
eligibility for participation in the Plan, increases the aggregate number of
shares of Common Stock that may be subject to Options or Contingent Options
granted pursuant to the Plan other than as provided in the Plan, changes the
purchase price for shares subject to Options or Contingent Options other than as
provided in the Plan, or that extends the period during which Awards may be
granted under the Plan shall be effective unless and until the same is approved,
at a meeting held to take such action at which a quorum is present, by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Corporation present in person or by proxy and entitled to vote. Without the
written consent of a Grantee, no amendment of the Plan shall adversely affect
any right of such Grantee with respect to any Award theretofore granted to him.
(b) Right of Board to Suspend or Terminate Plan.
The Board may at any time suspend or terminate the Plan. No
Awards may be granted during any suspension of the Plan or after the Plan has
been terminated.
(c) Termination of Plan.
The Plan shall terminate upon the earlier of the following
dates:
(i) on the date of termination specified in a resolution of
the Board, or
(ii) on a date five years from the earlier of the date on
which the Plan is adopted by the Board or the date on which the Plan is approved
by the shareholders of the Corporation in accordance with Article XV hereof.
Except as otherwise provided in Article XV, the termination of the Plan shall
not affect any Awards previously granted. After the Plan terminates, the
function of the Committee will be limited to supervising the administration of
Awards previously granted.
XIV. Governing Law.
The Plan and all Awards made thereunder shall be governed by the
laws of the State of New York.
XV. Adoption by Board and Approval by Stockholders.
The Plan shall become effective upon its adoption by the Board;
provided, however, that if the Plan is not approved by the shareholders of the
Corporation prior to the first anniversary of its adoption, the Plan and all
Awards made thereunder shall be of no effect. Shareholder approval shall be
obtained, at a meeting held to take such action at which a quorum is present, by
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Corporation present in person or by proxy and entitled to vote.
EXHIBIT 10.3
MEM COMPANY, INC.
1993 NON-EMPLOYEE STOCK INCENTIVE PLAN
1. Establishment of the Plan.
MEM Company, Inc. (hereinafter called the "Corporation") hereby
establishes the MEM Company, Inc. 1993 Non-Employee Stock Incentive Plan
(hereinafter called the "Plan"), subject to the terms and conditions hereinafter
stated.
2. Purpose of the Plan.
The purpose of the Plan is to secure for the Corporation and its
shareholders the benefits of the incentive inherent in increased ownership of
common stock of the Corporation by the members of the Board of Directors of the
Corporation who are not employees and by certain other individuals who provide
certain consulting services to the Corporation. It is anticipated that such
ownership will provide the non-employee members of the Board of Directors and
those providing consulting services with more of a direct stake in the future
growth and prosperity of the Corporation and encourage them to continue to serve
in their respective positions. It is further anticipated that the Plan will
encourage qualified persons to become directors of the Corporation.
3. Definitions.
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Section 3.
Wherever used in the Plan, words in the masculine gender shall be deemed to
refer to females as well as to males; words in the singular number shall be
deemed to refer also to the plural number; and references to a statute or
statutory provision shall be construed as if they referred also to that
provision (or to a successor provision of similar import) as currently amended
or reenacted.
(a) "Award" means an Option granted under the Plan.
(b) "Board" means the board of directors of the Corporation.
(c) "Change of Control" means the occurrence of any of the following
events:
(i) any person (within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")), other than the Corporation, any of its Subsidiaries, as defined
herein, any employee stock ownership plan or any other employee benefit
plan of the Corporation or any Subsidiary, any person holding
securities of the Corporation for or pursuant to the terms of any such
employee benefit plan, or the Mayer Family, becomes the beneficial
owner (within the meaning of Rule 13d-3 under the 1934 Act) of 30% or
more of the combined voting power of the Corporation's then outstanding
voting securities; or
(ii) a tender offer or exchange offer (other than an
offer by the Corporation, any of its Subsidiaries, any employee stock
ownership plan or any other employee benefit plan of the Corporation or
any Subsidiary, any person holding securities of the Corporation for or
pursuant to the terms of any such employee benefit plan, or the Mayer
Family), pursuant to which shares of the Corporation's Common Stock
were purchased, expires; or
(iii) the shareholders of the Corporation approve an
agreement to merge or consolidate with another corporation and the
surviving corporation is neither the Corporation nor a corporation that
was, prior to the merger or consolidation, a Subsidiary nor is
controlled, after the merger or consolidation, by any employee stock
ownership plan or any other employee benefit plan of the Corporation or
the Mayer Family; or
(iv) the shareholders approve an agreement (including
a plan of liquidation) to sell or otherwise to dispose of all or
substantially all of the Corporation's assets; or
(v) during any period of two consecutive years,
individuals who, at the beginning of such period, constituted the Board
cease for any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the Corporation's
shareholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at
the beginning of the period.
