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SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14c INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
THOR INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it is determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THOR INDUSTRIES, INC.
419 West Pike Street
Jackson Center, Ohio 45334-0629
September 16, 1999
Dear Stockholder:
This Information Statement is being provided to inform
stockholders of Thor Industries, Inc. (the "Company") that the holders
of a majority of the outstanding common stock of the Company have
delivered written consent to the Company approving the 1999 Stock
Option Plan. Because we are a corporation organized under the laws of
the State of Delaware, and our by-laws permit it, our stockholders may
take action by written consent without a meeting.
This Information Statement is being mailed on or about
September 30, 1999, to all stockholders of record at the close of
business on September 22, 1999. The actions taken by the holders of a
majority of the outstanding common stock will become effective 21 days
after the date of such mailing.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
By Order of the Board of Directors
Walter L. Bennett
Secretary
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THOR INDUSTRIES, INC.
419 West Pike Street
Jackson Center, Ohio 45334-0629
------------------------------
INFORMATION STATEMENT
------------------------------
This Information Statement is being furnished to the holders
of common stock, par value $0.10 per share (the "Common Stock"), of
Thor Industries, Inc., a Delaware corporation (the "Company"), to
inform you that the Board of Directors of the Company and the holders
of a majority of the outstanding Company Common Stock have authorized,
by written consent, approval of the 1999 Thor Industries, Inc. Stock
Option Plan (the "Plan").
The Plan was adopted by the holders of 6,221,192 shares
constituting 51.2% of the 12,143,510 shares of Common stock outstanding
as of the Record Date, by delivery of their written consent to the
Company in accordance with Section 228 of the Delaware General
Corporation Law. Each share of Common Stock entitles the holder to one
vote. If the Plan had been submitted for approval at an annual or
special meeting of stockholders, the approval of holders of at least a
majority of the outstanding shares of Common Stock present, in person
or by proxy, at the meeting and entitled to vote would have been
required.
APPROVAL OF 1999 STOCK OPTION PLAN
On July 22, 1999, the Board of Directors adopted the Thor
Industries, Inc. 1999 Stock Option Plan (the "Plan"). The purpose of the Plan is
to enhance the ability of the Company and its subsidiaries to attract and retain
employees, directors and consultants of outstanding ability and to provide
employees, directors and consultants with an interest in the Company parallel to
that of the Company's shareholders. A summary of the material features of the
Plan is set forth below and is qualified in its entirety by reference to the
Plan. The Plan and additional information concerning the Plan may be obtained,
upon written or oral request, from Thor Industries, Inc., attn. Secretary, Mr.
Walter Bennett, 419 West Pike Street, Jackson Center, OH 45334, (937)
596-6849/6111.
Administration
- --------------
The Plan is administered and managed by a committee of at
least two members of the Board who are appointed by the Board and who are
"non-employee directors" within the meaning of Rule 16b-3 as promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended and who are also
"outside directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").
The Committee will (i) approve the selection of participants,
(ii) determine the type of options to be made to participants, (iii) determine
the number of shares of Common Stock subject to options, (iv) determine the
terms and conditions of any options granted thereunder (including, but not
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limited to, any restriction and forfeiture conditions on such options) and (v)
have the authority to interpret the Plan, to establish, amend, and rescind any
rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into thereunder, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Options in the manner and to the extent it
shall deem desirable to carry it into effect. Any action of the Committee will
be final, conclusive and binding on all persons, including the Company and its
subsidiaries and shareholders, participants and persons claiming rights from or
through a participant. The Committee may delegate to officers or employees of
the Company or any subsidiary, and to service providers, the authority, subject
to such terms as the Committee will determine, to perform administrative
functions with respect to the Plan and agreements. Members of the Committee and
any officer or employee of the Company or any subsidiary acting at the direction
of, or on behalf of, the Committee will not be personally liable for any action
or determination taken or made in good faith with respect to the Plan, and will,
to the extent permitted by law, be fully indemnified by the Company with respect
to any such action or determination.
Eligibility
- -----------
Employees, directors and consultants of the Company and its
subsidiaries are eligible to receive grants of options under the Plan.
Shares Subject to the Plan
- --------------------------
The Common Stock subject to the options will be authorized but
unissued shares of Common Stock of the Company, $.10 value, or shares reacquired
by the Company in any manner. The aggregate number of shares of Common Stock
which may be acquired upon the grant of options under the Plan will not exceed
500,000, subject to adjustment in certain circumstances. If any option granted
under the Plan expires or terminates for any reason without having been
exercised in full or ceases for any reason to be exercisable in whole or in
part, the unpurchased shares subject to such Option shall again be available for
grant under the Plan. Subject to adjustment, no employee may be granted an
option to acquire more than 500,000 shares of Common Stock in any one year.
Options
- -------
Both nonqualified stock options ("Nonqualified Stock Options)
and "incentive stock options" ("ISOs") may be granted under the Plan
(collectively "Options").
