<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Thomas Nelson, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THOMAS NELSON, INC.
NELSON PLACE AT ELM HILL PIKE
P.O. BOX 141000
NASHVILLE, TENNESSEE 37214-1000
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of Thomas Nelson,
Inc. will be held at the Airport Marriott Hotel, 600 Marriott Drive, Nashville,
Tennessee, at 11:00 a.m., local time, on Thursday, August 24, 1995 for the
following purposes:
1. To elect three directors in Class One to serve for a term of three
years and one director in Class Two to serve for a term of two years or
until their respective successors are elected and take office.
2. To consider and act upon a proposal to amend the Company's Amended
and Restated 1992 Employee Stock Incentive Plan (the "Stock Incentive
Plan") to (i) increase the number of shares issuable thereunder, (ii) to
limit the amount of stock-based awards that may be granted to any single
officer or key employee during any consecutive three year period, (iii) to
provide for the issuance of annual stock option grants to the Company's
outside directors and (iv) to extend the term during which awards may be
made under the Stock Incentive Plan.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on July 3, 1995, will
be entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY. THE PROXY MAY BE REVOKED AT
ANY TIME PRIOR TO THE EXERCISE THEREOF, AND THE GIVING OF THE PROXY WILL NOT
AFFECT YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND VOTE IN PERSON.
By order of the Board of Directors.
/s/ Sam Moore
-------------
SAM MOORE,
President
Nashville, Tennessee
July 26, 1995
<PAGE> 3
THOMAS NELSON, INC.
NELSON PLACE AT ELM HILL PIKE
P.O. BOX 141000
NASHVILLE, TENNESSEE 37214-1000
---------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Thomas Nelson, Inc., a Tennessee
corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
to be held on August 24, 1995 (the "Annual Meeting"), at the time and place and
for the purposes set forth in the accompanying notice, and at any adjournment
thereof. It is expected that this proxy statement, the form of proxy and the
Company's Annual Report to Shareholders will be mailed to shareholders on or
about July 26, 1995.
Only shareholders of record at the close of business on July 3, 1995 (the
"Record Date") , are entitled to notice of and to vote at the Annual Meeting. On
such date, the issued and outstanding voting securities of the Company consisted
of 12,370,580 shares of Common Stock (the "Common Stock") and 1,085,843 shares
of Class B Common Stock (the "Class B Common Stock"). Each share of Common Stock
and Class B Common Stock entitles the holder thereof to one vote and ten votes,
respectively, on each matter presented for action at the Annual Meeting.
All proxies delivered pursuant to this solicitation may be revoked at any
time prior to the voting thereof by attending the Annual Meeting and electing to
vote in person, by filing with the Secretary of the Company a written
revocation, or duly executing a proxy bearing a later date. The giving of the
proxy will not affect the right of the shareholder to attend the Annual Meeting
and vote in person. If not revoked, all proxies which are properly signed and
returned to the Company will be voted in accordance with instructions contained
thereon. If no instructions are given, the persons named in the proxy will vote
the shares represented thereby FOR the approval of the election as directors of
all nominees set forth under PROPOSAL NO. 1 and FOR the proposal to amend the
Company's Amended and Restated 1992 Employee Stock Incentive Plan (the "Stock
Incentive Plan") as set forth under PROPOSAL NO. 2.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners (as defined by certain
rules of the Securities and Exchange Commission (the "Commission")) of more than
five percent (5%) of the Common Stock and Class B Common Stock and with respect
to the beneficial ownership of the Common Stock and Class B Common Stock by all
directors and nominees, each of the executive officers named in the Summary
Compensation Table (a "Named Officer") and all executive officers and directors
of the Company as a group. The information set forth below is based on ownership
information known to the Company as of July 3, 1995. Except as otherwise
specified the shares indicated are presently outstanding, and each person has
sole voting and investment power over the shares of Common Stock and Class B
Common Stock listed as beneficially owned by such person.
<PAGE> 4
<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF CLASS B
COMMON STOCK PERCENT COMMON STOCK PERCENT
NAME AND ADDRESS BENEFICIALLY OF BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED(1)(2) CLASS OWNED(1)(2) CLASS
- ---------------------------------------------------- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Sam Moore (3)****................................... 1,446,829 11.2% 549,757 50.6%
Nelson Place at Elm Hill Pike
Nashville, TN 37214
S. Joseph Moore(4)****.............................. 200,014 1.6 92,226 8.5
Nelson Place at Elm Hill Pike
Nashville, TN 37214
Thomas Nelson, Inc. Employee Stock Ownership
Plan(5)........................................... 897,017 7.2 37,673 3.5
FMR Corp (6)........................................ 968,914 7.5 0
82 Devonshire Street
Boston, MA 02109
Forstmann-Leff Associates, Inc. (6)................. 682,938 5.5 0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
TCW Management Company (6).......................... 865,316 7.0 0
865 South Figueroa Street
Los Angeles, CA 90017
Brownlee O. Currey, Jr.** (7)....................... 187,149 1.5 4,035 *
W. Lipscomb Davis, Jr.**............................ 9,843 * 2,531 *
Robert J. Niebel, Sr.**............................. 22,554 * 3,692 *
Millard V. Oakley** (8)............................. 241,054 1.9 19,542 1.8
Joe M. Rodgers** (9)................................ 5,079 * 0
Cal Turner, Jr.** (10).............................. 7,061 * 0
Andrew J. Young** (11).............................. 2,004 * 0
Joe L. Powers*** (12)............................... 104,903 * 63,916 5.9
Roland Lundy*** (13)................................ 8,587 * 45 *
Byron D. Williamson*** (14)......................... 8,506 * 37 *
All Executive Officers and Directors as a group (17
persons) (15)..................................... 2,432,137 18.4 784,883 69.7
</TABLE>
- ---------------
* Indicates less than 1%.
** Director of the Company.
*** Named Officer.
**** Director or Director Nominee and Named Officer.
(1) Pursuant to the rules of the Commission, shares of Common Stock which
certain persons presently have the right to acquire pursuant to the
conversion provisions of the Company's 5 3/4% Convertible Subordinated
Notes due 1999 (the "Convertible Notes") are deemed outstanding for the
purpose of computing such person's percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership of the
other persons shown in the table. Likewise, the shares subject to options
held by directors and executive officers of the Company which are
exercisable within 60 days of July 3, 1995 are all deemed outstanding for
the purpose of computing such director's or executive officer's percentage
ownership and the percentage ownership of all directors and executive
officers as a group, but are not deemed outstanding for the purpose of
computing the percentage ownership of the other persons in the table. The
share information assumes further that where such
2
<PAGE> 5
individuals can elect to receive either Common Stock or Class B Common
Stock, an election is made to receive Common Stock.
(2) Shares of Class B Common Stock are convertible into an equal number of
shares of Common Stock at the option of the holder, and, wherever
applicable, share information set forth above with respect to the Common
Stock assumes the conversion of all Class B Common Stock by the holders
thereof for an equivalent number of shares of Common Stock which may be so
acquired by conversion during the 60-day period commencing July 3, 1995.
(3) Includes 7,813 shares of Class B Common Stock issuable upon exercise of
outstanding options under the Company's 1986 Stock Incentive Plan (the
"1986 Plan"), and 87,152 shares of Common Stock and 6,336 shares of Class B
Common Stock held by the Company's Employee Stock Ownership Plan (the
"ESOP"), as to which Sam Moore has sole voting power. Sam Moore's spouse
owns 33,552 shares of Common Stock and 3,435 shares of Class B Common
Stock, beneficial ownership of which is disclaimed by Mr. Moore and which
are not included.
(4) Includes 3,125 shares of Common Stock issuable upon exercise of outstanding
options under the 1986 Plan and 6,297 shares of Common Stock and 88 shares
of Class B Common Stock held by the ESOP, as to which S. Joseph Moore has
sole voting power.
(5) As trustee for the ESOP, Merrill Lynch Trust Company of America ("Merrill
Lynch") is deemed to be beneficial owner of the shares held by the ESOP;
however, the participants in the ESOP have the right to give voting
instructions to Merrill Lynch for their respective shares individually.
(6) The share information set forth above for FMR Corp., Forstmann-Leff
Associates, Inc. and TCW Management Company is shown as reflected in
amendments to Schedule 13G as filed with the Commission on February 14,
February 13 and February 6, 1995, respectively. Includes 588,240 shares of
Common Stock beneficially owned by FMR Corp. and all of the 865,316 shares
of Common Stock beneficially owned by TCW Management Company, which are
issuable on conversion of the Convertible Notes.
(7) Includes 5,186 shares of Common Stock issuable upon exercise of outstanding
options under the Company's 1990 Deferred Compensation Plan for Outside
Directors (the "Outside Directors Plan").
(8) Includes 5,186 shares of Common Stock issuable upon exercise of outstanding
options under the Outside Directors Plan and 937 shares of Class B Common
Stock held by a trust of which Mr. Oakley is trustee and the sole
beneficiary.
(9) Includes 3,204 shares of Common Stock issuable upon exercise of outstanding
options under the Outside Directors Plan; the remaining 1,875 shares of
Common Stock are held by a limited partnership of which Mr. Rodgers is
Chairman and his spouse is the general partner and majority owner.
(10) Includes 5,186 shares of Common Stock issuable upon exercise of outstanding
options under the Outside Directors Plan.
(11) Shares of Common Stock issuable upon exercise of outstanding options under
the Outside Directors Plan.
(12) Includes 2,344 shares of Common Stock issuable upon exercise of outstanding
options under the 1986 Plan, and 33,466 shares of Common Stock and 2,082
shares of Class B Common Stock held by the ESOP, as to which Mr. Powers has
sole voting power.
(13) Includes 3,125 shares of Common Stock issuable upon exercise of outstanding
options under the 1986 Plan and 417 shares of Common Stock and 45 shares of
Class B Common Stock held by the ESOP, as to which Mr. Lundy has sole
voting power.
(14) Includes 3,125 shares of Common Stock issuable upon exercise of outstanding
options under the 1986 Plan and 344 shares of Common Stock and 37 shares of
Class B Common Stock held by the ESOP, as to which Mr. Williamson has sole
voting power.
(15) Includes an aggregate of 155,910 shares of Common Stock and 9,091 shares of
Class B Common Stock held by the ESOP as identified in note (5) above, and
shares issuable upon exercise of options to purchase 30,141 shares of
Common Stock and 15,625 shares of Class B Common Stock.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Amended and Restated Charter of the Company provides that the Board of
Directors shall be divided into three classes with the classes to be as nearly
equal in size as possible. The terms of office of the directors in Class One
expire at the Annual Meeting. The incumbent directors whose terms of office
extend beyond this Annual Meeting are as follows:
<TABLE>
<CAPTION>
ANNUAL MEETING
DIRECTOR AT WHICH
NAME CLASS TERM EXPIRES
------------------------------------------- -------- --------------
<S> <C> <C>
Brownlee O. Currey, Jr..................... Three 1996
W. Lipscomb Davis, Jr...................... Three 1996
Joe M. Rodgers............................. Three 1996
Robert J. Niebel, Sr....................... Two 1997
Millard V. Oakley.......................... Two 1997
</TABLE>
The Board of Directors has nominated the following persons for election as
directors in Class One with terms of office of three years expiring at the
Annual Meeting of Shareholders to be held in 1998:
Sam Moore
Cal Turner, Jr.
Andrew J. Young
In addition, on May 24, 1995, the Board of Directors (with Sam Moore
abstaining) authorized an increase in the total number of directors from eight
to nine and nominated S. Joseph Moore for election as a Class Two director to
fill an existing vacancy on the Board of Directors. If elected, S. Joseph
Moore's term shall expire at the Annual Meeting of Shareholders to be held in
1997.
It is intended that proxies received in response to this solicitation will,
unless otherwise specified, be voted in favor of the election of the above
persons as directors of the Company for the terms set forth above and until
their successors are elected and qualified. In case any of these persons is
unable or declines to serve, it is intended, in the absence of contrary
direction, that the proxies will be voted for the balance of those named above
and for substitute nominees selected by the Board of Directors. The Board of
Directors has no reason to expect that any of the nominees will not be available
for election at the Annual Meeting, and therefore does not at this time have any
substitute nominees under consideration.
A plurality of the votes cast by the shares entitled to vote in the
election is required to elect a director. Shareholders have no right to vote
cumulatively for directors, but rather each shareholder may cast one vote for
each share of Common Stock and 10 votes for each share of Class B Common Stock
held by such shareholder for each director to be elected. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR ALL NOMINEES.
4
<PAGE> 7
The following table contains additional information concerning the
incumbent directors who will remain in office and the director nominees. Each of
the nominees (other than S. Joseph Moore) is currently a member of the Board of
Directors and was previously elected as a director by the shareholders.
Except as indicated below, each director and nominee has been an employee
of the firm(s) listed below as his principal occupation for more than the past
five years.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
- ------------------------------------- --------------------------------------- --- ---------
<S> <C> <C> <C>
Brownlee O. Currey, Jr............... Chairman of the Board and President of 66 1984
(C, N & A) The Nashville Banner Publishing Co.;
Director of OCC, Inc. and A+
Communications, Inc.
W. Lipscomb Davis, Jr................ Partner of Hillsboro Enterprises; 63 1984
(A & C) Director of Third National Bank,
American General Corporation and
Genesco, Inc.
Sam Moore............................ Chairman of the Board, Chief Executive 64 1961
(E & N) Officer and President of the Company
Robert J. Niebel, Sr................. Senior Vice President of 20th Century 57 1973
(E & A) Christian, Inc.
Millard V. Oakley.................... Businessman managing private 65 1972
(C & N) investments
Joe M. Rodgers....................... Chairman of The JMR Group; Director of 61 1992
(E) AMR Corporation, BellSouth
Telecommunications, Gaylord
Entertainment Company, Gryphon
Holdings, Inc., Lafarge Corp., and
Willis Corroon plc. Mr. Rodgers
previously was the Chairman and Chief
Executive Officer of Berlitz
International from December 1991
until February 1993
Cal Turner, Jr....................... Chairman and Chief Executive Officer of 55 1991
(E) Dollar General Corp.; Director of
First American Corporation and
Shoney's, Inc.
Andrew J. Young...................... Vice Chairman of Law Companies Group; 63 1993
(E) Chairman of Atlanta Commission for
Olympic Games; Director of Delta
Airlines, Inc. and Host Marriott
Corporation. Previously served as
Mayor of Atlanta, Georgia from 1980
to 1990.
S. Joseph Moore...................... Executive Vice President of the 32 Nominee
Company. Previously served as
Divisional Vice President of the
Company in various capacities since
1991. S. Joseph Moore is the son of
Sam Moore.
</TABLE>
- ---------------
Member of Executive (E), Compensation (C), Nominating (N), Audit (A) Committee
5
<PAGE> 8
NOMINATIONS
In accordance with the Company's Amended Bylaws (the "Amended Bylaws"),
nominations of the persons for election to the Board of Directors may be made at
a meeting of shareholders by or at the direction of the Board of Directors, by
any nominating committee or by any shareholder of the Company entitled to vote
for the election of directors at such meeting who complies with the notice
procedures set forth in the Amended Bylaws. To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 60 days nor more than 90 days prior to the meeting
of shareholders; provided, however, that in the event that less than 70 days'
notice or prior public disclosure of the date of such meeting is given or made
to the shareholders, notice by the shareholder to be timely must be so received
not later than the close of business on the 10th day following the date on which
such notice of the day of the meeting was mailed or such public disclosure was
made. The Amended Bylaws require that the notice contain certain information
with respect to the proposed nominee and as to the shareholder giving the
notice. The Company will furnish on request to any shareholder a copy of the
relevant section of the Amended Bylaws.