(d) "Committee" means the Stock Option and Compensation Committee
established by the Board.
(e) "Common Stock" means shares of the Corporation's common stock, par
value $0.05 per share.
(f) "Consultant" means any individual, who is not a director or
employee of the Corporation or any Subsidiary, who provides consulting services
to the Corporation.
(g) "Corporation" means MEM Company, Inc.
(h) "Fair Market Value" means the last sale price regular way of the
Common Stock on the date of determination or, if the Common Stock is not traded
on the date of determination, on the last preceding date on which the Common
Stock is traded.
(i) "Grantee" means an individual to whom an Award is granted under the
Plan.
(j) "Mayer Family" means Elizabeth C. Mayer, Gay A. Mayer, Laurette M.
Beach and any entity over which any of them has direct or indirect control.
(k) "Non-Employee Director" means any member of the Board who is not an
employee of the Corporation or any Subsidiary.
(l) "Option" means a right granted to purchase Common Stock under
Section 7 of the Plan.
(m) "Plan" means the MEM Company, Inc. 1993 Non-Employee Stock
Incentive Plan, as set forth herein and as amended from time to time.
(n) "Subsidiary" means a subsidiary of the Corporation that meets the
definition of a "subsidiary corporation" in Section 424(f) of the Internal
Revenue Code of 1986, as amended.
4. Administration of the Plan.
The Plan shall be administered by the Stock Option and Compensation
Committee of the Board, which shall at all times consist of at least two
directors, and in connection therewith, the Committee shall have all the powers
vested in it by the terms of the Plan, including authority (within the
limitations described herein) to prescribe the form of the agreements embodying
Awards granted under the Plan.
Subject to the express provisions and limitations of the Plan, the
Committee may adopt such rules, regulations, and procedures as it deems
advisable for the conduct of its affairs, and may appoint one of its members to
be its chairman and any person, whether or not a member, to be its secretary or
agent. The Committee shall have full authority to direct the proper officers of
the Corporation to issue or transfer shares of the Corporation's Common Stock
pursuant to the exercise of an Option granted under the Plan.
The Committee shall act by vote or written consent of a majority of its
members. The decisions of the Committee shall be final and binding unless
otherwise determined by the Board. Each member of the Committee and each member
of the Board shall be without liability, to the fullest extent permitted by law,
for any action taken or determination made in good faith in connection with the
Plan.
5. Capital Stock Subject to Awards.
The aggregate number of shares of Common Stock that may be issued
pursuant to Awards granted under the Plan shall not exceed 50,000, which number
of shares is subject to adjustment as hereinafter provided in Section 12. Shares
of Common Stock issued pursuant to Awards shall be provided from shares in the
Corporation's treasury or from shares authorized but unissued. If an Option as
to any shares is surrendered before exercise, or expires or terminates for any
reason without having been exercised in full, or for any other reason ceases to
be exercisable, the number of unpurchased shares covered thereby shall become
available for the granting of Awards under the Plan (unless the Plan has been
terminated) within the aggregate maximum stated above.
6. Eligibility.
Each Non-Employee Director shall be eligible to receive non-qualified
stock Options in accordance with Section 7. The Committee may, in its sole
discretion, award such non-qualified stock Options to a Consultant, also in
accordance with Section 7. Options granted under the Plan shall be evidenced by
an agreement in such form as the Committee shall prescribe from time to time in
accordance with the Plan.
7. Grant of Options.
(a) Options shall be automatically granted to Non-Employee Directors in
accordance with the following terms and conditions:
(i) upon the date of the approval of this Plan by the
Board of Directors of the Corporation, each Non-Employee Director shall
receive an Option to purchase 2,000 shares of Common Stock, subject to
adjustment as provided in Section 12;
(ii) upon the date of his initial election or
appointment as a member of the Board of Directors, each new
Non-Employee Director who previously has not been granted Options under
the Plan or otherwise, shall receive an Option to purchase 1,000 shares
of Common Stock, subject to adjustment as provided in Section 12;
(iii) each year upon the date of the Annual Meeting
of Shareholders of the Corporation (the "Annual Meeting") each
Non-Employee Director who has been elected or reelected or who is
continuing as a member of the Board of Directors as of the adjournment
of such Annual Meeting and who has served as a director of the
Corporation for at least three years shall receive an Option to
purchase 400 shares of Common Stock, subject to adjustment as provided
in Section 12; and
(b) Options may be granted to Consultants at any time during the term
of the Plan at the discretion of the Committee.