EXERCISE PRICE. The exercise price per share of the shares of
Common Stock to be purchased pursuant to any Option shall be fixed by the
Committee at the time such Option is granted. In no event shall the exercise
price for ISOs be less than the Fair Market Value, as defined below, of a share
on the day on which the ISO is granted (110% of the Fair Market Value in the
case of an ISO granted to an employee owning stock with more than 10% of the
total combined voting power of all classes of stock of the Company or its
subsidiaries (a "10% Shareholder")). For purposes of determining the exercise
price, Fair Market Value shall be determined as of the last business day for
which the prices or
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quotes are available prior to the date such Option is granted and shall mean the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List or any other exchange on which such shares are traded.
OPTION TERM. Subject to termination, the duration of each
Option will be determined by the Committee, but may not exceed 10 years from the
date of grant; PROVIDED, HOWEVER, that in the case of ISOs granted to 10%
Shareholders, the term of such Option shall not exceed 5 years from the date of
grant.
VESTING. An Option will be exercisable by the Option holder at
such rate and times as may be determined by the Committee at or subsequent to
the time of grant.
METHOD OF EXERCISING OPTIONS. Each Option may be exercised in
whole or in part by giving written notice of exercise to the Company. Payment in
full of the Option exercise price will be made upon delivery of such notice in
cash or through additional methods, if any, prescribed by the Committee.
Special Terms and Conditions.
- -----------------------------
CHANGE IN CONTROL. Upon the occurrence of a Change in Control
(as defined in the Plan), all Options will automatically become vested and
exercisable in full and all restrictions or conditions, if any, on any Options
will automatically lapse.
FORFEITURE. Under certain circumstances, in the event option
holders engage in certain prohibitive behavior, options can be forfeited at the
discretion of the Committee. In addition, any gains realized by option holders
may have to be repaid under certain circumstances.
Assignability
- -------------
Unless otherwise determined by the Committee with respect to
the transferability of Nonqualified Stock Options by a participant to his
Immediate Family Members (as defined in the Plan) (or to trusts, partnerships,
limited liability companies or other entities established for such family
members), no Option will be assignable or transferable by the participants,
otherwise than by will or the laws of descent and distribution or pursuant to a
beneficiary designation, and Options will be exercisable, during the
participant's lifetime, only by the participant (or by the participant's legal
representatives in the event of the participant's incapacity).
Adjustments
- -----------
The Plan provides that in the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, combination or exchange of
shares or other similar corporate change, or any distributions to common
shareholders other than regular cash dividends, the number or kind of shares
available for Options under the Plan and the number and kind of shares subject
to any outstanding Options granted under the Plan and the purchase price thereof
may be adjusted by the Committee as it will in its sole discretion deem
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equitable. In addition, under certain circumstances, the Committee can
unilaterally cancel all outstanding Options (whether or not vested) in exchange
for a cash payment.
Amendment and Termination
- -------------------------
The Plan will expire at the end of the day on June 30, 2009 (except as
to Options outstanding on that date). The Board may terminate or amend the Plan
in any respect at any time, except that, no amendment will be made without
stockholder approval, if such approval is necessary to comply with any
applicable law, regulation or stock exchange rule and, no amendment will be made
that would adversely affect the rights of a participant without such
participant's written consent, except as provided under Adjustments.
Federal Tax Consequences
- ------------------------
The federal tax consequences of participating in the Plan are
described below, and are based upon an analysis of the present provisions of the
Code and the regulations promulgated thereunder, all of which are subject to
change. A participant may also be subject to state and local taxes, the
consequences of which are not discussed herein, in the jurisdiction in which he
works and/or resides.
Effect Upon Participants
------------------------
INCENTIVE STOCK OPTIONS. In general, no taxable income is
realized by an ISO holder upon the grant of an ISO. If shares of Common Stock
are issued to an ISO holder ("Option Shares") pursuant to the exercise of an ISO
granted under the Plan and the ISO holder does not dispose of the Option Shares
within one year after the receipt of such Option Shares by the ISO holder or
within two years after the date of grant of the ISO (a "disqualifying
disposition") then, generally (i) the ISO holder will not realize ordinary
income upon exercise and (ii) upon sale of such Option Shares, any amount
realized in excess of the exercise price of the ISO will be taxed to such ISO
holder as a long-term capital gain and any loss sustained will be a long-term
capital loss. However, if Option Shares acquired upon the exercise of an ISO are
disposed of in a disqualifying disposition, the ISO holder generally would
include in ordinary income in the year of disposition an amount equal to the
excess (if any) of the Fair Market Value of the Option Shares at the time of
exercise (or, if less, the amount realized on the disposition of the Option
Shares), over the exercise price thereof. Any additional gain recognized by the
ISO holder upon a disposition of such Option Shares prior to the expiration of
the holding periods described above should be taxed as a short-term or long-term
capital gain, as the case may be.