BOARD AND COMMITTEE MEETINGS
The Board of Directors has four standing committees, the Executive
Committee, the Compensation Committee, the Audit Committee, and the Nominating
Committee. The Executive Committee has all powers and authority vested in the
Board of Directors, except the power to declare dividends or other corporate
distributions or to remove members of the Board of Directors, but including the
power to amend or repeal bylaws, to submit to shareholders matters that require
shareholders' approval, and to fill vacancies on the Board of Directors or any
committee of the Board of Directors. The Compensation Committee reviews and
approves management compensation and administers the Company's retirement and
incentive plans. The Nominating Committee recommends to the Board of Directors
nominees for election to the Board of Directors. The Nominating Committee will
consider nominees recommended by the holders of the Common Stock and Class B
Common Stock provided such proposed nominees are submitted to the Company in the
manner and within the time limit for shareholder proposals as set forth in the
immediately preceding paragraph. The Audit Committee recommends to the Board of
Directors the appointment of the independent auditors and reviews with the
auditors' representatives the scope of their examination, their fees, the
results of their examination, and any problems identified by the independent
auditors regarding internal controls, together with their recommendations.
During the last fiscal year, the Board of Directors held four meetings. The
Executive Committee did not hold a meeting, the Compensation Committee held
three meetings, the Nominating Committee held one meeting and the Audit
Committee held two meetings. Each of the incumbent directors attended at least
75% of the aggregate of all Board of Director meetings and committee meetings on
which he served during the last fiscal year.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term and other
compensation during fiscal years 1995, 1994 and 1993 for the Company's Chief
Executive Officer and the persons who, in fiscal 1995, were the other four most
highly compensated executive officers of the Company (collectively, the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------
NAME AND OTHER ANNUAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) STOCK($)(1) COMPENSATION($)
- -------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Sam Moore................. 1995 $275,000 $175,000 $ 0 $246,875 $ 173,092(2)
President and Chief 1994 250,000 100,000 0 0 148,203
Executive Officer 1993 160,000 136,660 0 0 154,950
S. Joseph Moore........... 1995 153,847 130,000 0 74,063 7,039(3)
Executive Vice President 1994 120,385 50,000 0 0 5,938
1993 76,847 50,000 0 0 3,026
Joe L. Powers............. 1995 169,234 80,000 0 98,750 7,764(4)
Executive Vice President 1994 155,869 50,000 0 0 7,703
and Secretary 1993 125,166 50,000 0 0 8,483
Roland Lundy.............. 1995 184,201 127,000 0 98,750 8,148(5)
President, Word Records 1994 172,196 50,000 48,510(6) 0 8,068
& Music Division 1993(7) 51,923 25,000 0 0 0
Byron D. Williamson....... 1995 167,275 99,000 0 98,750 5,383(8)
President, Word 1994 158,694 96,000 0 0 4,828
Publishing Division 1993(7) 41,365 15,933 0 0 0
</TABLE>
- ---------------
(1) The amounts indicated in this column represent the dollar value as of March
31, 1995 of restricted stock grants earned during fiscal 1995 to the Named
Officers under the Stock Incentive Plan. These restricted stock awards were
granted contingently to Sam Moore in the amount of 25,000 shares and to
each of S. Joseph Moore, Joe L. Powers, Roland Lundy and Byron D.
Williamson in the amount of 10,000 shares and could be earned
proportionally over fiscal 1995 and fiscal 1996 based on the achievement of
pre-established margin contribution objectives of certain divisions of the
Company and/or pre-tax income targets of the Company for each of such
years. Shares earned pursuant to these restricted stock awards are
contingent upon the continued employment of the Named Officer for a period
of two fiscal years after the date such shares are earned. As a result of
achieving the performance goals established for fiscal 1995, the number of
shares earned by each of the Named Officers includes 12,500 shares to Sam
Moore; 3,750 shares to S. Joseph Moore and 5,000 to shares to each of Joe
L. Powers, Roland Lundy and Byron D. Williamson. Restricted stock awards
made during fiscal 1994 were rescinded by the Compensation Committee
because the target performance vesting criteria for fiscal 1994 were not
met by the Company.
(2) Includes $163,932 for fiscal year 1995 relating to amounts paid (net of
taxes) to Sam Moore to enable him to pay the after income tax cost of the
premiums on life insurance maintained on the joint lives of Sam Moore and
his wife. Such payments are contemplated by an agreement between Sam Moore
and the Company, dated May 17, 1991. Also includes $6,850 contributed to
the ESOP and $2,310 contributed to the Company's 401(k) Plan by the Company
on behalf of Sam Moore.
(3) Includes $4,729 contributed to the ESOP and $2,310 contributed to the
Company's 401(k) Plan by the Company on behalf of S. Joseph Moore.
(4) Includes $5,454 contributed to the ESOP and $2,310 contributed to the
Company's 401(k) Plan by the Company on behalf of Mr. Powers.
(5) Includes $5,838 contributed to the ESOP and $2,310 contributed to the
Company's 401(k) Plan by the Company on behalf of Mr. Lundy.
(6) Represents moving expenses paid by the Company on behalf of Mr. Lundy.
(7) The Named Officers became employees of the Company following the Company's
acquisition of Word, Incorporated in November 1992. Therefore, the
compensation reflected in this table for fiscal 1993 includes only four
months of employment with the Company.
(8) Includes $4,828 contributed to the ESOP and $555 contributed to the
Company's 401(k) Plan by the Company on behalf of Mr. Williamson.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
This table provides information as to options granted to the Named Officers
during fiscal year 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------- POTENTIAL
PERCENT OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS/ RATES OF STOCK
SECURITIES SARS GRANTED PRICE APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE OR FOR OPTION TERM
OPTION/SARS IN FISCAL BASE PRICE EXPIRATION ------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------- ----------- ------------ ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Sam Moore...................... 31,250(1) 10.0% $ 15.64 5/23/99 $85,577 $235,900
S. Joseph Moore................ 12,500(1) 4.0 14.40 5/23/99 40,731 91,892
Joe L. Powers.................. 9,375(1) 3.0 14.40 5/23/99 30,548 68,919
Roland Lundy................... 12,500(2) 4.0 14.40 5/23/99 40,731 91,892
Byron D. Williamson............ 12,500(2) 4.0 14.40 5/23/99 40,731 91,892
</TABLE>
- ---------------
(1) Options to purchase shares of Class B Common Stock granted on May 23, 1994
pursuant to the 1986 Plan. These options vest in four equal annual
installments of 25% beginning on the first anniversary of the date of
grant.
(2) Options to purchase shares of Common Stock granted on May 23, 1994 pursuant
to the 1986 Plan. These options vest in four equal annual installments of
25% beginning on the first anniversary of the date of grant.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Officers during fiscal year 1995. In addition, this table includes the
aggregate number of shares of Common Stock covered by both exercisable and
unexercisable stock options as of March 31, 1995. Also reported are the values
for the "in-the-money" options, which represent the positive spread between the
exercise price of any such existing stock options and the year-end price of the
Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam Moore................. 45,000 $ 832,500 0 31,250 $ 0 $ 103,754
S. Joseph Moore........... 5,625 106,875 0 12,500 0 57,500
Joe L. Powers............. 15,000 285,000 0 9,375 0 43,125
Roland Lundy.............. 0 0 0 12,500 0 57,500
Byron D. Williamson....... 0 0 0 12,500 0 57,500
</TABLE>
- ---------------
(1) Amount reflects gains on outstanding options based on the closing price of
the Common Stock on March 31, 1995.
DIRECTORS COMPENSATION
Directors not otherwise employed by the Company receive $1,200 per month
plus $1,000 for attending, in person, each meeting of the Board of Directors or
any committee, when such committee meetings are separately called and held.
Directors attending such meetings by means of a telephone conference call
receive $500 for each meeting. Board members who are employed as officers by the
Company receive no extra compensation for their services as directors or
committee members. All directors are reimbursed by the Company for expenses
incurred by them in connection with their service on the Board of Directors and
committees.
The Company has adopted the 1990 Deferred Compensation Option Plan for
Outside Directors (the "Outside Directors Plan"). Options may be awarded under
the Outside Directors Plan, on or prior to the
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<PAGE> 11
annual meeting of shareholders or on initial election to the Board of Directors,
to each director of the Company who files with the Company an irrevocable
election to receive options in lieu of not less than fifty percent (50%) of the
retainer fees to be earned during each fiscal year. The option price for shares
granted under the Outside Directors Plan is $1.00 per share with the number of
shares being determined by dividing the amount of the annual retainer fee by the
fair market value of the shares on the option date less $1.00 per share.
The Company engaged a nationally recognized compensation consulting firm to
assist the Company and make recommendations regarding compensation arrangements
for the Company's directors. Pursuant to this engagement, the consulting firm
made a recommendation that compensation for the Company's outside directors also
should include an annual stock option grant for the purchase of 2,000 shares of
Common Stock with an exercise price equal to the fair market value of the Common
Stock on the date of grant. Accordingly, as described in more detail under
"PROPOSAL NO. 2 -- Approval of Amendments to the Amended and Restated 1992
Employee Stock Incentive Plan," the Board of Directors is submitting for
shareholder approval an amendment to the Stock Incentive Plan providing for the
grant to each outside director as of the date of each annual meeting of
shareholders of a nonqualified stock option for 2,000 shares of Common Stock
with an exercise price equal to the fair market value of the Common Stock on the
date of grant. If approved by the shareholders, the shares subject to such
options will vest on the first anniversary of the date of grant and remain
exercisable for ten years after the date of grant.
EMPLOYMENT AND TERMINATION AGREEMENTS
The Company has an agreement with Sam Moore which provides that upon
termination of employment for any reason other than as defined in the agreement,
Mr. Moore will receive severance compensation equal to an amount necessary to
fund certain insurance survivorship policies until a net death benefit of
$10,000,000 is attained, or December 31, 2006, whichever is earlier. The policy
proceeds will be paid to a trust established for the benefit of Mr. Moore's
family.
The Company has multi-year employment agreements with Joe L. Powers, Roland
Lundy and Byron D. Williamson, which provide for annual salaries and benefits.
COMPENSATION COMMITTEE REPORT
Decisions concerning the compensation of the Company's executives are made
by the Compensation Committee of the Board of Directors. Each member of the
Compensation Committee is a non-employee director. The Compensation Committee is
responsible for reviewing and setting the compensation of the Company's senior
executives and for establishing general executive compensation policies for the
Company.
Compensation Philosophy and Policies for All Executive Officers
The Company believes that an effective executive compensation program is
one which is attractive compared with competing compensation programs, creates
incentives for enhancing long-term shareholder value and effectively aligns the
interests of the shareholders and the senior executive officers. The
Compensation Committee believes that the primary objectives of the Company's
executive compensation policy should be:
- to attract and retain talented executives by providing a
compensation program that is competitive with the compensation
provided to executives at companies of comparable size and position
in the publishing, media and music business, while maintaining
compensation within levels that are consistent with the Company's
business plan, financial objectives and operating performance;
- to provide appropriate incentives for executives to work towards the
achievement of the Company's annual performance targets established
in the Company's business plan; and
- to more closely align the interests of its executives with those of
shareholders by providing long-term incentive compensation in the
form of stock options or other equity-based long-term incentive
compensation.
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<PAGE> 12
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed during the first quarter of the fiscal
year when the financial results of the prior fiscal year become available. The
policies should be reviewed in light of their consistency with the Company's
financial performance, its business plan and its position within the publishing,
media and music industry, as well as the compensation policies of similar
companies in the publishing, media and music business. The compensation of
individual executives should then be reviewed annually by the Compensation
Committee in light of its executive compensation policies for that year.
In setting and reviewing compensation for the executive officers, the
Compensation Committee considers a number of different factors designed to
assure that compensation levels are properly aligned with the Company's business
strategy, corporate culture and operating performance. Among the factors
considered are the following:
a. Comparability -- The Compensation Committee considers the
compensation packages of similarly situated executives at companies deemed
to be most comparable to the Company. The objective is to maintain
competitiveness in the marketplace in order to attract and retain the
highest quality executives. This is a principal factor in setting base
levels of compensation.
b. Pay for Performance -- The Compensation Committee believes that
compensation should be in part directly linked to operating performance. To
achieve this link with regard to short-term performance, the Compensation
Committee has relied on cash bonuses which have been determined on the
basis of certain objective and subjective factors after receiving the
recommendations of senior management.
c. Equity Ownership -- The Compensation Committee considers that an
integral part of the executive compensation program at the Company is
equity-based compensation plans which encourage and create ownership of the
Company's stock by its executives, thereby aligning executives' long-range
interests with those of the shareholders. These long-term incentive
programs are principally reflected in the Company's stock incentive plans.
The Compensation Committee believes that significant stock ownership is a
major incentive in building shareholder value and reviews awards of
equity-based incentives with that goal in mind.
d. Qualitative Factors -- The Compensation Committee believes that in
addition to corporate performance and specific division performance, it is
appropriate to consider in setting and reviewing executive compensation the
personal contributions that a particular individual may make to the success
of the corporate enterprise. Such qualitative factors as leadership skills,
planning initiatives, development and moral skills, public affairs and
civic involvement have been deemed to be important qualitative factors to
take into account in considering levels of compensation.
Commencing with the Company's acquisition of Word, Incorporated in November
1992, the Company has expanded significantly its product lines and distribution
channels resulting in an increase in net revenues from $98.6 million in fiscal
1992 to $265.1 million in fiscal 1995, and an increase in net earnings per share
from $0.47 to $0.88. As a result of this growth and in connection with the
annual review of the Company's executive compensation policies, the Compensation
Committee deemed it appropriate to undertake a comprehensive review of the
Company's executive compensation and benefit programs. The Compensation
Committee has engaged a nationally recognized compensation consulting firm to
assist the Compensation Committee in its review and to make recommendations to
address the Company's compensation arrangements for the Company's senior
executive officers. Compensation for each of the Named Officers for fiscal 1996
will be based on policies adopted by the Compensation Committee based on such
review. In connection with this review and in light of the significant changes
in the Company's product lines and distribution channels, the Compensation
Committee determined that the peer group which the Compensation Committee had
utilized for purposes of evaluating compensation for executive officers for
fiscal 1995 and that the Company had included in the Performance Graph presented
in its prior Proxy Statements (the "Former Peer Group") should be changed. The
new peer group consists of 21 publishing and media companies, which are closer
to the Company in size than the companies included in the Former Peer Group. The
companies in the Company's new peer group are reflected in the Performance Graph
included in this Proxy Statement and will be used for purposes of reviewing
compensation policies for executive officers for fiscal 1996.
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<PAGE> 13
Compensation of Executive Officers
The Compensation Committee believes that the compensation for each of its
executive officers should consist of a base salary, the potential for an annual
cash bonus and equity-based long-term incentive compensation and has applied the
policies described herein to fiscal 1995 compensation for executive officers
including the Named Officers.
