<PAGE> 1
As filed with the Securities and Exchange
Commission on October 26, 1994 Registration No. 33-_____
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
ARROW ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
New York 11-1806155
(State of Incorporation) (I.R.S. Employer Identification No.)
25 Hub Drive, Melville, New York 11747
---------------------------------------
(Address of principal executive offices)
Anthem Electronics, Inc. Incentive Stock Option Plan
Anthem Electronics, Inc. Non-Qualified Stock Option Plan
(Full title of Plans)
---------------
Robert E. Klatell, Esq.
Senior Vice President and Chief Financial Officer
Arrow Electronics, Inc.
25 Hub Drive, Melville, New York 11747, (516) 391-1300
------------------------------------------------------
(Name and address of agent for service, including telephone number)
---------------
Copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
(212) 858-1000
Attention: Howard S. Kelberg, Esq.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed maximum Proposed maximum Amount of
Title of securities to be offering price aggregate offering registration
to be registered registered per share(1) price(1) fee(2)
------------------- ---------- ---------------- ------------------ ------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value(3) $673,857 $35.0625 $23,627,112 $8,148
</TABLE>
- --------------------
(1) Estimated pursuant to Rule 457(h) under the Securities Act of
1933, as amended (the "Securities Act"), based on the average
price of Arrow Electronics, Inc. Common Stock on the New York
Stock Exchange on October 20, 1994 (the "Market Value").
(2) The registration fee for the securities registered hereby,
$8,148, has been calculated pursuant to Rule 457(c) under the
Securities Act.
(3) This Registration Statement also pertains to rights to
purchase Participating Preferred Stock of the Registrant (the
"Rights"). Until the occurrence of certain prescribed events,
the Rights are not exercisable, are evidenced by the
certificates for Arrow Electronics, Inc. Common Stock and will
be transferred together with and only with such securities.
Thereafter, separate Rights certificates will be issued
representing one Right for each share of Arrow Electronics,
Inc. Common Stock held subject to adjustment pursuant to anti-
dilution provisions.
<PAGE> 2
PART I
INFORMATION REQUIRED IN A SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents which have heretofore been filed by Arrow
Electronics, Inc. (the "Company") (File No. 1-4482) or Anthem Electronics, Inc.
with the Securities and Exchange Commission the ("Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act") or the Securities
Act of 1933, as amended (the "1933 Act"), are incorporated by reference herein
and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993, the Company's Current Report on Form 8-K filed
September 13, 1994 and the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1994 and June 30, 1994.
2. The Company's supplemental and pro forma financial information
contained in the Company's registration statement on Form S-4 pursuant to
the Securities Act of 1933 (Reg. No. 33-55645) including any amendment or
report for the purpose of updating such information.
3. Description of the Company's capital stock contained in the
Company's registration statement filed under the 1934 Act, including any
amendment of report filed for the purpose of updating such description.
4. The description of the Company's Rights contained in the
Company's registration statement filed under the 1934 Act, including any
amendment or report filed for the purpose of updating such description.
5. The Anthem Electronics, Inc. Annual Report on Form 10-K for the
year ended December 31, 1993, and the Anthem Electronics, Inc. Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1994 and June 30,
1994.
All documents filed by the Company and Anthem Electronics, Inc. with
the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act
prior to the filing of a post-effective amendment to this Registration
Statement which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and made a part hereof
from their respective dates of filing (such documents, and the documents
enumerated above, being hereinafter referred to as "Incorporated Documents");
provided, however, that the documents enumerated above or subsequently filed by
the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act in
each year during which the offering made by this Registration Statement is in
effect prior to the filing with the Commission of the Company's Annual Report
on Form 10-K covering such year shall not be Incorporated Documents or be
incorporated by reference in this Registration Statement or be a part hereof
from and after the filing of such Annual Report on Form 10-K.
-2-
<PAGE> 3
Any statement contained in an Incorporated Document shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 9 of the Registrant's Certificate of Incorporation permits
the indemnification of officers and directors under certain circumstances to
the full extent that such indemnification may be permitted by law.
Such rights of indemnification are in addition to, and not in
limitation of, any rights to indemnification to which any officer or director
of the Company is entitled under the Business Corporation Law of the State of
New York (Sections 721 through 727), which provides for indemnification by a
corporation of its officers and directors under certain circumstances as stated
in the Business Corporation Law and subject to specified limitations set forth
in the Business Corporation Law.
The Registrant also maintains directors' and officers' liability
insurance coverage which insures directors and officers of the Registrant
against certain losses arising from claims made, and for which the Registrant
has not provided reimbursement, by reason of their being directors and officers
of the Registrant or its subsidiaries.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4(a) - Amended and Restated Certificate of Incorporation of Arrow Electronics, Inc. (Designated as
Exhibit 4(1) to the Registrant's Registration Statement on Form S-3 filed February 21, 1992
(Reg. No. 33-45895)).