If the ISO holder pays the exercise price, in full or in part, with
shares of previously acquired Common Stock which were acquired pursuant to the
exercise of an ISO and if the applicable holding period for such shares has not
been met such payment will constitute a "disqualifying disposition" of such
shares and will be taxable as discussed above. With respect to the receipt of
shares upon exercise, (i) no gain or loss will be recognized as a result of the
exchange and (ii) for purposes of determining the amount and character of any
gain or loss on the ultimate disposition of the shares received upon exercise
(x) the number of shares received that is equal in number to the shares
surrendered will have a basis equal to the basis of the shares surrendered and
(except for purposes of determining whether a disposition will be a
disqualifying disposition) will have a holding period that includes the holding
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period of the shares exchanged, and (y) any additional shares received will have
a zero basis and will have a holding period that begins on the date of the
exchange. If any of the shares received are disposed of within two years of the
date of grant of the ISO or within one year after exercise, the shares with the
lower basis will be deemed to be disposed of first, and such disposition will be
a disqualifying disposition giving rise to ordinary income as discussed above.
The amount by which the fair market value of the Common Stock
on the exercise date of an ISO exceeds the exercise price generally will
constitute an item which increases the ISO holder's "alternative minimum taxable
income."
Subject to certain exceptions, an ISO generally will not be
treated as an ISO if it is exercised more than three months following
termination of employment. If an ISO is exercised at a time when it no longer
qualifies as an ISO, such option will be treated as a Nonqualified Stock
Options.
NONQUALIFIED STOCK OPTIONS. In general, no taxable income is
realized by an option holder upon the grant of a Nonqualified Stock Option. Upon
exercise of a Nonqualified Stock Option, the option holder generally would
include in ordinary income at the time of exercise an amount equal to the
excess, if any, of the Fair Market Value of the Option Shares at the time of
exercise over the exercise price. In the event of a subsequent sale of Option
Shares received upon the exercise of a Nonqualified Stock Options, any
appreciation or depreciation after the date on which taxable income is realized
by the option holder in respect of the option exercise should be taxed as a
short-term or long-term capital gain (loss), as the case may be.
In general, an option holder who pays the exercise price in
full or in part with shares of Common Stock will recognize no gain or loss for
federal income tax purposes on the shares surrendered, but otherwise generally
will be taxed according to the rules described above with respect to the
exercise of the Nonqualified Stock Option. Accordingly, the amount of income
recognized should be equivalent to the amount of income which would be
recognized if the exercise price of the Nonqualified Stock Options were paid in
cash. The shares received by the option holder equal in number to the previously
held shares exchanged therefor, should have the same tax basis as the previously
held shares and a tax holding period that includes the holding period of the
shares exchanged. Shares received by the option holder in excess of the number
of previously held shares should have a tax basis equal to the fair market value
of such additional shares as of the date ordinary income is recognized and
should have a tax holding period beginning on the date of the exchange.
WITHHOLDING TAXES. If required, the Company will withhold any
applicable taxes in the event ordinary income is realized by a participant upon
the disqualifying disposition of ISOs and the exercise of Nonqualified Stock
Options. In addition to ordinary income tax, amounts treated as wages will be
subject to payroll tax withholding by the Company.
Effect Upon Company
-------------------
The Company will generally be entitled to a tax deduction equal to
amounts included in ordinary income by a participant at the time of such
inclusion.
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OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the Common
Stock owned as of October 21, 1998, by each person known by the Company
to be the beneficial owner of more than 5% of the Common Stock and by
all directors and executive officers of the Company as a group.
The information provided in the table below is derived from the
Company's 1998 Proxy Statement and Schedule 13G filings with the
Securities and Exchange Commission by First Pacific Advisors, Inc. on
February 11, 1999 and by Royce & Associates, Inc. on February 10, 1999.
<TABLE>
<CAPTION>
NAME AND ADDRESS BENEFICIAL OWNER
OF BENEFICIAL OWNER NUMBER OF SHARES (1) PERCENT
<S> <C> <C>
Wade F. B. Thompson ................... ........4,559,780 (2) .........37.4%
419 West Pike Street
Jackson Center, Ohio 45334-0629
Peter B. Orthwein ..................... ..656,250 (3) (4) (5) ..........5.4%
419 West Pike Street
Jackson Center, Ohio 45334-0629
First Pacific Advisors, Inc ........... ........1,449,750 (6) .........11.9%
1140 West Olympia Blvd.
Los Angeles, CA 90064
Royce & Associates, Inc ............... ..........653,900 (7) .........5.33%
1414 Avenue of The Americas
New York, New York 10019
All directors and executive officers... ........5,689,092 .........46.7%
as a group (six persons)
</TABLE>
(1) Except as otherwise indicated, the persons in
the table have sole voting investment power
with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Does not include 295,312 shares owned of
record by a trust for the benefit of Mr.