8. Exercise Price.
The Option exercise price per share shall be 100% of the Fair Market
Value of a share of Common Stock at the close of business on the day prior to
the day on which such Option is granted, subject to adjustment as provided in
Section 12.
9. Exercise of Options.
(a) No option shall be exercisable until and unless the Plan is
approved by the Corporation's shareholders at the Corporation's 1994 Annual
Meeting of Shareholders, and, unless the Plan is so approved, all Options will
terminate and be of no further force or effect on the day after the
Corporation's 1994 Annual Meeting of Shareholders.
(b) The shares subject to an Option granted pursuant to Section 7(a)(i)
and (ii) shall vest in two equal annual installments commencing on the
anniversary of the date of grant if the holder thereof has been a Non-Employee
Director of the Corporation at all times since such date of grant. The shares
subject to an Option granted pursuant to Section 7(a)(iii) shall vest in full on
the date of the first Annual Meeting held following the date of grant if the
holder thereof has been a Non-Employee Director of the Corporation at all times
from such date of grant to the date of such Annual Meeting. The shares subject
to an Option granted pursuant to Section 7(b) shall vest in full on the date of
grant.
(c) If a person shall cease to be a Non-Employee Director or Consultant
for any reason while holding an Option that has not expired and has not been
fully exercised, such person, or in the case of his death or adjudication of
incompetency, his executors, administrators, distributees, guardian, or legal
representative, as the case may be, may, at any time until the termination or
expiration of such Option, exercise the Option with respect to any shares of
Common Stock as to which it was exercisable on the date the person ceased to be
a Non-Employee Director or Consultant.
(d) No Option or any part of an Option shall be exercisable:
(i) after the expiration of five years from the date
the Option was granted; and
(ii) unless written notice of the exercise is
delivered to the Corporation specifying the number of shares to be
purchased, and payment in full is made for the shares of Common Stock
being acquired thereunder at the time of exercise.
(e) An Option shall not be transferable by the optionee otherwise than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order, as defined in the Internal Revenue Code of 1986, as
amended, and shall be exercisable during the optionee's lifetime only by him,
his guardian or legal representative, or the recipient thereof pursuant to a
qualified domestic relations order.
10. Acceleration of Vesting.
If a person shall cease to be a Non-Employee Director for any reason
within two years following a Change in Control, an Option shall automatically be
vested and immediately exercisable in full. In such event, notwithstanding the
provisions of Section 9, an Option recipient, or in the case of his death or
adjudication of incompetency, his executors, administrators, distributees,
guardian, or legal representative, as the case may be, may, at any time until
the termination or expiration of such Option, purchase some or all of the shares
covered by such recipient's Options.
11. Compliance with Law and Other Conditions.
(a) The listing on any securities exchange or the registration or
qualification under any federal or state law of any shares of Common Stock to be
granted pursuant to Awards may be necessary or desirable as a condition of or in
connection with such Awards (in order to permit the exercise of Options or the
resale or other disposition of any shares of Common Stock by or on behalf of the
Grantees). If the Board in its sole discretion determines that such listing,
registration, or qualification is necessary or desirable, delivery of the
certificates for such shares of Common Stock shall not be made until such
listing, registration, or qualification shall have been completed: The
Corporation agrees that it will use its reasonable efforts to effect any such
listing, registration, or qualification; provided, however, that the Corporation
shall not be required to use its reasonable efforts to effect such registration
under the Securities Act of 1933, as amended, other than by providing the
information called for by the applicable registration statement form, as
presently in effect, or such other forms as may be in effect from time to time.
(b) If the shares of Common Stock that have been awarded or issued to a
Grantee pursuant to the terms of the Plan are not registered under the
Securities Act of 1933, as amended, pursuant to an effective registration
statement, such Grantee may be required, if the Committee shall deem it
advisable, to agree in writing (i) that any shares of Common Stock acquired by
such Grantee pursuant to the Plan will not be sold except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or pursuant to an exemption from registration under said Act, and (ii) that such
Grantee is acquiring such shares of Common Stock for his own account and not
with a view to the distribution thereof.