4(b) - Certificate of Amendment to the Amended and Restated Certificate of Incorporation of
Arrow Electronics, Inc.
4(c) - By-Laws of Arrow Electronics, Inc. (Designated as Exhibit 3(b) in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1986, Commission File No. 1-4482).
5 - Opinion of Winthrop, Stimson, Putnam & Roberts as to the legality of securities offered under
the Anthem Electronics, Inc. Incentive Stock Option Plan and the Anthem Electronics, Inc.
Non-Qualified Stock Option Plan, including their consent.
23(a) - Consent of Ernst & Young LLP.
23(b) - Consent of Price Waterhouse LLP.
23(e) - Consent of Counsel (contained in the Opinion of the Company's Counsel, Exhibit 5 hereto).
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
24 - Power of Attorney (contained in the signature page hereof).
99(a) - Anthem Electronics, Inc. Incentive Stock Option Plan.
99(b) - Anthem Electronics, Inc. Non-Qualified Stock Option Plan.
</TABLE>
ITEM 9. UNDERTAKINGS.
(1) The undersigned Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs are contained in periodic reports filed by the Registrant
pursuant to Section 13(a) or Section 15(d) of the 1934 Act that are
incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for the
purpose of determining any liability under the Securities Act of 1933, each
filing of the issuer's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering hereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling
-4-
<PAGE> 5
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
EXPERTS
The historical consolidated financial statements and related
schedules of Arrow Electronics, Inc. at December 31, 1993 and 1992, and for
each of the three years in the period ended December 31, 1993, incorporated by
reference from the Company's Annual Report (Form 10-K) have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report appearing
elsewhere therein, and are incorporated in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The supplemental consolidated financial statements of Arrow
Electronics, Inc. at December 31, 1993, and 1992, and for each of the three
years in the period ended December 31, 1993 (which give effect to the merger of
Arrow and Gates/FA Distributing, Inc., which was accounted for as a pooling of
interests, such supplemental consolidated financial statements will become the
historical financial statements of the Company once financial statements
covering the consummation date of the Gates/FA Distributing, Inc. business
combination are issued) incorporated by reference from the Company's
Registration Statement (Form S-4 No. 33-54413) have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report appearing
elsewhere therein, and are incorporated in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Anthem Electronics, Inc.
incorporated in this Registration Statement Form S-8 by reference to Anthem's
Annual Report on Form 10-K for the year ended December 31, 1993, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given upon the authority of said firm as experts in auditing and
accounting.
LEGAL OPINION
The legality of the Common Stock offered pursuant to the Registration
Statement has been passed upon for the Company by Winthrop, Stimson, Putnam &
Roberts, Counsel for the Company, One Battery Park Plaza, New York, New York
10004.
-5-
<PAGE> 6
SIGNATURES
The Registrant: Pursuant to the requirements of the Securities Act
of 1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Melville, State of New
York, on the 25th day of October, 1994.
ARROW ELECTRONICS, INC.
/s/ROBERT E. KLATELL
-----------------------------
By: Robert E. Klatell
Senior Vice President and Chief Financial Officer
POWER OF ATTORNEY
Know all men by these presents, that each officer or director of
Arrow Electronics, Inc. whose signature appears below constitutes and appoints
Stephen P. Kaufman, Robert E. Klatell and John C. Waddell, and each of them
singly, his true and lawful attorney-in-fact and agent, with full and several
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign a Registration Statement on Form S-8 to be filed pursuant
to the Securities Act of 1933 in connection with the registration of up to
673,857 shares of Common Stock, par value $1.00 per share, and any or all
amendments, including pre- and post-effective amendments and supplements to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done. Each of said attorneys-in-fact shall have
power to act hereunder with or without the other.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated and on dates indicated.