Base Compensation. In determining whether an increase in base compensation
for its executive officers was appropriate for fiscal 1995, the Compensation
Committee reviewed salary ranges recommended by management and consulted with
the Chief Executive Officer. The Compensation Committee subjectively determined
on the basis of discussions with the Chief Executive Officer, a review of the
base compensation of executive officers of 14 companies with significant
publishing activities (which are included in the Performance Graph presented in
this Proxy Statement as the "Former Peer Group"), and its experience in business
generally and with the Company specifically what it viewed to be appropriate
levels of base compensation after taking into consideration the contributions of
each executive. As a result of this review, increases averaging approximately
10% in the base salaries for the Named Officers for fiscal 1995 were made, with
specific increases varying from 5% to 28%, reflecting the Compensation
Committee's subjective judgment as to the competitive level of the compensation
being paid to each executive, the executive's contribution to the success of the
Company's performance and the increased responsibilities undertaken by the
executive. As a result of these increases, base salaries for the Named Officers
were set for fiscal 1995 at approximately the 41st to 49th percentile of the
base compensation of executives with similar responsibilities at the companies
included in the Former Peer Group. The Compensation Committee did not assign any
relative weight to the quantitative and qualitative factors which were applied
subjectively in reaching its base compensation decisions.
Annual Incentive and Bonus Compensation. For fiscal 1995, the Compensation
Committee established goals for the award of cash incentive payments based
primarily on predetermined margin contributions of certain divisions of the
Company and pre-tax income targets for the Company for fiscal 1995. The amount
of any award varied with the executive officer and the percentage of actual
margin contributions and pre-tax income to target margin contributions and
pre-tax income, with a maximum bonus for each executive officer predicated on
achieving 110% of target margin contributions and pre-tax income. As a result of
this plan, incentive payments aggregating $611,000 (64% of applicable base
salaries) were earned by the Named Officers for fiscal 1995.
Long-Term Incentive Compensation. Stock options and restricted stock
awards were the principal vehicles for payment of long-term incentive
compensation in fiscal 1995. The Compensation Committee believes that its past
grants of stock options have successfully focused the Company's management team
on building profitability and enhancing shareholder value.
The Company currently has no set policy as to when equity-based incentives
should be awarded, although historically the Company has awarded stock options
and restricted stock, if any, at the time of the Company's annual compensation
review. The Compensation Committee believes the Company should make it a part of
its regular executive compensation policies to grant annual awards of
equity-based incentives to executive officers and other key employees as part of
the compensation package that is reviewed annually for each executive officer.
These grants should be made within guidelines established at the time of the
annual review. The exercise price of each stock option should be the fair market
value of the Common Stock on the date of grant. Generally, stock options have
vested over a period of four years. Restricted stock awards have generally
vested over a period of three years, with vesting tied to achievement of
performance goals for the Company and/or business units of the Company. The
Compensation Committee's policy is that the material terms of equity-based
incentives should not be amended after grant.
The Compensation Committee determines the award of equity-based incentives
to its executive officers and takes into account the recommendations of the
Chief Executive Officer prior to approving annual awards of long-term
stock-based incentive compensation to the other executive officers. During
fiscal 1995, the Compensation Committee granted to the Named Officers restricted
stock awards under the Stock Incentive Plan in the aggregate amount of 65,000
shares, which could be earned proportionately over the next two fiscal
11
<PAGE> 14
years based on predetermined margin contributions of certain divisions of the
Company and/or pre-tax income targets for the Company for each of such years.
Specific grants were between 10,000 and 25,000 shares. As a result of the
Company achieving the performance goals established for fiscal 1995, 31,250 of
such shares were earned in fiscal 1995. During fiscal 1995, the Compensation
Committee granted to the Named Officers options to purchase an aggregate of
53,125 and 25,000 shares of the Company's Class B Common Stock and Common Stock,
respectively, under the 1986 Plan. Specific grants were between 9,375 and 31,250
shares. The size of the option grant to each Named Officer was determined by the
Compensation Committee based upon a subjective assessment of such Named
Officer's performance and his respective level in the organization. The exercise
price of each option is equal to the fair market value on the date of grant. The
options vest at a rate of 25% annually over four years and are contingent upon
continued employment through the vesting dates. All options expire ten years
from the date of grant.
Chief Executive Officer Compensation. The Compensation Committee reviewed
the performance of Sam Moore as Chairman, Chief Executive Officer and President
of the Company in determining compensation for the 1995 fiscal year. The
Compensation Committee took into account a comparison of the base compensation
of chief executive officers of the companies included in the Former Peer Group,
the longevity of Mr. Moore's service to the Company and the increase in Mr.
Moore's management responsibilities as a result of the Company's continued
growth. In light of these factors, the Compensation Committee determined that
his base compensation for fiscal 1995 should be increased to $275,000. In
reaching that conclusion, the Compensation Committee also took into account that
as part of Mr. Moore's compensation the Company paid him an additional
approximately $163,932 to enable him to pay the after income tax cost of
premiums for life insurance maintained on the joint lives of Mr. Moore and his
wife. This payment was made pursuant to a previously executed agreement and is
conditioned upon Mr. Moore maintaining in excess of 3,000,000 votes of Common
Stock and Class B Common Stock at all times. The life insurance is designed to
ensure sufficient liquidity for Mr. Moore's estate so that the estate would not
be forced to sell its significant stock position in the Company to fund its
estate tax liability, thus providing stability in the market for the Company's
securities.
The Compensation Committee determined that it was appropriate that a
significant portion of Mr. Moore's compensation package continue to be linked to
performance-based cash and equity-based incentives. Accordingly, for fiscal year
1995, the Compensation Committee approved an incentive cash bonus for Mr. Moore
based on the achievement of a predetermined formula of pre-tax income. Mr. Moore
earned an incentive cash bonus during fiscal 1995 in the amount of $175,000. The
Committee noted the total compensation paid to Mr. Moore for fiscal 1995
represented a 29% increase over that paid in fiscal 1994, consistent with the
Company's percentage increase in net income over the same period.
The Compensation Committee also believed that it was important for Mr.
Moore to continue to be awarded from time to time long-term equity-based
incentive compensation. Historically, the Company from time to time has utilized
the 1986 Executive Stock Purchase Plan, the 1986 Plan and the Stock Incentive
Plan to provide awards of this character. During fiscal 1995, the Compensation
Committee granted Mr. Moore a restricted stock award under the Stock Incentive
Plan in the amount of 25,000 shares which could be earned proportionately over
the next two fiscal years based on predetermined pre-tax income targets for each
of such years. As a result of the Company achieving the performance goals
established for fiscal 1995, 12,500 of such shares were earned in fiscal 1995.
During fiscal 1995, the Compensation Committee granted to Mr. Moore an option to
purchase 31,250 shares of the Company's Class B Common Stock under the 1986 Plan
on the same terms as those granted to the other executive officers. Consistent
with those granted to the other executive officers, the size of such option
grant was determined by the Compensation Committee based upon a subjective
assessment of Mr. Moore's contribution to the success of the Company's
performance.
Federal Income Tax Deductibility Limitations. Section 162(m) of the
Internal Revenue Code of 1986, enacted as part of the Omnibus Budget
Reconciliation Act in 1993 ("OBRA"), generally disallows a tax deduction to
public companies for compensation over $1,000,000 paid to the Company's Chief
Executive Officer and four other most highly compensated executive officers.
Compensation paid to these officers in excess of $1,000,000 that is not
performance-based cannot be claimed by the Company as a tax deduction.
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<PAGE> 15
The Compensation Committee believes it is appropriate to take into account
the $1,000,000 limit on the deductibility of executive compensation and to seek
to qualify executive compensation awards as performance-based compensation
excluded from the $1,000,000 limit. Stock options and other equity-based
incentives granted under the Stock Incentive Plan will qualify as
performance-based compensation if shareholder approval of certain of the
proposed amendments to the Stock Incentive Plan is obtained. None of the
executive officers received compensation in fiscal 1995 that would exceed the
$1,000,000 limit on deductibility. The Committee has not determined whether it
will approve any compensation arrangements that will cause the $1,000,000 limit
to be exceeded in the future.
May 25, 1995
Millard V. Oakley, Chairman
Brownlee O. Currey, Jr.
W. Lipscomb Davis, Jr.
PERFORMANCE GRAPH
In connection with the annual review of the Company's executive
compensation policies for fiscal 1996, the Compensation Committee engaged the
services of a nationally recognized compensation consulting firm. Due to the
significant growth in the Company's product lines and distribution channels, the
Compensation Committee in consultation with such consulting firm determined that
an expanded peer group which included publishing and media companies more
comparable in size to the Company was appropriate both for reviewing the
Company's executive compensation policies and for use in the Performance Graph
hereinafter set forth. The new peer group (the "New Peer Group") is comprised of
the following 21 publicly traded companies:
American Greetings Corp.
BET Holdings, Inc.
C C H, Inc.
Courier Corp.
Day Runner, Inc.
Gaylord Entertainment Co.
C. R. Gibson Co.
Houghton Mifflin Co.
Integrity Music, Inc.
International Family Entertainment, Inc.
Jostens, Inc.
King World Productions, Inc.
Marvel Entertainment Group, Inc.
Meredith Corp.
Multimedia, Inc.
Plenum Publishing Corp.
Scholastic Corp.
Value Line, Inc.
Waverly, Inc.
Western Publishing Group, Inc.
John Wiley & Sons, Inc.
The companies in the Former Peer Group include the following 14 publicly
traded companies which have significant publishing activities:
Harcourt General, Inc.
Houghton Mifflin Co.
McGraw-Hill, Inc.
Meredith Corp.
Paramount Communications, Inc.
Plenum Publishing Corp.
Price Stern Sloan, Inc.
Readers' Digest Association, Inc.
Scholastic Corp.
Time Warner, Inc.
Times Mirror Co.
Waverly, Inc.
Western Publishing Group, Inc.
John Wiley & Sons, Inc.
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<PAGE> 16
The following graph compares the five-year cumulative returns of $100
invested on March 31, 1990 in (a) the Common Stock, (b) the Class B Common
Stock, (c) Standard & Poor's MidCap 400 Index (the "S&P Index"), (d) an index
compiled by the Company and composed of the publicly traded common stock of the
companies comprising the New Peer Group (the "New Peer Group Index") and (e) an
index compiled by the Company and composed of the publicly traded common stock
of the companies comprising the Former Peer Group (the "Former Peer Group
Index"), assuming the reinvestment of all dividends. The returns on the common
stock of each member of the Former Peer Group Index and the New Peer Group Index
have been weighted to reflect relative stock market capitalization.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THOMAS NELSON, INC. COMMON STOCK,
THOMAS NELSON, INC. CLASS B COMMON STOCK, THE S&P MIDCAP 400 INDEX,
THE NEW PEER GROUP INDEX AND THE FORMER PEER GROUP INDEX
(GRAPH)
<TABLE>
<CAPTION>
THOMAS NEL-
THOMAS NEL- SON, INC.
MEASUREMENT PERIOD SON, INC. CLASS B S& P MIDCAP NEW PEER FORMER PEER
(FISCAL YEAR COVERED) COMMON STOCK COMMON STOCK 400 INDEX GROUP INDEX GROUP INDEX
<S> <C> <C> <C> <C> <C>
1990 100 100 100 100 100
1991 187 151 120 106 110
1992 261 221 146 107 111
1993 315 260 170 132 145
1994 393 372 180 145 159
1995 502 404 196 156 168
</TABLE>
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<PAGE> 17
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE AMENDED AND
RESTATED 1992 EMPLOYEE STOCK INCENTIVE PLAN
The Stock Incentive Plan was originally adopted by the Company's
shareholders in August 1992 and was amended by the Board of Directors to make
certain minor changes in May 1994 and June 1995. The Stock Incentive Plan
initially authorized 300,000 shares of Common Stock and 200,000 shares of Class
B Common Stock for issuance, which number of shares subsequently increased to a
total of 562,500 shares of Common Stock and 375,000 shares of Class B Common
Stock due to stock splits. At July 3, 1995, there were approximately 450,297
shares of Common Stock and 323,332 shares of Class B Common Stock available for
issuance under the Stock Incentive Plan.
The Compensation Committee which consists entirely of directors who are not
employees of the Company ("Outside Directors"), reviewed the Company's
stock-based incentive compensation plans and concluded based, in part, on the
recommendations of a compensation consultant engaged by the Company to review
its compensation levels and policies that the Stock Incentive Plan did not
authorize a sufficient number of shares to provide flexibility for stock-based
compensation to establish appropriate long-term incentives and achieve Company
objectives. The Compensation Committee and the Board of Directors believe that a
key element of officer, key employee and Outside Director compensation is
stock-based incentive compensation. Stock-based compensation advances the
interests of the Company by encouraging, and providing for, the acquisition of
equity interests in the Company by officers, key employees and Outside
Directors, thereby providing substantial motivation for superior performance and
aligning their interests with shareholders. In order to provide the Company with
greater flexibility to adapt to changing economic and competitive conditions,
and to attract and retain those employees and Outside Directors who are
important to the long-term success of the Company, the Board of Directors
proposed the adoption, subject to shareholder approval, of amendments to the
Stock Incentive Plan to: (i) increase the number of shares authorized for
issuance thereunder from 937,500 shares to 2,140,000 shares; (ii) impose a limit
on the number of shares under stock-based awards that may be issued to any
individual under the Stock Incentive Plan to 300,000 during any three
consecutive years; (iii) provide for an automatic annual grant of a
non-qualified option to purchase 2,000 shares of Common Stock at an exercise
price equal to the fair market value of such stock on the date of grant, to be
awarded to each Outside Director on the date of the Company's annual meeting of
shareholders; and (iv) extend the term of the Stock Incentive Plan to June 27,
2005. The Board of Directors believes that these amendments are essential to
further the long-term stability and financial success of the Company by
attracting, motivating and retaining qualified employees and Outside Directors
through the use of stock incentives.
Under OBRA, compensation expense with respect to stock options, stock
appreciation rights ("SARs") and other stock-based awards having an exercise
price that is equal to or greater than the fair market value of the underlying
stock at the time of grant are exempt from the $1,000,000 limitation on
deductibility if, among other things, the options or SARs are granted pursuant
to a plan approved by shareholders which contains a per person limit on the
number of shares underlying stock-based awards which may be granted during a
specific period to a particular executive. If the amendments of the Stock
Incentive Plan are approved by shareholders, it is anticipated that awards of
such stock-based compensation to the Named Officers will not be subject to the
limitations of OBRA.
A copy of the Stock Incentive Plan, including the proposed amendments, is
attached as Exhibit A to this Proxy Statement. If approved by the shareholders,
the amendments to the Stock Incentive Plan will become effective as of June 27,
1995.
SUMMARY OF THE AMENDMENTS
The proposed amendments to the Stock Incentive Plan increase the number of
shares which may be issued upon the exercise of options or for issuance of SARs,
restricted stock awards, or other stock-based awards (as defined in the Stock
Incentive Plan, the "Incentive Stock Awards") by 1,202,500 shares, or
approximately nine percent of the 13,456,423 shares of Common Stock and Class B
Common Stock
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<PAGE> 18
outstanding on July 3, 1995. Such shares may consist of any combination of
Common Stock or Class B Common Stock. The Stock Incentive Plan provides for
appropriate adjustment in the number of shares in the event of a stock dividend,
recapitalization, merger or the like.