Thompson's children, of which Mr. Siegel is
sole trustee.
(3) Does not include 168,750 shares owned of
record by a trust for the benefit of Mr.
Orthwein's children, of which Mr. Siegel is
co-trustee and as to which he does not have
sole voting power.
(4) Includes 10,800 shares owned by Mr.
Orthwein's wife, 30,000 shares owned of
record by a trust for the benefit of Mr.
Orthwein's children, of
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which Mr. Orthwein is a trustee, 7,500 shares owned
of record by a trust for the benefit of Mr.
Orthwein's half brother, of which Mr. Orthwein is a
trustee, and 25,650 shares of record owned by Mr.
Orthwein's minor children for which Mrs. Orthwein
acts as custodian.
(5) Does not include 17,100 shares owned of
record by Mr. Orthwein's adult children, as
to which Mr. Orthwein disclaims beneficial
ownership.
(6) Based on Schedule 13G filed with the
Securities and Exchange Commission by First
Pacific on February 12, 1999.
(7) Based on Schedule 13G filed with the
Securities and Exchange Commission by Royce
& Associates, Inc., on February 9, 1999.
(8) Includes 295,312 shares and 168,750 shares as noted
in footnotes 2 and 3 above.
EXECUTIVE OFFICERS' REMUNERATION
Information is furnished below concerning the compensation of the Chief
Executive Officer and the three highest paid executive officers of the
Company who earned more than $100,000 in salary and bonuses for the
last three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE ALL OTHER
ANNUAL COMPENSATION LONG-TERM COMPENSATION COMPENSATION(2)
------------------ ---------------------- ---------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(l) OPTIONS(#) (3)
<S> <C> <C> <C> <C> <C>
Wade F. B. Thompson 1998 $200,000 $200,000 -- $184,58
Chairman, President, 1997 200,000 360,000 -- 185,14
Chief Executive Officer 1996 200,000 350,000 -- 185,18
Peter B. Orthwein 1998 70,000 100,000 -- 41,908
Vice Chairman, Treasurer 1997 70,000 200,000 -- 41,576
1996 70,000 200,000 -- 41,668
Walter L. Bennett 1998 75,000 280,000 5,000 --
Senior Vice President 1997 75,000 247,000 10,000 --
Chief Administrative Officer/Secretary 1996 75,000 202,000 -- --
Clare G. Wentworth 1998 75,000 310,000 5,000 --
Senior Vice President 1997 75,000 282,000 10,000 --
1996 75,000 227,000 -- --
</TABLE>
(1) Messrs. Bennett's, Wentworth's, Thompson's and Orthwein's
bonuses are discretionary and depend on the Company's profits.
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(2) The Company and Messrs. Thompson and Orthwein entered into a
split-dollar life insurance arrangement effective March 18,
1993, under which the Company assists Messrs. Thompson and
Orthwein in purchasing whole life insurance on their lives and
that of their wives. Under the arrangement Messrs. Thompson
and Orthwein pay a portion of the premiums based upon certain
Internal Revenue standards and the Company advances the
balance of the premiums. The Company is entitled to repayment
of the amounts it advances, without interest, upon the
occurrence of certain events, including the buildup of the
policy's cash surrender value or upon the payment of the death
benefit under the policy.
(3) Messrs. Bennett and Wentworth were granted options to purchase
shares pursuant to the Thor Industries, Inc., 1988 Incentive
Stock Plan at a purchase price of $21.50 per share. Shares are
exercisable on a one-third basis on May 1, 1998, 1999 and
2000. On April 6, 1998, a 3-for-2 stock split increased the
amount of options and reduced the purchase price accordingly
to $14.33 per share.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid $6,000 per
directors' meeting attended, plus expenses. No separate compensation is
paid for attendance at committee meetings.