Principal Executive Officer: Date: October 25, 1994
/s/STEPHEN P. KAUFMAN
- ------------------------------------------
Stephen P. Kaufman
Chairman and Chief Executive Officer
Principal Financial Officer:
/s/ROBERT E. KLATELL
- -------------------------------------------------
Robert E. Klatell
Senior Vice President and Chief Financial Officer
-6-
<PAGE> 7
Principal Accounting Officer:
/s/PAUL J. REILLY
- ---------------------------------
Paul J. Reilly
Controller
Directors:
/s/DANIEL W. DUVAL
- ---------------------------------
Daniel W. Duval
Director
/s/CARLO GIERSCH
- --------------------------------
Carlo Giersch
Director
/s/J. SPENCER GOULD
- --------------------------------
J. Spencer Gould
Director
/s/STEPHEN P. KAUFMAN
- --------------------------------
Stephen P. Kaufman
Director
/s/LAWRENCE R. KEM
- --------------------------------
Lawrence R. Kem
Director
/s/ROBERT E. KLATELL
- --------------------------------
Robert E. Klatell
Director
/s/STEPHEN W. MENEFEE
- --------------------------------
Stephen W. Menefee
Director
/s/KAREN GORDON MILLS
- --------------------------------
Karen Gordon Mills
Director
/s/ANNE POL
- --------------------------------
Anne Pol
Director
-7-
<PAGE> 8
/s/RICHARD S. ROSENBLOOM
- --------------------------------
Richard S. Rosenbloom
Director
/s/JOHN C. WADDELL
- --------------------------------
John C. Waddell
Director
-8-
<PAGE> 9
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
EXHIBITS
filed with
Registration Statement
on
Form S-8
under
The Securities Act of 1933
-------------------
Anthem Electronics, Inc. Incentive Stock Option Plan
Anthem Electronics, Inc. Non-Qualified Stock Option Plan
(Full title of the Plans)
ARROW ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
===============================================================================
<PAGE> 10
EXHIBIT INDEX
Anthem Electronics, Inc. Incentive Stock Option Plan
Anthem Electronics, Inc. Non-Qualified Stock Option Plan
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
- ------- ----------- -----------
<S> <C> <C>
4(a) - Amended and Restated Certificate of Incorporation of Arrow *
Electronics, Inc. (Designated as Exhibit 4(1) to the Registrant's Registration Statement on
Form S-3 filed February 21, 1992 (Reg. No. 33-45895)).
4(b) - Certificate of Amendment to the Amended and Restated Certificate of *
Incorporation of Arrow Electronics, Inc.
4(c) - By-Laws of Arrow Electronics, Inc. (Designated as Exhibit 3(b) in the *
Registrant's Annual Report on Form 10-K for the year ended December 31, 1986,
Commission File No. 1-4482).
5 - Opinion of Winthrop, Stimson, Putnam & Roberts as to the legality of securities offered
under the Anthem Electronics, Inc. Incentive Stock Option Plan and the Anthem Electronics,
Inc. Non-Qualified Stock Option Plan, including their consent.
23(a) - Consent of Ernst & Young LLP.
23(b) - Consent of Price Waterhouse LLP.
23(c) - Consent of Counsel (contained in the Opinion of the Company's
Counsel, Exhibit 5 hereto).
24 - Power of Attorney (contained in the signature page hereof).
99(a) - Anthem Electronics, Inc. Incentive Stock Option Plan.
99(b) - Anthem Electronics, Inc. Non-Qualified Stock Option Plan.
</TABLE>
- ---------------------------
* Incorporated by reference.
<PAGE> 1
Exhibit 5
<PAGE> 2
October 25, 1994
Arrow Electronics, Inc.
25 Hub Drive
Melville, NY 11747
Re: Arrow Electronics, Inc. Registration Statement on Form S-8 -- Anthem
Electronics, Inc. Incentive Stock Option Plan and Anthem Electronics,
Inc. Non-Qualified Stock
Option Plan (the "Plans")
Ladies and Gentlemen:
In connection with the proposed issuance of up to 673,857 shares of
Arrow Electronics, Inc.'s common stock ($1.00 par value) (the "Shares") for
purchase pursuant to options granted under the Plans and with respect to which
a Registration Statement on Form S-8 has been prepared for filing with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, we
have examined such corporate records, other documents and questions of law as
we considered necessary for the purposes of this opinion.
We are of the opinion that when:
(a) the applicable provisions of the Securities Act of 1933 and of
State securities or blue sky laws shall have been complied with; and
(b) your Board of Directors shall have duly authorized the issuance
of such Shares, and the Shares shall have been duly issued and paid for in
an amount not less than the par value thereof,
the shares will be legally issued, fully paid and non-assessable.
<PAGE> 3
-2-
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement on Form S-8 and to the reference to us under the caption
"Legal Opinion" in the Registration Statement, and any amendments thereto,
filed in connection with the Plan.
Very truly yours,
/s/ WINTHROP, STIMSON, PUTNAM & ROBERTS
<PAGE> 1
Exhibit 23(a)
<PAGE> 2
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) and related Prospectus of Arrow Electronics,
Inc. ("Arrow") for the registration of 673,857 shares of its common stock and
to:
(a) the incorporation by reference therein of our report dated February
24, 1994, with respect to the historical consolidated financial
statements and schedules of Arrow included in its Annual Report (Form
10-K) for the year ended December 31, 1993 filed with the Securities
and Exchange Commission; and
(b) the incorporation by reference therein of our report dated September
23, 1994, with respect to the supplemental consolidated financial
statements and schedules of Arrow at December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993
(which give effect to the August 29, 1994 merger of Arrow and
Gates/FA Distributing, Inc., which was accounted for as a pooling of
interest, such supplemental consolidated financial statements will
become the historical financial statements of Arrow once financial
statements covering the consummation date of the Gates/FA
Distributing, Inc. business combination are issued) included in its
Registration Statement (Form S-4 No. 33-54413) as filed with the
Securities and Exchange Commission on September 28, 1994.