In order to exclude the value of stock options and SARs from the
limitations on the federal tax deductibility of compensation paid to certain
executive officers, OBRA and applicable temporary regulations thereunder require
that the plan under which such stock awards are granted must be approved by
shareholders and contain a per person limitation on the number of options or
SARs which may be granted during a specific period to any particular executive.
Accordingly, the amendments to the Stock Incentive Plan provide that the number
of options and SARs which may be granted to any individual under the Stock
Incentive Plan will be limited to 300,000 shares during any consecutive three
year period.
The amendments to the Stock Incentive Plan include provisions providing for
an automatic annual grant of a non-qualified stock option to purchase 2,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock on the date of grant. An aggregate of 140,000 shares of Common
Stock will be reserved for issuance pursuant to automatic annual stock option
grants to Outside Directors. Outside Directors are not otherwise eligible to
receive awards under the Stock Incentive Plan.
The Stock Incentive Plan provides that no incentive stock awards shall be
granted on or after June 27, 2002. Accordingly, in order that the Stock
Incentive Plan may continue to serve its intended purposes after that date, the
amendments to the Stock Incentive Plan extend the period during which options
may be granted to June 27, 2005.
SUMMARY OF MATERIAL PROVISIONS OF THE STOCK INCENTIVE PLAN
The following is a summary of the material provisions of the Stock
Incentive Plan.
Shares. The Stock Incentive Plan will be amended to authorize an aggregate
of 2,140,000 shares, an increase of 1,202,500 additional shares, or
approximately nine percent of the Common Stock and Class B Common Stock
outstanding as of July 3, 1995. These shares are in addition to the 450,297
shares of Common Stock and 322,082 shares of Class B Common Stock currently
available for issuance under the Stock Incentive Plan. Shares awarded under the
Stock Incentive Plan may consist, in whole or in part, of any combination of
authorized and unissued shares of Common Stock and Class B Common Stock. If
shares subject to an option under the Stock Incentive Plan cease to be subject
to such option, or if shares awarded under the Stock Incentive Plan are
forfeited, or otherwise terminate without a payment being made to the
participant in the form of Common Stock or Class B Common Stock and without the
payment of any dividends thereon, such shares will again be available for future
distribution under the Stock Incentive Plan.
Participation. Incentive Stock Awards may be made to key employees,
including officers, of the Company, its subsidiaries and affiliates, but (except
for automatic annual grants of non-qualified options to Outside Directors as
described below) may not be granted to any director who is a member of the
Committee administering the Stock Incentive Plan or to any other director unless
the director is also a regular employee of the Company, its subsidiaries or
affiliates. No employee is eligible for awards relative to shares of Common
Stock and Class B Common Stock which exceed 300,000 shares in any consecutive
three year period. The number of officers and other key employees currently
eligible for awards pursuant to the Stock Incentive Plan is approximately 50.
Outside Directors will receive non-qualified stock options to purchase
2,000 shares of Common Stock at an exercise price equal to the fair market value
on the date of grant to be awarded to each Outside Director on the date of the
Company's annual meeting of shareholders. There are currently seven Outside
Directors.
Administration. The Stock Incentive Plan will be administered by a
Committee of no less than two disinterested individuals appointed by the Board
of Directors, which Committee is currently the Compensation Committee.
The Compensation Committee shall have no authority to determine the terms
or conditions of awards to Outside Directors.
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<PAGE> 19
Awards Under the Plan. The Committee will have the authority to grant the
following type of awards officers and key employees under the Stock Incentive
Plan (1) Stock Options, (2) Stock Appreciation Rights, (3) Restricted Stock, and
(4) Other Stock-Based Awards.
1. Stock Options. Incentive stock options ("ISO") and non-qualified
stock options may be granted for such number of shares of Common Stock and
Class B Common Stock as the Committee will determine and may be granted
alone, in conjunction with, or in tandem with, other awards under the Stock
Incentive Plan, but subject to the per person limitation on awards.
A stock option will be exercisable at such times and subject to such
terms and conditions as the Committee will determine and over a term to be
determined by the Committee, which term will be no more than ten years
after the date of grant. The option price for any ISO will not be less than
100% (110% in the case of certain 10% shareholders) of the fair market
value of the Common Stock or Class B Common Stock, as the case may be, as
of the date of grant and for any non-qualified stock option will be not
less than 50% of the fair market value as of the date of grant. Although
the Stock Incentive Plan, as previously approved by shareholders, permits
the Committee to grant non-qualified stock options exercisable at less than
their fair market value on the date of the grant, but not below 50% of such
fair market value, the Committee has not done so in the past and has no
current intention of doing so. Payment of the option price (in the case of
an ISO) may be in cash, or, as determined by the Committee, by unrestricted
Common Stock or Class B Common Stock, as the case may be, having a fair
market value equal to the option price. For non-qualified stock options,
payment, as determined by the Committee, may also be made in the form of
restricted stock.
2. Stock Appreciation Rights. SARs may be granted in conjunction with
all or part of a stock option and will be exercisable only when the
underlying stock option is exercisable. Once an SAR has been exercised, the
related portion of the stock option underlying the SAR will terminate.
Upon the exercise of an SAR, the Committee will pay to the employee in
cash, Common Stock, Class B Common Stock or a combination thereof (the
method of payment to be at the discretion of the Committee), an amount of
money equal to the excess between the fair market value of the stock on the
exercise date and the option of the price, multiplied by the number of
SAR's being exercised.
In addition to the foregoing SARs, the Committee may grant limited
SARs which will be exercisable only in the event of a change in control or
potential change in control of the Company as defined in the Stock
Incentive Plan. In awarding SARs or limited SARs, the Committee may provide
that in the event of a change in control or potential change in control.
SARs or limited SARs may be cashed out on the basis of the change in
control price, as defined in the Stock Incentive Plan.
3. Restricted Stock. Restricted stock may be granted alone, in
conjunction with, or in tandem with, other awards under the Stock Incentive
Plan and may be conditioned upon the attainment of specific performance
goals or such other factors as the Committee may determine. The provisions
attendant to a grant of restricted stock may vary from participant to
participant.
In making an award of restricted stock, the Committee will determine
the periods during which the stock is subject to forfeiture, and may grant
such stock at a purchase price equal to or less than the par value of the
Common Stock and/or Class B Common Stock.
During the restriction period, the employee may not sell, transfer,
pledge or assign the restricted stock. The certificate evidencing the
restricted stock will remain in the possession of the Company until the
restrictions have lapsed.
4. Other Stock-Based Awards. The Committee also may grant other types
of awards that are valued, in whole or in part, by reference to or
otherwise based on the Common Stock or Class B Common Stock. These awards
may be granted alone, in addition to, or in tandem with, stock options,
SARs and restricted stock. Such awards will be made upon terms and
conditions as the Committee may in its discretion provide.
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<PAGE> 20
Automatic Annual Grants to Outside Directors. The amendments to the Stock
Incentive Plan provide for an automatic annual grant of a non-qualified stock
option to purchase 2,000 shares of Common Stock at an exercise price equal to
the fair market value of such stock on the date of grant, to be awarded to each
Outside Director on the date of the Company's annual meeting of shareholders.
Each option granted to an Outside Director will vest and become exercisable in
full one year after the date of grant, if the Outside Director is still a
director on such date, and will expire, if unexercised, on the tenth anniversary
of the date of grant. Outside Directors are not otherwise eligible to receive
awards under the Stock Incentive Plan.
Change in Control Provisions. If there is a change in control or a
potential change in control, any SARs and stock options which are not then
exercisable will become fully exercisable and vested. Similarly, the
restrictions applicable to restricted stock and other stock-based awards will
lapse and such shares and awards will be deemed fully vested. Stock options,
SARs, limited SARs, restricted stock and other stock based awards, will, unless
otherwise determined by the Committee in its sole discretion, be cashed out on
the basis of the change in control price described below. Options granted to
Outside Directors will vest, but will not be cashed out, upon a change in
control.
The change in control price will be the highest price per share paid in any
transaction reported on the New York Stock Exchange composite index, or paid or
offered to be paid in any bona fide transaction relating to a potential or
actual change in control of the Company, at any time during the immediately
preceding 60 day period as defined by the Committee. A change in control occurs
if (1) any person becomes a beneficial owner directly or indirectly of 20% or
more of the total voting stock of the Company (subject to certain exceptions),
(2) as a result of, or in connection with, any cash tender or exchange offer,
merger or other business combination or similar transaction less than a majority
of the combined voting power of the then outstanding securities of the Company
are held in the aggregate by the holders of Company securities entitled to vote
generally in the election of directors immediately prior to such transaction, or
(3) during any period of two consecutive years, individuals which at the
beginning of such period constitute the Board of Directors cease for any reason
to constitute at least a majority thereof. A potential change in control means
(1) approval by the shareholders of an agreement which, if completed, would
constitute a change in control, or (2) the acquisition by a person of 5% or more
of the total voting stock of the Company and the adoption by the Board of
Directors of a resolution that a potential change in control, as defined in the
Stock Incentive Plan, has occurred.
Amendment. The Stock Incentive Plan may be amended by the Board of
Directors, except that the Board of Directors may not, without the approval of
the Company's shareholders, increase the number of shares available for
distribution, change the pricing rule applicable for stock options, change the
class of employees eligible to receive awards under the Amended and Restated
Stock Incentive Plan, or extend the term of any option award. The provisions of
the Stock Incentive Plan relating to grants to Outside Directors may not be
amended more than once every six months except to comply with changes in the
Internal Revenue Code of 1986, as amended (the "Code") and the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.
Adjustment. In the case of a stock split, stock dividend,
reclassification, recapitalization, merger, reorganization, or other changes in
the Company's structure affecting the Common Stock and/or Class B Common Stock,
appropriate adjustments will be made by the Committee, in its sole discretion,
in the number of shares reserved under the Stock Incentive Plan and in the
number of shares covered by options and other awards then outstanding under the
Stock Incentive Plan and, where applicable, the exercise price for awards under
the Stock Incentive Plan.
Federal Income Tax Aspects. The following is a brief summary of the
Federal income tax aspects of awards made under the Stock Incentive Plan based
upon the federal income tax laws in effect on the date hereof. This summary is
not intended to be exhaustive, and does not describe state or local tax
consequences.
1. Incentive Stock Options. No taxable income is realized by the
participant upon the grant or exercise of an ISO. If Common Stock or Class
B Common Stock is issued to a participant pursuant to the exercise of an
ISO, and if no disqualifying disposition of the shares is made by the
participant within two years of the date of grant or within one year after
the transfer of the shares to the participant, then:
18
<PAGE> 21
(a) upon the sale of the shares, any amount realized in excess of the
option price will be taxed to the participant as a long-term capital gain,
and any loss sustained will be a capital loss, and (b) no deduction will be
allowed to the Company for Federal income tax purposes. The exercise of an
ISO will give rise to an item of tax preference that may result in an
alternative minimum tax liability for the participant unless the
participant makes a disqualifying disposition of the shares received upon
exercise.
If Common Stock or Class B Common Stock acquired upon the exercise of
an ISO is disposed of prior to the expiration of the holding periods
described above, then generally: (a) the participant will realize ordinary
income in the year of disposition in an amount equal to the excess, if any,
of the fair market value of the shares at exercise (or, if less, the amount
realized on the disposition of the shares) over the option price paid for
such shares, and (b) the Company will be entitled to deduct any such
recognized amount. Any further gain or loss realized by the participant
will be taxed as short-term or long-term capital gain or loss, as the case
may be, and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the
participant's employment, the option will generally be taxed as a non-
qualified stock option.
2. Non-Qualified Stock Options. Except as noted below, with respect
to non-qualified stock options: (a) no income is realized by the
participant at the time the option is granted; (b) generally upon exercise
of the option, the participant realizes ordinary income in an amount equal
to the difference between the option price paid for the shares and the fair
market value of the shares on the date of exercise and the Company will be
entitled to a tax deduction in the same amount; and (c) at disposition, any
appreciation (or depreciation) after date of exercise is treated either as
short-term or long-term capital gain or loss, depending upon the length of
time that the participant has held the shares.
3. Stock Appreciation Rights. No income will be realized by a
participant in connection with the grant of an SAR. When the SAR is
exercised, the participant will generally be required to include as taxable
ordinary income in the year of exercise, an amount equal to the amount of
cash and the fair market value of any shares received. The Company will be
entitled to a deduction at the time and in the amount included in the
participant's income by reason of the exercise. If the participant receives
Common Stock or Class B Common Stock upon exercise of an SAR, the
post-exercise appreciation or depreciation will be treated in the same
manner discussed above under "Non-Qualified Stock Options."
4. Restricted Stock. A participant receiving restricted stock
generally will recognize ordinary income in the amount of the fair market
value of the restricted stock at the time the stock is no longer subject to
forfeiture, less the consideration paid for the stock. However, a
participant may elect, under Section 83(b) of the Code within 30 days of
the grant of the stock, to recognize taxable ordinary income on the date of
grant equal to the excess of the fair market value of the shares of
restricted stock (determined without regard to the restrictions) over the
purchase price of the restricted stock. Thereafter, if the shares are
forfeited, the participant will be entitled to a deduction, refund, or
loss, for tax purposes only, in an amount equal to the purchase price of
the forfeited shares regardless of whether be made a Section 83(b)
election. With respect to the sale of shares after the forfeiture period
has expired, the holding period to determine whether the participant has
long-term or short-term capital gain or loss generally begins when the
restriction period expires and the tax basis for such shares will generally
be based on the fair market value of such shares on such date. However, if
the participant makes an election under Section 83(b), the holding period
will commence on the date of grant, the tax basis will be equal to the fair
market value of shares on such date (determined without regard to
restrictions), and the Company generally, will be entitled to a deduction
equal to the amount that is taxable as ordinary income to the participant
in the year that such income is taxable.
5. Dividends and Dividend Equivalents. Dividends paid on restricted
stock generally will be treated as compensation that is taxable as ordinary
income to the participant, and will be deductible by the Company. If,
however, the participant makes a Section 83(b) election, the dividends will
be taxable as ordinary income to the participant but will not be deductible
by the Company.
19
<PAGE> 22
6. Other Stock-Based Awards. The Federal income tax treatment of
other stock-based awards will depend on the nature of any such award and
the restrictions applicable to such award. Such an award may, depending on
the conditions applicable to the award, be taxable as an option, an award
of restricted stock, or in a manner not described herein.
The following table provides information as to awards made to Named
Officers under the Stock Incentive Plan in fiscal 1995 and proposed awards to
Outside Directors for fiscal 1996.