SELECT EXECUTIVE INCENTIVE PLAN
The company has adopted the Thor Industries, Inc., Select Executive
Incentive Plan (the "Incentive Plan") effective September 29, 1997. The
Incentive Plan will be administered by an Administrative Committee (the
"Administrative Committee") which shall be appointed by the
Compensation Committee of the Board of Directors of the Company (or the
Board of Directors acting as such). The purpose of the Incentive Plan
is to provide its eligible executives with supplemental deferred
compensation in addition to the current compensation earned under the
Company's Management Incentive Plan. It is intended that the Incentive
Plan shall constitute an unfunded deferred compensation arrangement for
the benefit of a select group of management or highly compensated
employees of the Company and its designated subsidiaries and
affiliates. The Compensation Committee will designate those employees
of the Company (which include employees of any subsidiary or affiliate
thereof) and members of the Board of Directors of the Company who will
be eligible executives under the Incentive Plan. For each year of
participation, each eligible executive shall be credited with the
amount(s), if any, determined by the Compensation Committee. The amount
to be credited to any eligible executive shall be determined in the
sole discretion of the Compensation Committee. The amount(s) will be
credited to an account maintained for each eligible executive, which
will also be credited with earnings and losses as if the amounts were
invested in specific investment funds selected by the Administrative
Committee (or by the eligible executive if the Administrative Committee
establishes a procedure permitting the eligible executive to credit his
or her account with respect to the results of one or more of the index
funds selected by the Administrative Committee). The Administrative
Committee is not obligated to comply with the investment request of an
eligible executive, and retains the sole discretion regarding the
decision to credit earnings with regard to
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the results of the index funds selected by any eligible executive. The
amount(s) credited to the account of an eligible executive shall vest
and be payable six years after the effective date of such eligible
executive's participation; provided, however, that the amounts vest
immediately upon death or age 65. The Incentive Plan contains
non-competition and non-solicitation provisions which prohibit eligible
executives from competing with the Company within the United States or
Canada during the term of such eligible executive's participation and
for a period of eighteen months after termination of employment with
the Company for any reason. Non-compliance with such provisions will
result in 100% forfeiture of vested benefits. The Company may establish
a trust for payment of benefits under the Incentive Plan; such trust
shall be a grantor trust for tax purposes. Payment of benefits will
generally by made following termination of employment in one of the
following forms: (a) lump sum; (b) substantially equal annual
installments for five years; (c) substantially equal installments for
ten years; or (d) any other actuarially equivalent form approved by the
Administrative Committee.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTION
Messrs. Thompson, Orthwein, and Siegel are directors and
stockholders of the Company and have consented to the action described
in this information statement. As directors, Messrs. Thompson,
Orthwein, and Siegel are eligible to receive options under the 1999
Stock Option Plan as described herein.
Messrs. Thompson and Orthwein own Hi-Lo Trailer Co. and the
controlling interest in TowLite, Inc., which produce and sell
telescoping travel trailers. Management believes that such trailers are
a distinct product line within the recreation vehicle industry and do
not compete directly with any products manufactured or sold by the
Company.
Messrs. Thompson and Orthwein own all the stock of Cash Flow
Management, Inc. The Company pays Cash Flow a management fee of $96,000
per annum, which is used to defray expenses, including rent of an
office used by Messrs. Thompson and Orthwein.
Alan Siegel, a director of the Company, is a member of the law
firm Akin, Gump, Strauss, Hauer & Feld, L.L.P., which provides outside
counsel to the Company.
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EXHIBIT A
THOR INDUSTRIES, INC.
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Thor Industries, Inc. 1999
Stock Option Plan (the "Plan") is to enhance the ability of Thor Industries,
Inc. (the "Company") and its subsidiaries to attract and retain employees,
directors and consultants of outstanding ability and to provide employees,
directors and consultants with an interest in the Company parallel to that of
the Company's shareholders.
2. DEFINITIONS.
(a) "Award" shall mean an award determined in accordance with
the terms of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Change in Control" shall mean the occurrence of any one
of the following events:
(i) any "person" (as such term is defined in Section 3(a) (9)
of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"); PROVIDED, HOWEVER, that the event described in
this paragraph (i) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any subsidiary, (B) by
any employee benefit plan sponsored or maintained by the Company or any
subsidiary, (C) by any underwriter temporarily holding securities pursuant to an
offering of such securities, (D) pursuant to a Non-Control Transaction (as
defined in paragraph (iii)), or (E) a transaction (other than one described in
(iii) below) in which Company Voting Securities are acquired from the Company,
if a majority of the Incumbent Board (as defined below) approves a resolution
providing expressly that the acquisition pursuant to this clause (E) does not
constitute a Change in Control under this paragraph (i);
(ii) individuals who, on the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
Effective Date, whose election or nomination for election was approved by a vote
of at least two-thirds of the directors comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be considered a member of the Incumbent Board; PROVIDED,
HOWEVER, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
directors or any other actual or threatened solicitation of proxies or consents
by or on behalf of any person other than the Board shall be deemed to be a
member of the Incumbent Board;
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(iii) the shareholders of the Company approve a merger,
consolidation, share exchange or similar form of corporate reorganization of the
Company or any such type of transaction involving the Company or any of its
subsidiaries (whether for such transaction or the issuance of securities in the
transaction or otherwise) (a "Business Combination"), unless immediately
following such Business Combination: (A) more than 50% of the total voting power
of the publicly traded corporation resulting from such Business Combination
(including, without limitation, any corporation which directly or indirectly has
beneficial ownership of 100% of the Company Voting Securities or all or
substantially all of the assets of the Company and its subsidiaries) eligible to
elect directors of such corporation would be represented by shares that were
Company Voting Securities immediately prior to such Business Combination (either
by remaining outstanding or being converted), and such voting power would be in
substantially the same proportion as the voting power of such Company Voting
Securities immediately prior to the Business Combination, (B) no person (other
than any publicly traded holding company resulting from such Business
Combination, any employee benefit plan sponsored or maintained by the Company
(or the corporation resulting from such Business Combination), or any person
which beneficially owned, immediately prior to such Business Combination,
directly or indirectly, 50% or more of the Company Voting Securities (a "Company
50% Stockholder")) would become the beneficial owner, directly or indirectly, of
50% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the corporation resulting from such Business
Combination and no Company 50% Stockholder would increase its percentage of such
total voting power, and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination would be
members of the Incumbent Board at the time of the Board's approval of the
execution of the initial agreement providing for such Business Combination (a
"Non-Control Transaction"); or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the sale or disposition of
all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 50% of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which, by
reducing the number of Company Voting Securities outstanding, increases the
percentage of shares beneficially owned by such person; provided, that if a
Change in Control of the Company would occur as a result of such an acquisition
by the Company (if not for the operation of this sentence), and after the
Company's acquisition such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of outstanding Company
Voting Securities beneficially owned by such person, then a Change in Control of
the Company shall occur.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Committee" shall mean a committee of at least two members
of the Board appointed by the Board to administer the Plan and to perform the
functions set forth herein and who are "non-employee directors" within the
meaning of Rule 16b-3 as promulgated under Section 16 of the Exchange Act and
who are also "outside directors" within the meaning of Section 162(m) of the
Code.