/s/ERNST & YOUNG LLP
New York, New York
October 24, 1994
<PAGE> 1
Exhibit 23(b)
<PAGE> 2
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Arrow Electronics, Inc., of our report dated
January 19, 1994, which appears on page 15 of the 1993 Annual Report to
Shareholders of Anthem Electronics, Inc., which is incorporated by
reference in the Anthem Electronics, Inc. Annual Report on Form 10-K for
the year ended December 31, 1993. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules, which
appears on page 21 of such Annual Report on Form 10-K. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
October 20, 1994
<PAGE> 1
Exhibit 99(a)
<PAGE> 2
ANTHEM ELECTRONICS, INC.
INCENTIVE STOCK OPTION PLAN
---------------------------
(AS RESTATED AND AMENDED THROUGH FEBRUARY 18, 1992)
I. PURPOSES OF THE PLAN.
--------------------
(a) This Incentive Stock Option Plan (the "Plan") is intended to
promote the interests of Anthem Electronics, Inc., a Delaware corporation
("Corporation"), by providing a method whereby employees of the Corporation or
its subsidiaries who are primarily responsible for the management, growth and
financial success of the Corporation and its subsidiaries may be offered
incentives and rewards which will encourage them to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
and continue to remain in the employ of the Corporation or its subsidiaries.
(b) The corporation intends that options issued under the Plan be
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code (the "Code").
(c) For purposes of this Plan, each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation shall be considered to be a subsidiary of the Corporation, provided
each such corporation other than the last corporation in the unbroken chain
owns, at the time of determination, stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN.
--------------------------
(a) The Plan shall be administered by a committee (the
"Committee") of the Corporation's Board of Directors (the "Board"). The
committee shall consist of not less than two (2) non-employee members of the
Board. Each member shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time.
(b) The Committee is authorized (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
the proper administration of the Plan and to make such determinations under,
and issue such interpretations of, the Plan and any outstanding option as it
may deem necessary or advisable. Decisions of the Committee shall be final and
binding on all parties who have an interest in the Plan or any outstanding
option.
(c) The Committee shall have the authority to make option grants
under the Plan to any and all eligible individuals. The Committee shall have
complete discretion to determine the number of shares to be covered by each
such option, the time or times at which such option is to become exercisable
and the maximum term for which the option is to remain outstanding.
III. ELIGIBILITY FOR OPTION GRANTS.
-----------------------------
The persons who shall be eligible to receive options pursuant to
this Plan are such employees (including officers and directors) of the
Corporation or its subsidiaries as the Committee shall from time to time
select. A director of the Corporation shall not be eligible for option grants
under the Plan unless such director is also an employee of the Corporation or
its subsidiaries.
IV. STOCK SUBJECT TO THE PLAN.
-------------------------
(a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The number
of shares issuable in the aggregate over the term
<PAGE> 3
of this Plan and the Corporation's Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") shall not exceed 2,340,000****/ shares, subject to
adjustment from time to time in accordance with subsection IV(c) of the Plan.
The maximum number of shares for which stock appreciation rights may be granted
under this Plan and the Non-Qualified Plan shall not exceed 2,100,000*****/
shares of Common Stock, subject to adjustment from time to time in accordance
with subsection IV(c) of the Plan.
(b) Should an option granted under this Plan or the Non-Qualified
Plan be terminated or canceled for any reason prior to exercise or surrender in
full, the shares subject to the portion of the option not so exercised or
surrendered shall be available for subsequent option grants under this Plan or
the Non-Qualified Plan. Shares subject to any option surrendered or canceled
in accordance with the stock appreciation rights provisions of the Plan and
shares repurchased by the Corporation pursuant to its repurchase rights under
the Plan shall not be available for subsequent option or stock appreciation
rights grants under this Plan or the Non-Qualified Plan.
(c) In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made by the Committee to (A) the maximum
number and/or class of shares issuable in the aggregate under this Plan and the
Non-Qualified Plan, (B) the number and/or class of shares and the option price
per share of the stock subject to each outstanding option, (C) the maximum
number of shares for which stock appreciation rights may be granted under this
Plan and the Non- Qualified Plan and (D) the number of shares subject to
outstanding stock appreciation rights and the exercise price per share in
effect thereunder. The adjustments determined by the Committee shall be final,
binding and conclusive.
V. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
Options granted pursuant to the Plan shall be authorized by action
of the Committee. Each granted option shall be evidenced by an instrument in
such form as the Committee shall from time to time approve; provided, however,
that each such instrument shall comply with and incorporate the terms and
conditions specified below.
1. Option Price.
------------
A. The option price per share shall be fixed by the Committee,
but in no event shall the option price per share be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the date
of the option grant.
B. If any individual to whom an option is to be granted pursuant
to the provisions of the Plan is on the date of grant the owner of stock (as
determined under Section 425(d) of the Code) possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation or any
one of its subsidiaries (such person to be herein referred to as a 10%
Shareholder), then the option price per share of the Common Stock subject to
such option shall not be less than one hundred and ten percent (110%) of the
fair market value per share of Common Stock on the date of grant.
- ----------------------------------
**** From and after February 18, 1992, 1992, not more than 2,940,000 shares
may be issued in the aggregate under both this Plan and the Non-
Qualified Plan, assuming stockholder approval of the 600,000-share
increase is obtained at the 1992 Annual Meeting.
***** From and after February 18, 1992, the maximum number of shares for
which stock appreciation rights may be granted under this Plan and the
Non-Qualified Plan shall not in the aggregate exceed 2,700,000 shares,
assuming stockholder approval of the 600,000-share increase at the 1992
Annual Meeting.
-2-
<PAGE> 4
C. Exercise of the option shall be effected by written notice to
the Corporation or its designate, and the option price shall become immediately
due upon exercise. Payment of the option price may, subject to the provisions
of Article IX, be effected in one of the alternative forms specified below:
(i) full payment in cash or cash equivalents;
(ii) full payment in shares of Common Stock held by the
optionee for at least six (6) months and having a fair market value on
the Exercise Date (as such term is defined below) equal to the option
price;
(iii) full payment in a combination of shares of Common
Stock held for at least six (6) months and valued at fair market value
on the Exercise Date and cash or cash equivalents; or
(iv) payment effected through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable written instructions to the designated broker-dealer to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
an amount equal to the aggregate Option Price payable for the purchased
shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Corporation by reason of such
purchase and (II) shall provide written directives to the Corporation
to deliver the certificates for the purchased shares directly to such
broker-dealer; or
(v) payment with any other property acceptable to the
Committee which has a fair market value on the Exercise Date equal to
the option price and serves as valid consideration for issuance of the
Corporation's Common Stock under Delaware law.
For purposes of this subsection C, the Exercise Date shall be the
first date on which there shall have been delivered to the Corporation: (i)
written notice of the exercise of the option and (ii) any representations by
the optionee the Corporation should determine are required by Federal and State
securities laws. Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the option price
for the purchased shares must accompany such notice.
D. The fair market value of a share of Common Stock on any
relevant date under subsection A, B or C above (and for all other valuation
purposes under the Plan) shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the mean
between the highest bid and lowest asked prices (or, if such
information is available, the closing selling price) of one share of
Common Stock on the day preceding the date in question in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers through its NASDAQ system or any
successor system. If there are no reported bid and asked prices (or
closing selling price) for the Common Stock on such day, then the mean
between the highest bid and lowest asked prices (or closing selling
price) on the last preceding date for which such quotations exist shall
be determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price of one share of Common Stock on the
day preceding the date in question on the stock exchange determined by
the Committee to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on such
exchange on such day, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.
-3-
<PAGE> 5
2. Term and Exercise of Options.
----------------------------
A. Each option granted under the Plan shall be exercisable at
such time or times, during such period, and for such number of shares as shall
be determined by the Committee and set forth in the instrument evidencing such
option; provided, however, that (i) no option granted under this Plan shall
have a term in excess of ten (10) years from the grant date and (ii) no option
granted to a 10% Shareholder shall have a term in excess of five (5) years from
the grant date.
B. During the lifetime of the optionee, the option shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee otherwise than by will or by the laws of descent and distribution.
3. Effect of Termination of Employment.
-----------------------------------
A. Should an optionee cease to be an Employee of the Corporation
for any reason (including death or permanent disability as defined in Section
22(e) (3) of the Code) while the holder of one or more outstanding options
granted to such optionee under the Plan, then (except as otherwise provided
pursuant to Article XI below) such option or options shall in no event remain
exercisable for more than a twelve (12) month period (or such shorter period as
is determined by the Committee and set forth in the instrument evidencing the
option) following the date of such cessation of Employee status, and under no
circumstances shall any such option be exercisable after the specified
expiration date of the option term. Each such option shall, during such twelve
(12) month or shorter period, be exercisable only to the extent of the number
of shares (if any) for which the option is exercisable on the date of such
cessation of Employee status. Upon the expiration of such twelve (12) month or
shorter period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be exercisable.