FISCAL 1995 AND PROPOSED FISCAL 1996 PLAN BENEFITS
AMENDED AND RESTATED 1992 EMPLOYEE STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE SHARES OF
OF ALL STOCK STOCK RESTRICTED
BASED AWARDS OPTIONS STOCK
NAME AND POSITION EARNED ($) GRANTED GRANTED
- ------------------------------------------------------ -------------- ------- ----------
<S> <C> <C> <C>
Named Officers:
Sam Moore........................................... $246,875(1) -- 25,000
S. Joseph Moore..................................... 74,063(1) -- 10,000
Joe L. Powers....................................... 98,750(1) -- 10,000
Roland Lundy........................................ 98,750(1) -- 10,000
Byron D. Williamson................................. 98,750(1) -- 10,000
All executive officers as a group (10 persons)...... 761,263 -- 81,461
Non-executive officer employee group................ 767,624 -- 82,410
Outside Directors:
Brownlee O. Currey, Jr.............................. 3,000(2) 2,000 --
W. Lipscomb Davis, Jr............................... 3,000(2) 2,000 --
Robert J. Niebel, Sr................................ 3,000(2) 2,000 --
Millard V. Oakley................................... 3,000(2) 2,000 --
Joe M. Rodgers...................................... 3,000(2) 2,000 --
Cal Turner, Jr...................................... 3,000(2) 2,000 --
Andrew J. Young..................................... 3,000(2) 2,000 --
All Outside Directors as a group (7 persons)........ 21,000(2) 14,000 --
</TABLE>
- ---------------
(1) The amounts indicated represent the dollar value as of March 31, 1995 of
restricted stock grants earned during fiscal 1995 to the Named Officers
under the Stock Incentive Plan. These restricted stock awards were granted
contingently to Sam Moore in the amount of 25,000 shares and to each of S.
Joseph Moore, Joe L. Powers, Roland Lundy and Byron D. Williamson in the
amount of 10,000 shares and could be earned proportionally over fiscal 1995
and fiscal 1996 based on the achievement of pre-established margin
contribution objectives of certain divisions of the Company and/or pre-tax
income targets of the Company for each of such years. Shares earned
pursuant to these restricted stock awards are contingent upon the continued
employment of the Named Officers for a period of two fiscal years after the
date such shares are earned. As a result of achieving the performance goals
established for fiscal 1995, the number of shares earned by each of the
Named Officers includes 12,500 shares to Sam Moore, 3,750 shares to S.
Joseph Moore and 5,000 shares to each of Joe L. Powers, Roland Lundy and
Byron D. Williamson.
(2) The exercise price of these options will be the closing sale price of the
Common Stock as reported on the New York Stock Exchange on the date of
grant. The value of such options cannot be determined at this time;
however, the amounts indicated are representative dollar values as of March
31, 1995 based upon an exercise price equal to the closing price of the
Common Stock on August 24, 1994.
20
<PAGE> 23
CONCLUSION AND RECOMMENDATION
The Board of Directors believes it is in the best interests of the Company
and its shareholders to adopt the amendments to the Stock Incentive Plan to help
attract and retain key persons of outstanding competence, to further align their
interests with those of the Company's shareholders generally, and to conform the
terms of the Stock Incentive Plan to the requirements of performance-based
compensation under OBRA.
A majority of the votes of all shares present, represented and entitled to
vote is necessary for approval of this proposal. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENTS TO THE STOCK INCENTIVE PLAN.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Commission. Executive officers,
directors and greater than 10% beneficial owners are required by regulation of
the Commission to furnish the Company with copies of all Section 16(a) forms so
filed.
Based solely upon a review of the Forms 3, 4 and 5 and amendments thereto
and certain written representations furnished to the Company, the Company
believes that, during the fiscal year ended March 31, 1995, its executive
officers, directors and greater than 10% beneficial owners complied with all
applicable filing requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended March 31, 1995, were
examined by Arthur Andersen LLP, independent certified public accountants.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting. Such representatives will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.
In keeping with its past practice, the Board of Directors does not intend
to select independent auditors for the year ending March 31, 1996 until after
the Annual Meeting.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE
PRESENTED AT THE 1996 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented at the Annual Meeting of
Shareholders to be held in 1996 must be received in writing by the Company at
its executive offices at Nelson Place at Elm Hill Pike, Nashville, Tennessee
37214-1000, not later than March 28, 1996, in order to be included in the
Company's proxy statement and proxy for that meeting.
METHOD OF COUNTING VOTES
Pursuant to rules promulgated by the Commission, boxes and a designated
blank space are provided on the proxy card for shareholders to mark if they wish
to vote "for," "against" or "withhold authority" (or abstain) to vote for one or
more of the director nominees, and to vote "for," "against" or "abstain" from
voting on any other matters submitted to the shareholders. Under applicable
securities laws, Tennessee law and the Company's charter and bylaws, an
abstention or withholding of authority to vote will have no effect on the
outcome of the election of directors, as such election is determined by the
number of votes cast. With regard to the election of directors, however, shares
represented at the Annual Meeting by proxies containing instructions to abstain,
or withholding authority to vote, will nonetheless be counted as present for
purposes of determining whether a quorum exists at the Annual Meeting. With
respect to the approval of the amendments to the Stock Incentive Plan, an
abstention or withholding of authority to vote will have the same effect as a
21
<PAGE> 24
vote against the amendments, as a majority of all shares present, or
represented, and entitled to vote is necessary for such approval.
A broker non-vote occurs when a broker holding shares registered in a
street name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters, and the broker returns a proxy card
with no vote (the "non-vote") on the non-routine matter. Under Tennessee law and
the Company's charter and bylaws, broker non-votes will have no impact on any of
the matters submitted to the shareholders, but shares represented by a proxy
card marked with a non-vote would be counted as present for purposes of
determining the existence of a quorum. Under New York Stock Exchange rules, the
election of directors is a matter on which a broker has the discretion to vote
if instructions are not received from the client at least 10 days prior to the
Annual Meeting, but brokers will not have the discretion to vote on the
amendment to the Stock Incentive Plan in the absence of instructions from their
clients.
MISCELLANEOUS
The cost of this solicitation of proxies will be borne by the Company. It
is anticipated that the solicitation will be made primarily by mail, but regular
employees or representatives of the Company may, without additional
compensation, also solicit proxies by telephone, telegram, or personal interview
and arrange for brokerage houses and other custodians, nominees and fiduciaries
to send proxies and proxy material to their principals at the Company's expense.
The Board of Directors is not aware of any business other than that
described in this Proxy Statement to be presented for action at the Annual
Meeting, but the persons named in the proxy intend to vote or act with respect
to any other proposal that may be properly brought before the Annual Meeting in
accordance with their judgment.
THE ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED MARCH 31, 1995, IS
BEING MAILED TO ALL SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING.
ADDITIONAL INFORMATION IS CONTAINED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K
WHICH WAS FILED WITH THE COMMISSION ON JUNE 27, 1995. THE COMPANY WILL FURNISH
WITHOUT CHARGE TO ANY SHAREHOLDER A COPY OF ITS COMPLETE ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, UPON WRITTEN
REQUEST TO JOE L. POWERS, EXECUTIVE VICE-PRESIDENT AND SECRETARY, THOMAS NELSON,
INC., P.O. BOX 141000, NASHVILLE, TENNESSEE 37214-1000.
By order of the Board of Directors.
THOMAS NELSON, INC.
By Sam Moore, President
July 26, 1995
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<PAGE> 25
EXHIBIT A
THOMAS NELSON, INC.
AMENDED AND RESTATED
1992 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Thomas Nelson, Inc. 1992 Stock Incentive Plan (the
"Plan") is to enable Thomas Nelson, Inc. (the "Corporation") to attract, retain
and reward key employees of and consultants to the Corporation and its
Subsidiaries and Affiliates and directors who are not also employees of the
Corporation, and strengthen the mutuality of interests between such key
employees, consultants, directors and the Corporation's stockholders, by
offering such key employees, consultants and directors performance-based stock
incentives and/or other equity interests or equity-based incentives in the
Corporation, as well as performance-based incentives payable in cash. The
creation of the Plan shall not diminish or prejudice other compensation programs
approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set forth
below:
A. "Affiliate" means any entity other than the Corporation and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Corporation directly or indirectly owns
at least 20% of the combined voting power of all classes of stock of such
entity or at least 20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Corporation.
C. "Book Value" means, as of any given date, on a per share basis (i)
the Common Stockholders' Equity in the Corporation as of the end of the
immediately preceding fiscal year as reflected in the Corporation's
consolidated balance sheet, subject to such adjustment as the Committee
shall specify at or after grant, divided by (ii) the number of then
outstanding shares of Stock as of such year-end date (as adjusted by the
Committee for subsequent events or for shares of capital stock immediately
convertible into Common Stock).
D. "Common Stock" means the Corporation's Common Stock, par value
$1.00 per share and "Class B Common Stock" means the Corporation's Class B
Common Stock, par value $1.00 per share.
E. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
F. "Committee" means the Committee referred to in Section 2 of the
Plan.
G. "Corporation" means Thomas Nelson, Inc., a corporation organized
under the laws of the State of Tennessee or any successor corporation.
H. "Disability" means disability as determined under the Corporation's
long-term disability insurance policy.
I. "Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) as promulgated by the Securities and Exchange Commission
("Commission") under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor definition adopted by the Commission.
J. "Early Retirement" means retirement, for purposes of this Plan with
the express consent of the Corporation at or before the time of such
retirement, from active employment with the Corporation and any Subsidiary
or Affiliate prior to age 65, in accordance with any applicable early
retirement policy of the Corporation then in effect.
K. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the reported closing price of a
share of such class of Stock on the New York Stock Exchange or such other
exchange or market as is the principal trading market for such class of
Stock, or, if no such sale of a share of such class of Stock is reported on
the New York Stock Exchange or
A-1
<PAGE> 26
other exchange or principal trading market on such date, the fair market
value of a share of such class of Stock as determined by the Committee in
good faith.
L. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.
M. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
N. "Normal Retirement" means retirement from active employment with
the Corporation and any Subsidiary or Affiliate on or after age 65.
O. "Other Stock-Based Award" means an award under Section 8 below that
is valued in whole or in part by reference to, or is otherwise based on,
Stock.
P. "Outside Director" means a member of the Board who is not an
officer or employee of the Corporation or any Subsidiary of the
Corporation.
Q. "Outside Director Option" shall have the meaning provided in
Section 9.
R. "Plan" means this Thomas Nelson, Inc. 1992 Employee Stock Incentive
Plan, as amended from time to time.
S. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7 below.
T. "Retirement" means Normal or Early Retirement.
U. "Stock" means the Common Stock and/or the Class B Common Stock as
may be specifically designated by the Committee.
V. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Corporation all (or a
portion) of a Stock Option in exchange for an amount equal to the
difference between (i) the Fair Market Value, as of the date such Stock
Option (or such portion thereof) is surrendered, of the shares of Stock
covered by such Stock Option (or such portion thereof), subject, where
applicable, to the pricing provisions in Section 6(b)(ii), and (ii) the
aggregate exercise price of such Stock Option (or such portion thereof).
W. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.
X. "Subsidiary" means any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation if each of
the corporations (other than the last corporation in the unbroken chain)
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
In addition, the terms "Change in Control," "Potential Change in Control"
and "Change in Control Price" shall have the meanings set forth, respectively in
Sections 10(b), (c) and (d) below and the term "Cause" shall have the meaning
set forth in Section 5(j) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Disinterested Persons, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan may be exercised by an existing Committee of the Board composed exclusively
of Disinterested Persons.
The Committee shall have authority to grant, pursuant to the terms of the
Plan, to officers, other key employees and consultants eligible under Section 4:
(i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock,
and/or (iv) Other Stock-Based Awards.
A-2
<PAGE> 27
In particular, the Committee shall have the authority, consistent with the
terms of the Plan:
(a) to select the officers and other key employees of and consultants
to the Corporation and its Subsidiaries and Affiliates to whom Stock
Options, Stock Appreciation Rights, Restricted Stock and/or Other
Stock-Based Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
and/or Other Stock-Based Awards, or any combination thereof, are to be
granted hereunder to one or more eligible employees;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any
Stock Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Committee shall determine, in its
sole discretion);
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash or Restricted Stock under Section 5(m) or (n), as
applicable, instead of Stock;
(f) to determine whether, to what extent and under what circumstances
Option grants and/or other awards under the Plan and/or other cash awards
made by the Corporation are to be made, and operate, on a tandem basis
vis-a-vis other awards under the Plan and/or cash awards made outside of
the Plan, or on an additive basis; and
(g) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount (if any) of
any deemed earnings on any deferred amount during any deferral period).
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Corporation and Plan participants.
Notwithstanding the foregoing, the Committee shall have no authority to
determine the terms or conditions of awards to Outside Directors, which shall be
governed solely by Section 9 hereof.
SECTION 3. SHARES OF STOCK SUBJECT TO PLAN.
The aggregate number of shares of Stock reserved and available for
distribution under the Plan shall not exceed 2,140,000 shares. Any number of
shares of Common Stock or Class B Common Stock may be awarded so long as the
total number of shares of Stock awarded does not exceed 2,140,000 shares. No
award of Class B Common Stock may be made if such award would violate any rule
of the principal trading market for the Stock or would result in a suspension of
the trading of the Stock or delisting of the Stock. An aggregate of 140,000
shares of Common Stock shall be reserved solely for issuance under Section 9.
Subject to Section 6(b)(iv) below, if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any shares of Stock that
are subject to any Restricted Stock or Other Stock-Based Award granted hereunder
are forfeited prior to the payment of any dividends, if applicable, with respect
to such shares of Stock, or any such award otherwise terminates without a
payment being made to the participant in the form of Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
A-3
<PAGE> 28
In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend, Stock split or
other change in corporate structure affecting the Stock, an appropriate
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan, and in the number of
shares subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Corporation upon the exercise of any Stock Appreciation Right associated
with any Stock Option. The maximum number of shares that may be awarded to any
participant under Section 4 of this Plan will be adjusted in the same manner as
the number of shares subject to outstanding Options.
SECTION 4. ELIGIBILITY.
Officers and other key employees of and consultants to the Corporation and
its Subsidiaries and Affiliates (but excluding members of the Committee and any
person who serves only as a director, except as otherwise provided in Section 9)
who are responsible for or contribute to the management, growth and/or
profitability of the business of the Corporation and/or its Subsidiaries and
Affiliates are eligible to be granted awards under the Plan. No officer or key
employee shall be eligible to receive awards relative to shares of Stock which
exceed 300,000 shares during any consecutive three year period.
Outside Directors shall be eligible to receive awards under Section 9 only.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may
be granted only to individuals who are employees of the Corporation or any
Subsidiary of the Corporation.
The Committee shall have the authority to grant to any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights).
Options granted to officers, key employees and consultants under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall be not less than 100% (or, in the case of any employee who
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or of any of its subsidiary or
parent corporations, not less than 110%) of the Fair Market Value of the
Stock at grant, in the case of Incentive Stock Options, and not less than
50% of the Fair Market Value of the Stock at grant, in the case of
Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years (or, in the case of an employee who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or any of its subsidiary or parent corporations, more than five
years) after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that except as provided
in Section 5(g) and (h) and Section 10, unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable prior to
the first anniversary date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of future
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service at a rate specified at the time of grant, or that the Stock Option
is exercisable only in installments. If the Committee provides, in its sole
discretion, that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Committee
shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
restrictions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period, by giving written
notice of exercise to the Corporation specifying the number of shares to be
purchased.
Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or
(except in the case of an Incentive Stock Option) after grant, payment in
full or in part may also be made in the form of unrestricted Stock already
owned by the optionee or, in the case of the exercise of a Non-Qualified
Stock Option, Restricted Stock subject to an award hereunder (based on the
Fair Market Value of the Stock on the date the option is exercised, as
determined by the Committee). If payment of the exercise price is made in
part or in full with Stock, the Committee may award to the employee a new
Stock Option to replace the Stock which was surrendered.
If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto) shall remain
(or be) restricted or deferred, as the case may be, in accordance with the
original terms of the Restricted Stock award in question, and any
additional Stock received upon the exercise shall be subject to the same
forfeiture restrictions or deferral limitations, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to dividends or
other rights of a stockholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid in full
for such shares, and, if requested, has given the representation described
in Section 13(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified Stock Option, the
Committee in its discretion may award at the time of grant or thereafter
the right to receive upon exercise of such Stock Option a cash bonus
calculated to pay part or all of the Federal income tax incurred by the
optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if an optionee's
employment by the Corporation and any Subsidiary or (except in the case of
an Incentive Stock Option) Affiliate terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised, to the
extent such option was exercisable at the time of death or (except in the
case of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or except in the case of an
Incentive Stock Option, as may be determined in accordance with procedures
established by the Committee) by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a period
ending upon the expiration of the stated term of such Stock Option.
(h) Termination by Reason of Disability. Subject to Section 5(k), if
an optionee's employment by the Corporation and any Subsidiary or (except
in the case of an Incentive Stock Option) Affiliate terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination or (except in the case of an Incentive Stock Option) on such
accelerated basis as the Committee may determine at or after grant (or,
except in the case of an Incentive Stock Option, as may be determined in
accordance with procedures established by the Committee), for a period
ending upon the expiration of the stated term of such Stock Option. In the
event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the
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expiration of any period that would apply if such Stock Option were a
Non-Qualified Stock Option, such Stock Option will thereafter be treated as
a Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to Section 5(k), if
an optionee's employment by the Corporation and any Subsidiary or (except
in the case of an Incentive Stock Option) Affiliate terminates by reason of
Normal or Early Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable
at the time of such Retirement or (except in the case of an Incentive Stock
Option) on such accelerated basis as the Committee may determine at or
after grant (or, except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the Committee), for
a period ending upon the expiration of the stated term of such Stock
Option. In the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of the
exercise period applicable to Incentive Stock Options, but before the
expiration of the period that would apply if such Stock Option were a
Non-Qualified Stock Option, the option will thereafter be treated as a
Non-Qualified Stock Option.
(j) Other Termination. Subject to Section 5(k), unless otherwise
determined by the Committee (or pursuant to procedures established by the
Committee) at or (except in the case of an Incentive Stock Option) after
grant, if an optionee's employment by the Corporation and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate is
involuntarily terminated for any reason other than death, Disability or
Normal or Early Retirement, the Stock Option shall thereupon terminate,
except that such Stock Option may be exercised, to the extent otherwise
then exercisable, for the lesser of three months or the balance of such
Stock Option's term if the involuntary termination is without Cause. For
purposes of this Plan, "Cause" means (i) a felony conviction of a
participant or the failure of a participant to contest prosecution for a
felony, or (ii) a participant's willful misconduct or dishonesty, which is
directly and materially harmful to the business or reputation of the
Corporation or any Subsidiary or Affiliate. If an optionee voluntarily
terminates employment with the Corporation and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate (except for Disability,
Normal or Early Retirement), the Stock Option shall thereupon terminate;
provided, however, that the Committee at grant or (except in the case of an
Incentive Stock Option) thereafter may extend the exercise period in this
situation for the lesser of three months or the balance of such Stock
Option's term.
(k) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options
shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the
optionee(s) affected, to disqualify any Incentive Stock Option under such
Section 422.
No Incentive Stock Option shall be granted to any participant under
the Plan if such grant would cause the aggregate Fair Market Value (as of
the date the Incentive Stock Option is granted) of the Stock with respect
to which all Incentive Stock Options issued after December 31, 1986 are
exercisable for the first time by such participant during any calendar year
(under all such plans of the Company and any Subsidiary) to exceed
$100,000.
To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
(i) if (x) a participant's employment is terminated by reason of
death, Disability or Retirement and (y) the portion of any Incentive
Stock Option that is otherwise exercisable during the post-termination
period specified under Section 5(g), (h) or (i), applied without regard
to the $100,000 limitation contained in Section 422(d) of the Code, is
greater than the portion of such option that is immediately exercisable
as an "incentive stock option" during such post-termination period under
Section 422, such excess shall be treated as a Non-Qualified Stock
Option; and
(ii) if the exercise of an Incentive Stock Option is accelerated by
reason of a Change in Control, any portion of such option that is not
exercisable as an Incentive Stock Option by reason of
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the $100,000 limitation contained in Section 422(d) of the Code shall be
treated as a Non-Qualified Stock Option.
(l) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash, Stock or Restricted Stock an option previously
granted, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is
made.
(m) Settlement Provisions. If the option agreement so provides at
grant or (except in the case of an Incentive Stock Option) is amended after
grant and prior to exercise to so provide (with the optionee's consent),
the Committee may require that all or part of the shares to be issued with
respect to the spread value of an exercised Option take the form of
Restricted Stock, which shall be valued on the date of exercise on the
basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regards to the deferral
limitations and/or forfeiture restrictions involved.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such purpose. Upon such exercise, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be exercisable
to the extent that the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions of Section 5 and
this Section 6 of the Plan; provided, however, that any Stock Appreciation
Right granted to an optionee subject to Section 16(b) of the Exchange Act
subsequent to the grant of the related Stock Option shall not be
exercisable during the first six months of its term. The exercise of Stock
Appreciation Rights held by optionees who are subject to Section 16(b) of
the Exchange Act shall comply with Rule 16b-3 thereunder, to the extent
applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock equal
in value to the excess of the Fair Market Value of one share of Stock over
the option price per share specified in the related Stock Option multiplied
by the number of shares in respect of which the Stock Appreciation Right
shall have been exercised, with the Committee having the right to determine
the form of payment. When payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the Fair Market Value
of the shares on the date of exercise. When payment is to be made in cash,
such amount shall be calculated on the basis of the average of the highest
and lowest quoted selling price, regular way, of the Stock on the New York
Stock Exchange or such other exchange or market as is the principal trading
market for the Stock, or, if no such sale of Stock is reported on such
date, the fair market value of the Stock as determined by the Committee in
good faith.
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(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable under
Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 3 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares of Stock
actually issued under the Stock Appreciation Right at the time of exercise
based on the value of the Stock Appreciation Right at such time. To the
extent that a Stock Appreciation Right is paid in cash upon exercise, the
shares of Stock which would have been issued pursuant to the underlying
Stock Option in lieu of such cash payment shall not count towards the
limitation contained in Section 3 of the Plan and shall remain available
for future distribution under the Plan.
(v) In its sole discretion, the Committee may grant "Limited" Stock
Appreciation Rights under this Section 6, i.e, Stock Appreciation Rights
that become exercisable only in the event of a Change in Control and/or a
Potential Change in Control, subject to such terms and conditions as the
Committee may specify at grant. Such Limited Stock Appreciation Rights
shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide that, in
the event of a Change in Control and/or a Potential Change in Control, the
amount to be paid upon the exercise of a Stock Appreciation Right or
Limited Stock Appreciation Right shall be based on the Change in Control
Price, subject to such terms and conditions as the Committee may specify at
grant.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone,
in addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock will be
made, the number of shares of Restricted Stock to be awarded to any person, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the awards in
addition to those set forth in Section 7(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with respect
to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Corporation, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after
the award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Corporation until the
restrictions thereon shall have lapsed, and that, as a condition of any
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Restricted Stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) In accordance with the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions
in whole or in part, based on service, performance and/or such other
factors or criteria as the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a stockholder of the Corporation, including the right
to vote the shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time of award, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested, subject to Section 13(e), in
additional Restricted Stock to the extent shares are available under
Section 3, or otherwise reinvested. Pursuant to Section 3 above, Stock
dividends issued with respect to Restricted Stock shall be treated as
additional shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to the shares with
respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the award agreement and
this Section 7, upon termination of a participant's employment with the
Corporation and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions established by
the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
certificates for an appropriate number of unrestricted shares shall be
delivered to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Corporation and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a restricted stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
SECTION 8. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including, without
limitation, performance shares, convertible preferred stock, convertible
debentures, exchangeable securities and Stock awards or options valued by
reference to Book Value earnings per share or subsidiary performance, may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights or Restricted Stock granted under the Plan and/or cash
awards made outside of the Plan; provided that no such Other Stock-Based Awards
may be granted in tandem with Incentive Stock Options if that would cause such
Stock Options not to qualify as Incentive Stock Options pursuant to Section 422
of the Code.
Subject to the provisions of the Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such awards
shall be made, the number of shares of Stock to be awarded pursuant to such
awards, and all other conditions of the awards. The Committee may also provide
for the grant of Stock upon the completion of a specified performance period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
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(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 8 shall be subject to the following terms and conditions:
(i) Shares subject to awards under this Section 8 may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient of
an award under this Section 8 shall be entitled to receive, currently or on
a deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the award, as determined at
the time of the award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Stock or otherwise reinvested.
(iii) Any award under Section 8 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 8.
(v) Each award under this Section 8 shall be confirmed by, and subject
to the terms of, an agreement or other instrument by the Corporation and
the participant.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 8 may be issued for no cash consideration.
Stock (including securities convertible into Stock) purchased pursuant to a
purchase right awarded under this Section 8 shall be priced at least 85% of
the Fair Market Value of the Stock on the date of grant.
SECTION 9. AWARDS TO OUTSIDE DIRECTORS
(a) The provisions of this Section 9 shall apply only to awards to Outside
Directors in accordance with this Section 9. The Committee shall have no
authority to determine the terms or conditions of any award under this Section
9.
(b) On the date of each annual meeting of shareholders of the Corporation,
commencing with the 1995 Annual Meeting of Shareholders, each Outside Director
will receive an automatic grant of a non-qualified stock option to purchase
2,000 shares of the Corporation's Common Stock, par value $1.00 per share, at an
exercise price equal to the Fair Market Value of such Stock on the date of grant
(an "Outside Director Option"). Each Outside Director Option shall vest and
become exercisable on the first anniversary of the date of grant if the grantee
is still a member of the Board on such date, but shall not be exercisable before
such date. Each Outside Director Option shall expire, if unexercised, on the
tenth anniversary of the date of grant. The exercise price may be paid in cash
or in shares of Common Stock, including shares of Common Stock subject to the
Outside Director Option.
(c) Outside Director Options shall not be transferable other than by will
or by laws of descent and distribution and shall be exercisable during the
lifetime of the grantee only by the grantee.
(d) Grantees of Outside Director Options shall enter into a stock option
agreement with the Corporation setting forth the exercise price and other terms
as provided herein.
(e) The termination of Outside Director Options shall be governed by the
provisions of Sections 5(h), 5(i) and 5(j) hereof as if Outside Directors were
employees of the Corporation, except that there shall be no discretion to
accelerate the vesting of an Outside Director Option.
(f) Outside Director Options shall vest and become exercisable
automatically upon a Change in Control, but shall not otherwise be subject to
Section 10. The number of shares and the exercise price per share of each
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Outside Director Option shall be adjusted automatically in the same manner as
the number of shares and the exercise price for Stock Options under Section 3
hereof at any time that Stock Options are adjusted as provided in Section 3.
(g) Any applicable withholding taxes shall be paid in shares of Common
Stock subject to the Outside Director Option valued at the Fair Market Value of
such shares on the date of exercise, unless the Corporation agrees to accept a
payment in cash in the amount of such withholding taxes.
(h) The Board may not amend, alter or discontinue this Section 9 without
the approval of the holders of a majority of the issued and outstanding shares
of Common Stock, and in no event shall this Section 9 be amended more than once
every six months, other than to comply with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
SECTION 10. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 10(b) or
(2) a "Potential Change in Control" as defined in Section 10(c), but
only if and to the extent so determined by the Committee at or after grant
(subject to any right of approval expressly reserved by the Committee at
the time of such determination),
the following acceleration and valuation provisions shall apply if so determined
by the Committee in its sole discretion:
(i) Any Stock Appreciation Rights (including, without limitation, any
Limited Stock Appreciation Rights) outstanding for at least six months and
any Stock Option awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock and Other Stock-Based Awards, in each case to the extent
not already vested under the Plan, shall lapse and such shares and awards
shall be deemed fully vested.
(iii) Except as otherwise provided in Section 10(a)(iv) below, the
value of all outstanding Stock Options, Stock Appreciation Rights,
Restricted Stock and Other Stock-Based Awards, in each case to the extent
vested, shall, unless otherwise determined by the Committee in its sole
discretion at or (except in the case of an Incentive Stock Option) after
grant but prior to any Change in Control, be cashed out on the basis of the
"Change in Control Price" as defined in Section 10(d) as of the date such
Change in Control or such Potential Change in Control is determined to have
occurred or such other date as the Committee may determine prior to the
Change in Control.
(iv) In the case of any Stock Options, Stock Appreciation Rights,
Restricted Stock and Other Stock-Based Awards held by any person subject to
Section 16(b) of the Exchange Act, the value of all such Stock Options,
Stock Appreciation Rights, Restricted Stock or Other Stock-Based Awards, in
each case to the extent that they are vested and have been held for at
least six months, shall (unless otherwise determined by the Committee in
its sole discretion) be cashed out on the basis of the "Change in Control
Price" as defined in Section 10(d) as of the date of such Change in Control
or such Potential Change in Control is determined to have occurred, but
only if the Change in Control or Potential Change in Control is outside the
control of the grantee for purposes of Rule 16b-3(e)(3) under the Exchange
Act, or any successor provision promulgated by the Securities and Exchange
Commission.
(b) Definition of "Change in Control". For purposes of Section 10(a), a
"Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Exchange Act, other than the Corporation or a wholly-owned
subsidiary thereof or any employee benefit plan of the Corporation or any
of its Subsidiaries, becomes the beneficial owner of the Corporation's
securities having 35% or more of the combined voting power of the then
outstanding securities of the Corporation
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that may be cast for the election of directors of the Corporation (other
than as a result of an issuance of securities initiated by the Corporation
in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sales of assets or
contested election, or any combination of the foregoing transactions, less
than a majority of the combined voting power of the then outstanding
securities of the Corporation or any successor corporation or entity
entitled to vote generally in the election of the directors of the
Corporation or such other corporation or entity after such transaction are
held in the aggregate by the holders of the Corporation's securities
entitled to vote generally in the election of directors of the Corporation
immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of each director
of the Corporation first elected during such period was approved by a vote
of at least two-thirds of the directors of the Corporation then still in
office who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. For purposes of Section
10(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The approval by stockholders of an agreement by the Corporation,
the consummation of which would result in a Change in Control of the
Corporation as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Corporation or a Subsidiary
or any Corporation employee benefit plan (including any trustee of such
plan acting as such trustee)) of securities of the Corporation representing
5% or more of the combined voting power of the Corporation's outstanding
securities and the adoption by the Committee of a resolution to the effect
that a Potential Change in Control of the Corporation has occurred for
purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 10, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange or such other exchange or market as is
the principal trading market for the Stock, or paid or offered in any bona fide
transaction related to a Potential or Actual Change in Control of the
Corporation at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the Committee
except that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the optionee exercises such Stock
Appreciation Rights (or Limited Stock Appreciation Rights) or, where applicable,
the date on which a cash out occurs under Section 10(a)(iii).