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(f) "Common Stock" shall mean the common stock, $0.10 par
value per share, of the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Fair Market Value" per share as of a particular date
shall mean the last reported sale price (on the day immediately preceding such
date) of the Common Stock on the NASDAQ National Market List or such other
exchange as the Common Stock may then be trading.
(i) "Immediate Family Member" shall except as otherwise
determined by the Committee, a Participant's children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouse, siblings, in-laws and
persons related by reason of legal adoption.
(j) "Incentive Stock Option" shall mean a stock option which
is intended to meet the requirements of Section 422 of the Code.
(k) "Nonqualified Stock Option" shall mean a stock option
which is not intended to be an Incentive Stock Option.
(l) "Option" shall mean either an Incentive Stock Option or a
Nonqualified Stock Option.
(m) "Participant" shall mean an employee, director or
consultant of the Company or its Subsidiaries who is selected to participate in
the Plan in accordance with Section 5.
(n) "Subsidiary" shall mean any subsidiary of the Company that
is a corporation and which at the time qualifies as a "subsidiary corporation"
within the meaning of Section 424(f) of the Code.
3. SHARES SUBJECT TO THE PLAN. Subject to adjustment in
accordance with Section 14, the total of the number of shares of Common Stock
which shall be available for the grant of Awards under the Plan shall not exceed
500,000 shares; PROVIDED, that, for purposes of this limitation, any Option
which is canceled or expires without exercise shall again become available for
Awards under the Plan. Upon forfeiture of Awards in accordance with the
provisions of the Plan, and the terms and conditions of the Award, such shares
shall no longer be counted in any determination of the number of shares
available under the Plan and shall be available for subsequent Awards. Subject
to adjustment in accordance with Section 14, no employee shall be granted in any
calendar year Options to purchase more than 500,000 shares of Common Stock.
Shares of Common Stock available for issue or distribution under the Plan shall
be authorized and unissued shares or shares reacquired by the Company in any
manner.
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4. ADMINISTRATION.
(a) The Plan shall be administered by the Committee.
(b) The Committee shall (i) approve the selection of
Participants, (ii) determine the type of Awards to be made to Participants,
(iii) determine the number of shares of Common Stock subject to Awards, (iv)
determine the terms and conditions of any Award granted hereunder (including,
but not limited to, any restriction and forfeiture conditions on such Award) and
(v) have the authority to interpret the Plan, to establish, amend, and rescind
any rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements entered into hereunder, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect.
(c) Any action of the Committee shall be final, conclusive and
binding on all persons, including the Company and its Subsidiaries and
shareholders, Participants and persons claiming rights from or through a
Participant.
(d) The Committee may delegate to officers or employees of the
Company or any Subsidiary, and to service providers, the authority, subject to
such terms as the Committee shall determine, to perform administrative functions
with respect to the Plan and Award agreements.
(e) Members of the Committee and any officer or employee of
the Company or any Subsidiary acting at the direction of, or on behalf of, the
Committee shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified by the Company with respect to any such
action or determination.
5. ELIGIBILITY. Individuals eligible to receive Awards under the Plan
shall be the directors, consultants and officers and other employees of the
Company and its Subsidiaries selected by the Committee.
6. AWARDS. Awards under the Plan may consist of Options. Awards shall
be subject to the terms and conditions of the Plan and shall be evidenced by an
agreement containing such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall deem desirable.
7. OPTIONS. Options may be granted under the Plan in such form as the
Committee may from time to time approve pursuant to terms set forth in an Option
agreement. The Committee may alter or waive, at any time, any term or condition
of an Option that is not mandatory under the Plan.