B. If (i) the optionee's status as an Employee is terminated for
cause (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement or any unauthorized disclosure or use of
confidential information or trade secrets) or (ii) the optionee makes or
attempts to make any unauthorized use or disclosure of confidential information
or trade secrets of the Corporation or any subsidiary, then in any such event
all outstanding options granted the optionee under the Plan shall immediately
terminate and cease to be exercisable.
C. Any option granted to an optionee under the Plan and
exercisable in whole or in part on the date of the optionee's death may be
subsequently exercised, but only to the extent of the number of shares (if any)
for which the option is exercisable on the date of the optionee's death, by the
personal representative of the optionee's estate or by the person or persons to
whom the option is transferred pursuant to the optionee's will or in accordance
with the laws of descent and distribution, provided and only if such exercise
occurs prior to the earlier of (i) the first anniversary of the date of the
optionee's death or (ii) the specified expiration date of the option term.
Upon the occurrence of the earlier event, the option shall terminate and cease
to be exercisable.
D. The Committee shall have complete discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to permit one or more options held by the optionee under
this subsection V.3 to be exercised, during the limited period of
exercisability provided under subsections V.3.A and V.3.C above, not only with
respect to the number of shares for which each such option is exercisable at
the time of the optionee's cessation of Employee status but also with respect
to one or more subsequent installments of purchasable shares for which the
option would have otherwise become exercisable had such cessation of Employee
status not occurred.
E. For purposes of the foregoing provisions of this subsection
V.3, the optionee shall be deemed to be an Employee of the Corporation for so
long as the optionee remains in the employ of the Corporation or one or more of
its subsidiaries.
-4-
<PAGE> 6
4. Stockholder Rights. An option holder shall have none of the
rights of a stockholder with respect to any shares covered by the option until
such individual shall have exercised the option in accordance with the
provisions of the Plan and the option agreement evidencing the grant.
5. Repurchase Rights. The Committee may in its discretion
determine that it shall be a term and condition of one or more options granted
under the Plan that the Corporation (or its assigns) shall have the right,
exercisable upon the optionee's cessation of Employee status, to repurchase at
the original option price any or all of the shares of Common Stock previously
acquired by the optionee upon the exercise of such option. Any such repurchase
right shall be exercisable by the Corporation (or its assigns) upon such terms
and conditions (including the establishment of the appropriate vesting schedule
and other provisions for the expiration of such right in one or more
installments) as the Committee may specify in the instrument evidencing such
right. All of the Corporation's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction
under Article VI, except to the extent: (i) the Corporation's outstanding
repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with the Corporate Transaction or (ii) such termination
of repurchase rights and acceleration of vesting are precluded by other
limitations imposed by the Committee at the time of the option grant. The
Committee shall have the discretionary authority, exercisable either before or
after the optionee's cessation of Employee status, to cancel the Corporation's
outstanding repurchase rights with respect to one or more shares subject to
such rights and thereby accelerate the vesting of such shares in whole or in
part at any time.
6. Sequential Exercise. Notwithstanding anything to the
contrary contained in this Plan, no option granted prior to January 1, 1987
shall be exercisable to any extent while there remains outstanding (within the
meaning of Section 422(c)(7) of the Code as in effect prior to January 1, 1987)
any other pre-1987 incentive stock option which was granted at an earlier date
to the optionee to purchase stock in the Corporation or in any other
corporation which is on the date of grant of the later option either a parent
or subsidiary of the Corporation or a predecessor corporation of any of such
corporations.
7. Dollar Limitation. The following dollar limitations shall be
in effect for options granted under the Plan:
(i) Pre-1987 Grants. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common
Stock which may be made the subject of options granted under the Plan
(or any other incentive stock option plan of the Corporation or its
subsidiaries) to any Employee in any one calendar year prior to the
1987 calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000), plus any unused Carryover to such pre-1987 calendar
year. For purposes of the preceding limitation, the term "Carryover"
means one-half (1/2) of the amount by which the sum of One Hundred
Thousand Dollars ($100,000) exceeds the aggregate fair market value
(determined as of the respective date or dates of grant) of the Common
Stock for which the Employee was previously granted options under the
Plan (or any other incentive stock option plan of the Corporation or
its subsidiaries) in each calendar year after 1980 and prior to 1987.
The unused Carryover shall be available for each of the three (3)
pre-1987 calendar years immediately following the calendar year in
which the Carryover arises and shall increase the basic $100,000
limitation otherwise applicable to the Employee for each such pre-1987
calendar year by an amount equal to the Carryover, less the portion
thereof used in prior calendar years. Options granted the Employee
during any pre-1987 calendar year shall first be applied against the
basic $100,000 limitation in effect for such calendar year and then
applied against any of the Employee's unused Carryovers to such
calendar year, in the order in which such Carryovers arose in prior
calendar years.