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted Stock award or other Stock-Based
Award theretofore granted, without the optionee's or participant's consent or
which, without the approval of the Corporation's stockholders, would:
(a) except as expressly provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;
(b) change the pricing terms of Section 5(a);
(c) change the employees or class of employees eligible to participate
in the Plan; or
(d) extend the term under Section 15 of the Plan.
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The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
Notwithstanding the foregoing, amendments to Section 9 of the Plan shall
only be made in accordance with such Section 9.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Corporation, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Corporation. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or with respect
to awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or other award under the Plan to represent to and agree with the
Corporation in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable Federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Corporation or any Subsidiary or Affiliate any right to continued employment
with the Corporation or a Subsidiary or Affiliate, as the case may be, nor shall
it interfere in any way with the right of the Corporation or a Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations shall be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Corporation under the Plan shall be conditional on such
payment or arrangements and the Corporation and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Stock (or in other types of Plan awards) at the time of
any dividend payment shall only be permissible if
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sufficient shares of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Stock Options and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Tennessee.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of the date of approval of the Plan by a
majority of the votes cast by the holders of the Company's capital stock.
SECTION 15. TERM OF PLAN.
No Incentive Stock Option shall be granted pursuant to the Plan on or after
the tenth anniversary of the earlier of the date the Plan was originally
approved by the Board or the date of shareholder approval of the Plan, but
Incentive Stock Options granted prior to such tenth anniversary may extend
beyond that date. No Non-Qualified Stock Option, Stock Appreciation Right,
Restricted Stock award, Other Stock-Based Award or Outside Director Option shall
be granted on or after June 27, 2005, but Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock awards, Other Stock-Based Awards or
Outside Director Options granted prior to such date may extend beyond such date.
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APPENDIX A
THOMAS NELSON, INC.
AMENDED AND RESTATED
1992 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Thomas Nelson, Inc. 1992 Stock Incentive Plan (the
"Plan") is to enable Thomas Nelson, Inc. (the "Corporation") to attract, retain
and reward key employees of and consultants to the Corporation and its
Subsidiaries and Affiliates and directors who are not also employees of the
Corporation, and strengthen the mutuality of interests between such key
employees, consultants, directors and the Corporation's stockholders, by
offering such key employees, consultants and directors performance-based stock
incentives and/or other equity interests or equity-based incentives in the
Corporation, as well as performance-based incentives payable in cash. The
creation of the Plan shall not diminish or prejudice other compensation programs
approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set forth
below:
A. "Affiliate" means any entity other than the Corporation and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Corporation directly or indirectly owns
at least 20% of the combined voting power of all classes of stock of such
entity or at least 20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Corporation.
C. "Book Value" means, as of any given date, on a per share basis (i)
the Common Stockholders' Equity in the Corporation as of the end of the
immediately preceding fiscal year as reflected in the Corporation's
consolidated balance sheet, subject to such adjustment as the Committee
shall specify at or after grant, divided by (ii) the number of then
outstanding shares of Stock as of such year-end date (as adjusted by the
Committee for subsequent events or for shares of capital stock immediately
convertible into Common Stock).
D. "Common Stock" means the Corporation's Common Stock, par value
$1.00 per share and "Class B Common Stock" means the Corporation's Class B
Common Stock, par value $1.00 per share.
E. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
F. "Committee" means the Committee referred to in Section 2 of the
Plan.
G. "Corporation" means Thomas Nelson, Inc., a corporation organized
under the laws of the State of Tennessee or any successor corporation.
H. "Disability" means disability as determined under the Corporation's
long-term disability insurance policy.
I. "Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2)(i) as promulgated by the Securities and Exchange Commission
("Commission") under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor definition adopted by the Commission.
J. "Early Retirement" means retirement, for purposes of this Plan with
the express consent of the Corporation at or before the time of such
retirement, from active employment with the Corporation and any Subsidiary
or Affiliate prior to age 65, in accordance with any applicable early
retirement policy of the Corporation then in effect.
K. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the reported closing price of a
share of such class of Stock on the New York Stock Exchange or such other
exchange or market as is the principal trading market for such class of
Stock, or, if no such sale of a share of such class of Stock is reported on
the New York Stock Exchange or
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other exchange or principal trading market on such date, the fair market
value of a share of such class of Stock as determined by the Committee in
good faith.
L. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.
M. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
N. "Normal Retirement" means retirement from active employment with
the Corporation and any Subsidiary or Affiliate on or after age 65.
O. "Other Stock-Based Award" means an award under Section 8 below that
is valued in whole or in part by reference to, or is otherwise based on,
Stock.
P. "Outside Director" means a member of the Board who is not an
officer or employee of the Corporation or any Subsidiary of the
Corporation.
Q. "Outside Director Option" shall have the meaning provided in
Section 9.
R. "Plan" means this Thomas Nelson, Inc. 1992 Employee Stock Incentive
Plan, as amended from time to time.
S. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7 below.
T. "Retirement" means Normal or Early Retirement.
U. "Stock" means the Common Stock and/or the Class B Common Stock as
may be specifically designated by the Committee.
V. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Corporation all (or a
portion) of a Stock Option in exchange for an amount equal to the
difference between (i) the Fair Market Value, as of the date such Stock
Option (or such portion thereof) is surrendered, of the shares of Stock
covered by such Stock Option (or such portion thereof), subject, where
applicable, to the pricing provisions in Section 6(b)(ii), and (ii) the
aggregate exercise price of such Stock Option (or such portion thereof).
W. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.
X. "Subsidiary" means any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation if each of
the corporations (other than the last corporation in the unbroken chain)
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
In addition, the terms "Change in Control," "Potential Change in Control"
and "Change in Control Price" shall have the meanings set forth, respectively in
Sections 10(b), (c) and (d) below and the term "Cause" shall have the meaning
set forth in Section 5(j) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Disinterested Persons, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan may be exercised by an existing Committee of the Board composed exclusively
of Disinterested Persons.
The Committee shall have authority to grant, pursuant to the terms of the
Plan, to officers, other key employees and consultants eligible under Section 4:
(i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock,
and/or (iv) Other Stock-Based Awards.
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In particular, the Committee shall have the authority, consistent with the
terms of the Plan:
(a) to select the officers and other key employees of and consultants
to the Corporation and its Subsidiaries and Affiliates to whom Stock
Options, Stock Appreciation Rights, Restricted Stock and/or Other
Stock-Based Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
and/or Other Stock-Based Awards, or any combination thereof, are to be
granted hereunder to one or more eligible employees;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any
Stock Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Committee shall determine, in its
sole discretion);
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash or Restricted Stock under Section 5(m) or (n), as
applicable, instead of Stock;
(f) to determine whether, to what extent and under what circumstances
Option grants and/or other awards under the Plan and/or other cash awards
made by the Corporation are to be made, and operate, on a tandem basis
vis-a-vis other awards under the Plan and/or cash awards made outside of
the Plan, or on an additive basis; and
(g) to determine whether, to what extent and under what circumstances
Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount (if any) of
any deemed earnings on any deferred amount during any deferral period).
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Corporation and Plan participants.
Notwithstanding the foregoing, the Committee shall have no authority to
determine the terms or conditions of awards to Outside Directors, which shall be
governed solely by Section 9 hereof.
SECTION 3. SHARES OF STOCK SUBJECT TO PLAN.
The aggregate number of shares of Stock reserved and available for
distribution under the Plan shall not exceed 2,140,000 shares. Any number of
shares of Common Stock or Class B Common Stock may be awarded so long as the
total number of shares of Stock awarded does not exceed 2,140,000 shares. No
award of Class B Common Stock may be made if such award would violate any rule
of the principal trading market for the Stock or would result in a suspension of
the trading of the Stock or delisting of the Stock. An aggregate of 140,000
shares of Common Stock shall be reserved solely for issuance under Section 9.
Subject to Section 6(b)(iv) below, if any shares of Stock that have been
optioned cease to be subject to a Stock Option, or if any shares of Stock that
are subject to any Restricted Stock or Other Stock-Based Award granted hereunder
are forfeited prior to the payment of any dividends, if applicable, with respect
to such shares of Stock, or any such award otherwise terminates without a
payment being made to the participant in the form of Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
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In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend, Stock split or
other change in corporate structure affecting the Stock, an appropriate
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan, and in the number of
shares subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Corporation upon the exercise of any Stock Appreciation Right associated
with any Stock Option. The maximum number of shares that may be awarded to any
participant under Section 4 of this Plan will be adjusted in the same manner as
the number of shares subject to outstanding Options.
SECTION 4. ELIGIBILITY.
Officers and other key employees of and consultants to the Corporation and
its Subsidiaries and Affiliates (but excluding members of the Committee and any
person who serves only as a director, except as otherwise provided in Section 9)
who are responsible for or contribute to the management, growth and/or
profitability of the business of the Corporation and/or its Subsidiaries and
Affiliates are eligible to be granted awards under the Plan. No officer or key
employee shall be eligible to receive awards relative to shares of Stock which
exceed 300,000 shares during any consecutive three year period.
Outside Directors shall be eligible to receive awards under Section 9 only.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may
be granted only to individuals who are employees of the Corporation or any
Subsidiary of the Corporation.
The Committee shall have the authority to grant to any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights).
Options granted to officers, key employees and consultants under the Plan
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall be not less than 100% (or, in the case of any employee who
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or of any of its subsidiary or
parent corporations, not less than 110%) of the Fair Market Value of the
Stock at grant, in the case of Incentive Stock Options, and not less than
50% of the Fair Market Value of the Stock at grant, in the case of
Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years (or, in the case of an employee who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or any of its subsidiary or parent corporations, more than five
years) after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that except as provided
in Section 5(g) and (h) and Section 10, unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable prior to
the first anniversary date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of future
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service at a rate specified at the time of grant, or that the Stock Option
is exercisable only in installments. If the Committee provides, in its sole
discretion, that any Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Committee
shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
restrictions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period, by giving written
notice of exercise to the Corporation specifying the number of shares to be
purchased.
Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or
(except in the case of an Incentive Stock Option) after grant, payment in
full or in part may also be made in the form of unrestricted Stock already
owned by the optionee or, in the case of the exercise of a Non-Qualified
Stock Option, Restricted Stock subject to an award hereunder (based on the
Fair Market Value of the Stock on the date the option is exercised, as
determined by the Committee). If payment of the exercise price is made in
part or in full with Stock, the Committee may award to the employee a new
Stock Option to replace the Stock which was surrendered.
If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto) shall remain
(or be) restricted or deferred, as the case may be, in accordance with the
original terms of the Restricted Stock award in question, and any
additional Stock received upon the exercise shall be subject to the same
forfeiture restrictions or deferral limitations, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to dividends or
other rights of a stockholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid in full
for such shares, and, if requested, has given the representation described
in Section 13(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified Stock Option, the
Committee in its discretion may award at the time of grant or thereafter
the right to receive upon exercise of such Stock Option a cash bonus
calculated to pay part or all of the Federal income tax incurred by the
optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if an optionee's
employment by the Corporation and any Subsidiary or (except in the case of
an Incentive Stock Option) Affiliate terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised, to the
extent such option was exercisable at the time of death or (except in the
case of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or except in the case of an
Incentive Stock Option, as may be determined in accordance with procedures
established by the Committee) by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a period
ending upon the expiration of the stated term of such Stock Option.
(h) Termination by Reason of Disability. Subject to Section 5(k), if
an optionee's employment by the Corporation and any Subsidiary or (except
in the case of an Incentive Stock Option) Affiliate terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be
exercised by the optionee, to the extent it was exercisable at the time of
termination or (except in the case of an Incentive Stock Option) on such
accelerated basis as the Committee may determine at or after grant (or,
except in the case of an Incentive Stock Option, as may be determined in
accordance with procedures established by the Committee), for a period
ending upon the expiration of the stated term of such Stock Option. In the
event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the
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expiration of any period that would apply if such Stock Option were a
Non-Qualified Stock Option, such Stock Option will thereafter be treated as
a Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to Section 5(k), if
an optionee's employment by the Corporation and any Subsidiary or (except
in the case of an Incentive Stock Option) Affiliate terminates by reason of
Normal or Early Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable
at the time of such Retirement or (except in the case of an Incentive Stock
Option) on such accelerated basis as the Committee may determine at or
after grant (or, except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the Committee), for
a period ending upon the expiration of the stated term of such Stock
Option. In the event of termination of employment by reason of Retirement,
if an Incentive Stock Option is exercised after the expiration of the
exercise period applicable to Incentive Stock Options, but before the
expiration of the period that would apply if such Stock Option were a
Non-Qualified Stock Option, the option will thereafter be treated as a
Non-Qualified Stock Option.
(j) Other Termination. Subject to Section 5(k), unless otherwise
determined by the Committee (or pursuant to procedures established by the
Committee) at or (except in the case of an Incentive Stock Option) after
grant, if an optionee's employment by the Corporation and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate is
involuntarily terminated for any reason other than death, Disability or
Normal or Early Retirement, the Stock Option shall thereupon terminate,
except that such Stock Option may be exercised, to the extent otherwise
then exercisable, for the lesser of three months or the balance of such
Stock Option's term if the involuntary termination is without Cause. For
purposes of this Plan, "Cause" means (i) a felony conviction of a
participant or the failure of a participant to contest prosecution for a
felony, or (ii) a participant's willful misconduct or dishonesty, which is
directly and materially harmful to the business or reputation of the
Corporation or any Subsidiary or Affiliate. If an optionee voluntarily
terminates employment with the Corporation and any Subsidiary or (except in
the case of an Incentive Stock Option) Affiliate (except for Disability,
Normal or Early Retirement), the Stock Option shall thereupon terminate;
provided, however, that the Committee at grant or (except in the case of an
Incentive Stock Option) thereafter may extend the exercise period in this
situation for the lesser of three months or the balance of such Stock
Option's term.
(k) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options
shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the
optionee(s) affected, to disqualify any Incentive Stock Option under such
Section 422.
No Incentive Stock Option shall be granted to any participant under
the Plan if such grant would cause the aggregate Fair Market Value (as of
the date the Incentive Stock Option is granted) of the Stock with respect
to which all Incentive Stock Options issued after December 31, 1986 are
exercisable for the first time by such participant during any calendar year
(under all such plans of the Company and any Subsidiary) to exceed
$100,000.
To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
(i) if (x) a participant's employment is terminated by reason of
death, Disability or Retirement and (y) the portion of any Incentive
Stock Option that is otherwise exercisable during the post-termination
period specified under Section 5(g), (h) or (i), applied without regard
to the $100,000 limitation contained in Section 422(d) of the Code, is
greater than the portion of such option that is immediately exercisable
as an "incentive stock option" during such post-termination period under
Section 422, such excess shall be treated as a Non-Qualified Stock
Option; and
(ii) if the exercise of an Incentive Stock Option is accelerated by
reason of a Change in Control, any portion of such option that is not
exercisable as an Incentive Stock Option by reason of
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the $100,000 limitation contained in Section 422(d) of the Code shall be
treated as a Non-Qualified Stock Option.