12. Adjustment.
The number of shares of Common Stock of the Corporation reserved for
Awards under the Plan and the Option price shall be subject to adjustment by the
Committee, in its sole discretion, to reflect any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange of shares or other similar event. All determinations made by the
Committee with respect to adjustments under this Section 12 shall be conclusive
and binding for all purposes of the Plan.
13. Miscellaneous Provisions.
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or Consultant shall have any claim or right to be granted an Option
under the Plan.
(b) Nothing in the Plan or in any Option agreement shall confer any
right to continue as a director or consultant of the Corporation or interfere in
any way with the right of the Corporation to remove such Option holder or, if
applicable, not to nominate such Option holder for election as a director of the
Corporation at any time.
(c) Payment in full of the purchase price in United States currency for
the shares purchased pursuant to the exercise of any Option shall be made in
cash upon exercise of the Option. All shares sold under the Plan pursuant to the
exercise of an Option shall be fully paid and nonassessable. Payment in full of
any federal, state or local taxes of any kind required by law to be withheld
with respect to the exercise of the Option shall be made to the Corporation in
cash upon exercise of the Option. A Grantee may irrevocably elect to have any
withholding tax obligation satisfied by (a) having the Corporation withhold
shares otherwise deliverable to the Grantee with respect to the exercise of the
Option, or (b) delivering to the Corporation shares received upon the exercise
of the Option or delivering to the Corporation other shares of Common Stock;
provided that the Committee may, in its sole discretion, disapprove any such
election.
(d) No Grantee of an Option shall have any voting or dividend rights or
any other rights of a shareholder with respect to any shares of Common Stock
covered by an Option before he exercises the Option with respect to such shares
and his name is recorded on the Corporation's shareholder ledger as the holder
of record of such shares.
(e) The expenses of the Plan shall be borne by the Corporation.
(f) If an Option is exercised by the executors, administrators,
legatees or distributees of the estate of a deceased optionee or by the guardian
or legal representative of an optionee, the Corporation shall be under no
obligation to issue stock thereunder unless and until the Corporation is
satisfied that the person or persons exercising the Option are the duly
appointed legal representatives of the optionee or of the deceased optionee's
estate or the proper legatees or distributees of such estate.
14. Amendment, Suspension or Termination.
(a) The Plan may be amended at any time and from time to time, but not
more than once in a six-month period, by the Board as the Board shall deem
advisable including, but not limited to, amendments necessary to qualify for any
exemption or to comply with applicable law or regulations; provided, however, no
amendment that materially increases the benefits accruing to participants under
the Plan, materially modifies the requirements as to eligibility for
participation in the Plan, increases the aggregate number of shares of Common
Stock that may be subject to Options granted pursuant to the Plan other than as
provided in the Plan, changes the purchase price for shares subject to Options
other than as provided in the Plan, or that extends the period during which
Awards may be granted under the Plan shall be effective unless and until the
same is approved, at a meeting held to take such action at which a quorum is
present, by the affirmative vote of the holders of a majority of the shares of
Common Stock of the Corporation present in person or by proxy and entitled to
vote. Without the written consent of a Grantee, no amendment of the Plan shall
adversely affect any right of such Grantee with respect to any Award theretofore
granted to him.
(b) The Board may at any time suspend or terminate the Plan. No Awards
may be granted during any suspension of the Plan or after the Plan has been
terminated.
(c) The Plan shall terminate upon the earlier of the following dates:
(i) on the date of termination specified in a
resolution of the Board, or
(ii) on a date seven years from the earlier of the
date on which the Plan is adopted by the Board or the date on which the
Plan is approved by the shareholders of the Corporation in accordance
with Section 16 hereof.
Except as otherwise provided in Section 16, the termination of the Plan shall
not affect any Awards previously granted. After the Plan terminates, the
function of the Committee will be limited to supervising the administration of
Awards previously granted.
15. Governing Law.
The Plan and all Awards made thereunder shall be governed by the laws
of the State of New York.
16. Adoption by Board and Approval of Shareholders.
The Plan shall become effective upon its adoption by the Board; provided,
however, that if the Plan is not approved by the shareholders of the Corporation
prior to the first anniversary of its adoption, the Plan and all Awards made
thereunder shall be of no effect. Shareholder approval shall be obtained, at a
meeting held to take such action at which a quorum is present, by the
affirmative vote of the holders of a majority of all the shares of Common Stock
of the Corporation entitled to vote.
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<PERIOD-END> MAR-31-1995
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0
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