(ii) Post-1986 Grants. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common
Stock for which one or more options granted to any Employee after
December 31, 1986 under the Plan (or any other incentive stock option
plan of the Corporation or its subsidiaries) may for the first time
become exercisable as incentive stock options under the Federal tax
laws during any one calendar year shall not exceed the sum of One
Hundred
-5-
<PAGE> 7
Thousand Dollars ($100,000.00) or such greater amount as may be
permitted under subsequent amendments to Section 422 of the Code. To
the extent the Employee holds two or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability thereof as incentive stock options
shall be applied on the basis of the order in which such options are
granted.
VI. CORPORATE TRANSACTION/CHANGE IN CONTROL.
---------------------------------------
A. In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State in which the Corporation is
incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation, or
(iii) any other corporate reorganization or business
combination in which fifty percent (50%) or more of the Corporation's
outstanding voting stock is transferred to different holders in a
single transaction or a series of related transactions,
then the exercisability of each option outstanding under the Plan shall be
automatically accelerated so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock
purchasable under such option and may be exercised for all or any portion of
such shares. However, an outstanding option under the Plan shall not be so
accelerated if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof or (ii) the
acceleration of such option is subject to other applicable limitations imposed
by the Committee at the time of grant. The determination of comparability
under clause (i) above shall be made by the Committee, and its determination
shall be final, binding and conclusive. The Committee shall have the
discretion, exercisable either in advance of any actually- anticipated
Corporate Transaction or at the time of an actual Corporate Transaction, to
provide (upon such terms and conditions as it may deem appropriate) for the
automatic acceleration of one or more outstanding options assumed or replaced
in the Corporate Transaction, in the event the optionee's employment should
subsequently terminate within a designated period following the effective date
of such Corporate Transaction.
B. A change in control ("Change in Control") shall be deemed to
occur:
(i) should a person or related group of persons, other
than the Corporation or a person that directly or indirectly controls,
is controlled by or is under common control with the Corporation,
acquire ownership of twenty-five percent (25%) or more of the
corporation's outstanding voting stock pursuant to a tender or exchange
offer which the Board does not recommend the shareholders of the
Corporation to accept; or
(ii) on the first date within any period of twenty-four
(24) consecutive months or less on which there is effected a change in
the composition of the Board such that a majority of the Board members
(rounded up to the next whole number) cease, by reason of one or more
proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been members of the Board continuously
since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least
a majority of the Board members described in clause (A) who were still
in office at the time such election or nomination was approved by the
Board.
-6-
<PAGE> 8
With respect to any such Change in Control, the Committee shall have full power
and authority, exercisable either in advance of any actually- anticipated
Change in Control or at the time of an actual Change in Control, to provide for
the acceleration of each option outstanding under the Plan which is not then
fully exercisable so that each such option shall become fully exercisable as of
the Change in Control for the total number of shares at the time subject to
such option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. The Committee shall also have full power
and authority to condition such option acceleration, and the termination of any
of the Corporation's repurchase rights with respect to any unvested shares
purchased or purchasable under such option, upon the subsequent termination of
the optionee's employment within a designated period following the Change in
Control.
C. In connection with any such Corporate Transaction or Change
in Control, the exercisability as an incentive stock option under the Federal
tax laws of any accelerated post-1986 options under the Plan shall remain
subject to the applicable dollar limitation of subsection V.7(ii), and the
exercise of any accelerated pre-1987 incentive stock options shall remain
subject to the applicable segmented exercise limitation of subsection V.6.
D. Upon the consummation of a Corporate Transaction, all
outstanding options under the Plan shall, to the extent not previously
exercised or assumed by the successor corporation or its parent company,
terminate and cease to be outstanding. Upon a Change in Control, all
outstanding options accelerated pursuant to subsection VI.B above shall remain
fully exercisable until the expiration or sooner termination of the option term
specified in the instrument evidencing the option.
E. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have
been issuable, in consummation of such Corporate Transaction, to an actual
holder of the same number of shares of Common Stock as are subject to such
option immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities shall remain the same.
In addition, the class and number of securities available for issuance under
the Plan following the consummation of the Corporate Transaction shall be
appropriately adjusted.