(a) TYPES OF OPTIONS. Each Option agreement shall state
whether or not the Option will be treated as an Incentive Stock Option or
Nonqualified Stock Option. Incentive Stock Options shall only be granted to
employees of the Company and its subsidiaries.
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(b) OPTION PRICE. The purchase price per share of the Common
Stock purchasable under an Option shall be determined by the Committee, but in
the case of Incentive Stock Options, the Option price will be not less than 100%
of the Fair Market Value of the Common Stock on the date of the grant of the
Option and in the case of Incentive Stock Options granted to an employee owning
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company and its Subsidiaries (a "10% Shareholder") the price per
share specified in the agreement relating to such Option shall not be less than
110% of the Fair Market Value per share of the Common Stock on the date of
grant.
(c) OPTION PERIOD. The term of each Option shall be fixed by
the Committee, but no option shall be exercisable after the expiration of 10
years from the date the Option is granted, provided, however, that in the case
of Incentive Stock Options granted to 10% Shareholders, the term of such Option
shall not exceed 5 years from the date of grant.
(d) EXERCISABILITY. Each Option shall vest and become
exercisable at a rate determined by the Committee at or subsequent to grant;
provided, however, that no Option granted under this Section 7 shall become
exercisable earlier than the time that the Plan is approved by the shareholders
of the Company in accordance with Section 19.
(e) METHOD OF EXERCISE. Options may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of shares of Common Stock to be purchased. Such notice shall be
accompanied by the payment in full of the Option purchase price. Such payment
shall be made in cash or through additional methods prescribed by the Committee.
8. CHANGE IN CONTROL. Upon the occurrence of a Change in Control, all
Options shall automatically become vested and exercisable in full. The Committee
may, in its discretion, include such further provisions and limitations in any
agreement documenting such Options as it may deem equitable and in the best
interests of the Company.
9. FORFEITURE. Notwithstanding anything in the Plan to the contrary,
the Committee may provide in any Award agreement that in the event of a serious
breach of conduct by a current or former Participant (including, without
limitation, any conduct prejudicial to or in conflict with the Company or its
Subsidiaries), or any activity of a current or former Participant in competition
with any of the businesses of the Company or any Subsidiary, (a) cancel any
outstanding Award granted to such current or former Participant, in whole or in
part, whether or not vested, and/or (b) if such conduct or activity occurs
within 1 year following the exercise or payment of an Award, require such
current or former Participant to repay to the Company any gain realized or
payment received upon the exercise or payment of such Award (with such gain or
payment valued as of the date of exercise or payment). Such cancellation or
repayment obligation shall be effective as of the date specified by the
Committee. Any repayment obligation may be satisfied in Common Stock or cash or
a combination thereof (based upon the Fair Market Value of Common Stock on the
day prior to the date of payment), and the Committee may provide for an offset
to any future payments owed by the Company or any Subsidiary to the current or
former Participant if necessary to satisfy the repayment obligation. The
determination of whether a current or former Participant has engaged in a
serious breach of conduct or any activity in competi-
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tion with any of the businesses of the Company or any Subsidiary shall be
determined by the Committee in good faith and in its sole discretion. This
Section 9 shall have no application following a Change in Control.
10. WITHHOLDING. The Company shall have the right to deduct from any
payment to be made pursuant to the Plan the amount of any taxes required by law
to be withheld therefrom, or to require a Participant to pay to the Company in
cash such amount required to be withheld prior to the issuance or delivery of
any shares of Common Stock or the payment of cash under the Plan. If permitted
by the Committee in its sole discretion, such taxes may be paid by (a)
delivering previously owned shares of Common Stock or (b) having the Company
retain shares of Common Stock which would otherwise be delivered upon exercise
or payment of Awards or (c) any combination of a cash payment or the methods set
forth in (a) and (b) above. For purposes of (a) and (b) above, shares of Common
Stock shall be valued at Fair Market Value determined as of the day immediately
prior to exercise or payment. If and to the extent specifically authorized by
the Committee, the Company may, upon election by a Participant, withhold from
any distribution of Common Stock hereunder shares of Common Stock with a Fair
Market Value in excess of the Participant's required withholding obligation.
11. NONTRANSFERABILITY, BENEFICIARIES. Unless otherwise determined by
the Committee with respect to the transferability of Nonqualified Stock Options
by a Participant to his Immediate Family Members (or to trusts or partnerships
limited liability companies or other entities established for such family
members), no Award shall be assignable or transferable by the Participant,
otherwise than by will or the laws of descent and distribution or pursuant to a
beneficiary designation, and Options shall be exercisable, during the
Participant's lifetime, only by the Participant (or by the Participant's legal
representatives in the event of the Participant's incapacity). Each Participant
may designate a beneficiary to exercise any Option held by the Participant at
the time of the Participant's death or to be assigned any other Award
outstanding at the time of the Participant's death. If no beneficiary has been
named by a deceased Participant, any Award held by the Participant at the time
of death shall be transferred as provided in his will or by the laws of descent
and distribution. Except in the case of the holder's incapacity, an Option may
only be exercised by the holder thereof.