(l) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash, Stock or Restricted Stock an option previously
granted, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is
made.
(m) Settlement Provisions. If the option agreement so provides at
grant or (except in the case of an Incentive Stock Option) is amended after
grant and prior to exercise to so provide (with the optionee's consent),
the Committee may require that all or part of the shares to be issued with
respect to the spread value of an exercised Option take the form of
Restricted Stock, which shall be valued on the date of exercise on the
basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regards to the deferral
limitations and/or forfeiture restrictions involved.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such purpose. Upon such exercise, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be exercisable
to the extent that the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate
shall be exercisable in accordance with the provisions of Section 5 and
this Section 6 of the Plan; provided, however, that any Stock Appreciation
Right granted to an optionee subject to Section 16(b) of the Exchange Act
subsequent to the grant of the related Stock Option shall not be
exercisable during the first six months of its term. The exercise of Stock
Appreciation Rights held by optionees who are subject to Section 16(b) of
the Exchange Act shall comply with Rule 16b-3 thereunder, to the extent
applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock equal
in value to the excess of the Fair Market Value of one share of Stock over
the option price per share specified in the related Stock Option multiplied
by the number of shares in respect of which the Stock Appreciation Right
shall have been exercised, with the Committee having the right to determine
the form of payment. When payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the Fair Market Value
of the shares on the date of exercise. When payment is to be made in cash,
such amount shall be calculated on the basis of the average of the highest
and lowest quoted selling price, regular way, of the Stock on the New York
Stock Exchange or such other exchange or market as is the principal trading
market for the Stock, or, if no such sale of Stock is reported on such
date, the fair market value of the Stock as determined by the Committee in
good faith.
7
<PAGE> 46
(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable under
Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 3 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares of Stock
actually issued under the Stock Appreciation Right at the time of exercise
based on the value of the Stock Appreciation Right at such time. To the
extent that a Stock Appreciation Right is paid in cash upon exercise, the
shares of Stock which would have been issued pursuant to the underlying
Stock Option in lieu of such cash payment shall not count towards the
limitation contained in Section 3 of the Plan and shall remain available
for future distribution under the Plan.
(v) In its sole discretion, the Committee may grant "Limited" Stock
Appreciation Rights under this Section 6, i.e, Stock Appreciation Rights
that become exercisable only in the event of a Change in Control and/or a
Potential Change in Control, subject to such terms and conditions as the
Committee may specify at grant. Such Limited Stock Appreciation Rights
shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide that, in
the event of a Change in Control and/or a Potential Change in Control, the
amount to be paid upon the exercise of a Stock Appreciation Right or
Limited Stock Appreciation Right shall be based on the Change in Control
Price, subject to such terms and conditions as the Committee may specify at
grant.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone,
in addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock will be
made, the number of shares of Restricted Stock to be awarded to any person, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the awards in
addition to those set forth in Section 7(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with respect
to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Corporation, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after
the award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Corporation until the
restrictions thereon shall have lapsed, and that, as a condition of any
8
<PAGE> 47
Restricted Stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) In accordance with the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions
in whole or in part, based on service, performance and/or such other
factors or criteria as the Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a stockholder of the Corporation, including the right
to vote the shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time of award, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested, subject to Section 13(e), in
additional Restricted Stock to the extent shares are available under
Section 3, or otherwise reinvested. Pursuant to Section 3 above, Stock
dividends issued with respect to Restricted Stock shall be treated as
additional shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to the shares with
respect to which such dividends are issued.
(iii) Subject to the applicable provisions of the award agreement and
this Section 7, upon termination of a participant's employment with the
Corporation and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions established by
the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
certificates for an appropriate number of unrestricted shares shall be
delivered to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Corporation and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a restricted stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
SECTION 8. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including, without
limitation, performance shares, convertible preferred stock, convertible
debentures, exchangeable securities and Stock awards or options valued by
reference to Book Value earnings per share or subsidiary performance, may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights or Restricted Stock granted under the Plan and/or cash
awards made outside of the Plan; provided that no such Other Stock-Based Awards
may be granted in tandem with Incentive Stock Options if that would cause such
Stock Options not to qualify as Incentive Stock Options pursuant to Section 422
of the Code.
Subject to the provisions of the Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such awards
shall be made, the number of shares of Stock to be awarded pursuant to such
awards, and all other conditions of the awards. The Committee may also provide
for the grant of Stock upon the completion of a specified performance period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
9
<PAGE> 48
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this
Section 8 shall be subject to the following terms and conditions:
(i) Shares subject to awards under this Section 8 may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient of
an award under this Section 8 shall be entitled to receive, currently or on
a deferred basis, interest or dividends or interest or dividend equivalents
with respect to the number of shares covered by the award, as determined at
the time of the award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Stock or otherwise reinvested.
(iii) Any award under Section 8 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 8.
(v) Each award under this Section 8 shall be confirmed by, and subject
to the terms of, an agreement or other instrument by the Corporation and
the participant.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 8 may be issued for no cash consideration.
Stock (including securities convertible into Stock) purchased pursuant to a
purchase right awarded under this Section 8 shall be priced at least 85% of
the Fair Market Value of the Stock on the date of grant.
SECTION 9. AWARDS TO OUTSIDE DIRECTORS
(a) The provisions of this Section 9 shall apply only to awards to Outside
Directors in accordance with this Section 9. The Committee shall have no
authority to determine the terms or conditions of any award under this Section
9.
(b) On the date of each annual meeting of shareholders of the Corporation,
commencing with the 1995 Annual Meeting of Shareholders, each Outside Director
will receive an automatic grant of a non-qualified stock option to purchase
2,000 shares of the Corporation's Common Stock, par value $1.00 per share, at an
exercise price equal to the Fair Market Value of such Stock on the date of grant
(an "Outside Director Option"). Each Outside Director Option shall vest and
become exercisable on the first anniversary of the date of grant if the grantee
is still a member of the Board on such date, but shall not be exercisable before
such date. Each Outside Director Option shall expire, if unexercised, on the
tenth anniversary of the date of grant. The exercise price may be paid in cash
or in shares of Common Stock, including shares of Common Stock subject to the
Outside Director Option.
(c) Outside Director Options shall not be transferable other than by will
or by laws of descent and distribution and shall be exercisable during the
lifetime of the grantee only by the grantee.
(d) Grantees of Outside Director Options shall enter into a stock option
agreement with the Corporation setting forth the exercise price and other terms
as provided herein.
(e) The termination of Outside Director Options shall be governed by the
provisions of Sections 5(h), 5(i) and 5(j) hereof as if Outside Directors were
employees of the Corporation, except that there shall be no discretion to
accelerate the vesting of an Outside Director Option.
(f) Outside Director Options shall vest and become exercisable
automatically upon a Change in Control, but shall not otherwise be subject to
Section 10. The number of shares and the exercise price per share of each
10
<PAGE> 49
Outside Director Option shall be adjusted automatically in the same manner as
the number of shares and the exercise price for Stock Options under Section 3
hereof at any time that Stock Options are adjusted as provided in Section 3.
(g) Any applicable withholding taxes shall be paid in shares of Common
Stock subject to the Outside Director Option valued at the Fair Market Value of
such shares on the date of exercise, unless the Corporation agrees to accept a
payment in cash in the amount of such withholding taxes.
(h) The Board may not amend, alter or discontinue this Section 9 without
the approval of the holders of a majority of the issued and outstanding shares
of Common Stock, and in no event shall this Section 9 be amended more than once
every six months, other than to comply with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.
SECTION 10. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 10(b) or
(2) a "Potential Change in Control" as defined in Section 10(c), but
only if and to the extent so determined by the Committee at or after grant
(subject to any right of approval expressly reserved by the Committee at
the time of such determination),
the following acceleration and valuation provisions shall apply if so determined
by the Committee in its sole discretion:
(i) Any Stock Appreciation Rights (including, without limitation, any
Limited Stock Appreciation Rights) outstanding for at least six months and
any Stock Option awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any
Restricted Stock and Other Stock-Based Awards, in each case to the extent
not already vested under the Plan, shall lapse and such shares and awards
shall be deemed fully vested.
(iii) Except as otherwise provided in Section 10(a)(iv) below, the
value of all outstanding Stock Options, Stock Appreciation Rights,
Restricted Stock and Other Stock-Based Awards, in each case to the extent
vested, shall, unless otherwise determined by the Committee in its sole
discretion at or (except in the case of an Incentive Stock Option) after
grant but prior to any Change in Control, be cashed out on the basis of the
"Change in Control Price" as defined in Section 10(d) as of the date such
Change in Control or such Potential Change in Control is determined to have
occurred or such other date as the Committee may determine prior to the
Change in Control.
(iv) In the case of any Stock Options, Stock Appreciation Rights,
Restricted Stock and Other Stock-Based Awards held by any person subject to
Section 16(b) of the Exchange Act, the value of all such Stock Options,
Stock Appreciation Rights, Restricted Stock or Other Stock-Based Awards, in
each case to the extent that they are vested and have been held for at
least six months, shall (unless otherwise determined by the Committee in
its sole discretion) be cashed out on the basis of the "Change in Control
Price" as defined in Section 10(d) as of the date of such Change in Control
or such Potential Change in Control is determined to have occurred, but
only if the Change in Control or Potential Change in Control is outside the
control of the grantee for purposes of Rule 16b-3(e)(3) under the Exchange
Act, or any successor provision promulgated by the Securities and Exchange
Commission.
(b) Definition of "Change in Control". For purposes of Section 10(a), a
"Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Exchange Act, other than the Corporation or a wholly-owned
subsidiary thereof or any employee benefit plan of the Corporation or any
of its Subsidiaries, becomes the beneficial owner of the Corporation's
securities having 35% or more of the combined voting power of the then
outstanding securities of the Corporation
11
<PAGE> 50
that may be cast for the election of directors of the Corporation (other
than as a result of an issuance of securities initiated by the Corporation
in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sales of assets or
contested election, or any combination of the foregoing transactions, less
than a majority of the combined voting power of the then outstanding
securities of the Corporation or any successor corporation or entity
entitled to vote generally in the election of the directors of the
Corporation or such other corporation or entity after such transaction are
held in the aggregate by the holders of the Corporation's securities
entitled to vote generally in the election of directors of the Corporation
immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of each director
of the Corporation first elected during such period was approved by a vote
of at least two-thirds of the directors of the Corporation then still in
office who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. For purposes of Section
10(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The approval by stockholders of an agreement by the Corporation,
the consummation of which would result in a Change in Control of the
Corporation as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Corporation or a Subsidiary
or any Corporation employee benefit plan (including any trustee of such
plan acting as such trustee)) of securities of the Corporation representing
5% or more of the combined voting power of the Corporation's outstanding
securities and the adoption by the Committee of a resolution to the effect
that a Potential Change in Control of the Corporation has occurred for
purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 10, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange or such other exchange or market as is
the principal trading market for the Stock, or paid or offered in any bona fide
transaction related to a Potential or Actual Change in Control of the
Corporation at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the Committee
except that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the optionee exercises such Stock
Appreciation Rights (or Limited Stock Appreciation Rights) or, where applicable,
the date on which a cash out occurs under Section 10(a)(iii).
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted Stock award or other Stock-Based
Award theretofore granted, without the optionee's or participant's consent or
which, without the approval of the Corporation's stockholders, would:
(a) except as expressly provided in this Plan, increase the total
number of shares reserved for the purpose of the Plan;
(b) change the pricing terms of Section 5(a);
(c) change the employees or class of employees eligible to participate
in the Plan; or
(d) extend the term under Section 15 of the Plan.
12
<PAGE> 51
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
Notwithstanding the foregoing, amendments to Section 9 of the Plan shall
only be made in accordance with such Section 9.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Corporation, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Corporation. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or with respect
to awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or other award under the Plan to represent to and agree with the
Corporation in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable Federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Corporation or any Subsidiary or Affiliate any right to continued employment
with the Corporation or a Subsidiary or Affiliate, as the case may be, nor shall
it interfere in any way with the right of the Corporation or a Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations shall be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Corporation under the Plan shall be conditional on such
payment or arrangements and the Corporation and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Stock (or in other types of Plan awards) at the time of
any dividend payment shall only be permissible if
13
<PAGE> 52
sufficient shares of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Stock Options and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Tennessee.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of the date of approval of the Plan by a
majority of the votes cast by the holders of the Company's capital stock.
SECTION 15. TERM OF PLAN.
No Incentive Stock Option shall be granted pursuant to the Plan on or after
the tenth anniversary of the earlier of the date the Plan was originally
approved by the Board or the date of shareholder approval of the Plan, but
Incentive Stock Options granted prior to such tenth anniversary may extend
beyond that date. No Non-Qualified Stock Option, Stock Appreciation Right,
Restricted Stock award, Other Stock-Based Award or Outside Director Option shall
be granted on or after June 27, 2005, but Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock awards, Other Stock-Based Awards or
Outside Director Options granted prior to such date may extend beyond such date.
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<PAGE> 53
APPENDIX B
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THOMAS NELSON, INC.
Nelson Place and Elm Hill Pike
Nashville, TN 37214-1000
The undersigned hereby appoints SAM MOORE and JOE L. POWERS, or either of them,
as proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock and Class B Common Stock of Thomas Nelson, Inc. held of record by the
undersigned on July 3, 1995, at the Annual Meeting of Shareholders to be held at
the Airport Marriott Hotel, 600 Marriott Drive, Nashville, Tennessee 37214 on
Thursday, August 24, 1995, at 11:00 a.m., local time, or any adjournment
thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
/ / FOR all nominees listed below (except as marked to the / / WITHHOLD AUTHORITY (Abstain) to vote for all nominees
contrary below): listed below:
<S> <C> <C> <C>
Sam Moore Andrew J. Young Sam Moore Andrew J. Young
Cal Turner, Jr. S. Joseph Moore Cal Turner, Jr. S. Joseph Moore
/ / AGAINST all nominees listed below:
Sam Moore Andrew J. Young
Cal Turner, Jr. S. Joseph Moore
</TABLE>
INSTRUCTION: TO VOTE FOR, AGAINST OR TO WITHHOLD AUTHORITY (ABSTAIN) TO VOTE FOR
ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW
AND INDICATE WHETHER YOUR VOTE IS FOR, AGAINST OR TO WITHHOLD AUTHORITY
(ABSTAIN) TO VOTE FOR THAT NOMINEE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. APPROVAL OF THE AMENDMENTS TO THE AMENDED AND RESTATED 1992 EMPLOYEE STOCK
INCENTIVE PLAN.
/ / FOR / / AGAINST / / WITHHOLD AUTHORITY (Abstain)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF ALL THE NOMINEES NAMED ABOVE AND FOR APPROVAL
OF THE AMENDMENTS TO THE AMENDED AND RESTATED 1992 EMPLOYEE STOCK INCENTIVE
PLAN.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please sign exactly as name
appears below. When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee, or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
persons.
--------------------------------
Signature
--------------------------------
Signature
DATED: , 1995
--------------------