12. NO RIGHT TO EMPLOYMENT. Nothing contained in the Plan or in any
Award under the Plan shall confer upon any employee any right with respect to
the continuation of employment with the Company or any of its Subsidiaries, or
interfere in any way with the right of the Company to terminate his or her
employment at any time. Nothing contained in the Plan shall confer upon any
employee or other person any claim or right to any Award under the Plan.
13. GOVERNMENTAL COMPLIANCE. Each Award under the Plan shall be subject
to the requirement that if at any time the Committee shall determine that the
listing, registration or qualification of any shares issuable or deliverable
thereunder upon any securities exchange or under any Federal or state law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition thereof, or in connection therewith, no such grant or
award may be exercised or shares issued or delivered unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
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<PAGE> 19
14. ADJUSTMENTS. In the event of any change in the outstanding shares
of Common Stock by reason of any stock dividend or split, recapitalization,
merger, consolidation, spinoff, combination or exchange of shares or other
corporate change, or any distribution to holders of Common Stock other than
regular cash dividends, the number or kind of shares available for Awards under
the Plan may be adjusted by the Committee as it shall in its sole discretion
deem equitable and the number and kind of shares subject to any outstanding
Awards granted under the Plan and the purchase price thereof may be adjusted by
the Committee as it shall in its sole discretion deem equitable to preserve the
value of such Awards. In addition, in the event that the Company is not the
surviving entity in a corporate transaction (or, if it is the surviving entity
and the Committee so determines it is appropriate), the Committee may, in its
sole discretion, cancel each outstanding Award (whether or not vested) without a
Participant's consent, and cause the Company or the surviving entity to make a
payment to such Participant in consideration of such cancellation in an amount
equal to the product of (a) and (b), where (a) is the difference between (i) and
(ii), where (i) is the greater of (A) the Fair Market Value of a share of Common
Stock on such cancellation date of (B) the value of the per share of Common
Stock consideration in such corporate event and (ii) is the exercise price per
share of an Option and (b) is the number of shares of Common Stock subject to
such Option.
15. AWARD AGREEMENT. Each Award under the Plan shall be evidenced by an
agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in the Plan.
16. AMENDMENT. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that (a) no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable law, regulation or stock exchange rule and (b) except as provided in
Section 14, no amendment shall be made that would adversely affect the rights of
a Participant under an Award theretofore granted, without such Participant's
written consent.
17. GENERAL PROVISIONS.
(a) The Committee may require each Participant purchasing or
acquiring shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that such Participant is acquiring the shares for
investment and without a view to distribution thereof.
(b) All certificates for shares of Common Stock delivered
under the Plan pursuant to any Award 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 Securities and Exchange
Commission, any stock exchange upon which the Common 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. If the Committee determines that the issuance of
shares of Common Stock hereunder is not in compliance with, or subject to an
exemption from, any applicable Federal or state securities laws, such shares
shall not be issued until such time as the Committee determines that the
issuance is permissible.
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(c) It is the intent of the Company that the Plan satisfy, and
be interpreted in a manner that satisfies, the applicable requirements of Rule
16b-3 as promulgated under Section 16 of he Exchange Act so that Participants
will be entitled to the benefit of Rule 16b-3, or any other rule promulgated
under Section 16 of the Exchange Act, and will not be subject to short-swing
liability under Section 16. Accordingly, if the operation of any provision of
the Plan would conflict with the intent expressed in this Section 17(c), such
provision to the extent possible shall be interpreted and/or deemed amended so
as to avoid such conflict.
(d) Except as otherwise provided by the Committee in the
applicable-grant or Award agreement, a Participant shall have no rights as a
shareholder with respect to any shares of Common Stock subject to Options until
a certificate or certificates evidencing shares of Common Stock shall have been
issued to the Participant and, subject to Section 14, no adjustment shall be
made for dividends or distributions or other rights in respect of any share for
which the record date is prior to the date on which Participant shall become the
holder of record thereof.
(e) The law of the State of Delaware shall apply to all Awards
and interpretations under the Plan regardless of the effect of such state's
conflict of laws principles.
(f) Where the context requires, words in any gender shall
include any other gender.
18. TERM OF PLAN. Subject to earlier termination pursuant to
Section 16, the Plan shall have a term of 10 years from its Effective Date.
19. EFFECTIVE DATE; APPROVAL OF SHAREHOLDERS. The Plan is
effective as of July 22, 1999. The Plan is conditioned upon the approval of the
shareholders of the Company, and failure to receive their approval shall render
the Plan and all outstanding Awards issued thereunder void and of no effect.
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