F. Should the corporation, in connection with any merger or
other business consolidation with, or any purchase or acquisition of the stock
or assets of another corporation, enter into an agreement with such other
corporation providing for the substitution of the corporation 1 options for the
outstanding options of such other corporation upon the consummation of the
transaction, then the Committee shall have full power and authority to issue
new options under this Plan in substitution for one or more outstanding options
of the other corporation, subject, however, to the following special terms and
conditions:
(i) The number of shares covered by each incentive
stock option of the other corporation (the "old option") and the price
per share payable thereunder will be appropriately adjusted to apply to
the number and class of securities of the Corporation which would be
issuable, in connection with the merger or other transaction, to an
actual holder of the same number of shares of stock of the other
corporation which are purchasable under the old option immediately
prior to such transaction, and the option issued hereunder in
substitution (the "new option") will be for such adjusted number of
shares exercisable at such adjusted option price, subject however to
the further limitations of clauses (ii), (iii) and (iv) below.
(ii) On a share-by-share basis, the ratio of the option
price to the fair market value of stock covered by the new option
immediately after the substitution will not be more than the ratio of
the option price to the fair market value of the stock covered by the
old option immediately prior to the substitution.
-7-
<PAGE> 9
(iii) The excess of the aggregate fair market value of
the shares subject to the new option immediately after the substitution
over the aggregate option price payable for such shares will not be
more than the excess of the aggregate fair market value of all shares
subject to the old option immediately before such substitution over the
aggregate option price payable for such shares.
(iv) The new option will not give the option holder any
additional benefits not otherwise provided under the old option.
G. In connection with the Corporation's acquisition, on July 3,
1986 (the "Closing"), of all the issued and outstanding capital stock of Lionex
Corporation ("Lionex"), there were issued under the Plan, in compliance with
the requirements of subsection VI.F above, options to purchase shares of the
Corporation's Common Stock (the "Anthem Incentive Options") in substitution for
the incentive stock options for shares of Lionex common stock outstanding under
the Lionex 1983 Stock Option Plan ("the Lionex Incentive Options") immediately
prior to the Closing. Accordingly, the number of shares of the Corporation's
Common Stock subject to each Anthem Incentive Option immediately after the
substitution was equal to the product of (A) the number of shares of Lionex
common stock subject to the substituted Lionex Incentive Option immediately
prior to the Closing and (B) the Conversion Factor in effect for the Lionex
acquisition. For this purpose, the Conversion Factor is the fraction the
numerator of which is $20.6728 ($16,826,617.50 divided by 813,950, the total
number of Lionex shares outstanding immediately prior to the Closing), and the
denominator of which is $13.95, the average closing selling price per share of
the Corporation's Common Stock on the New York Stock Exchange for the five (5)
consecutive trading days which immediately preceded the date of the Closing.
The exercise price per share in effect under each Anthem Incentive Option was
obtained by dividing (i) the exercise price per share in effect under the
Lionex Incentive Option immediately prior to the Closing, by (ii) the
Conversion Factor and then rounded up to the next highest whole cent.
H. The grant of options under this Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
VII. CANCELLATION AND NEW GRANT OF OPTIONS.
-------------------------------------
The Committee shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than one hundred percent (100%) of fair market value of the Common Stock on the
new grant date (or one hundred ten percent (110%) of such fair market value if
the optionee is a 10% Shareholder). If one or more of the canceled options are
pre-1986 options, then such options shall, for purposes of the "sequential
exercise" rule of subsection V.6, be considered to be outstanding until the
expiration date initially specified for the option term.
VIII. STOCK APPRECIATION RIGHTS.
-------------------------
A. The Committee shall have full power and authority,
exercisable in its sole discretion, to grant to selected optionees tandem stock
appreciation rights ("Tandem Rights") and/or Limited Stock Appreciation Rights
("Limited Rights") pertaining to all or part of the shares of Common Stock
subject to one or more of their option grants under the Plan.
B. The terms and conditions applicable to each Tandem Right
shall be as follows:
(1) Tandem Rights may be granted at the same time the
underlying option is granted or at any time thereafter while such
option remains outstanding. The exercise of a Tandem
-8-
<PAGE> 10
Right shall be effective only if approved by the Committee, which shall
have sole discretion in the matter.
(2) The Tandem Right shall be exercised by surrendering the
underlying option to the Corporation, in whole or in part to the extent
such option is at the time exercisable for vested shares of the
Corporation's Common Stock. If the Committee approves the exercise of
the Tandem Right, then the optionee shall become entitled to a
distribution from the Corporation ("Appreciation Distribution") equal
to the excess of (i) the fair market value (at date of exercise) of the
shares of the Corporation's Common Stock in which the optionee is at
the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate option price payable for such vested
shares.
(3) If the entire option is surrendered or if a portion of
the option is surrendered without a concurrent exercise of all or part
of the remainder, then the Appreciation Distribution to which the
optionee becomes entitled upon approval of the surrender by the
Committee shall be made in the form of shares of Common Stock or in
cash or in a combination of Common Stock and cash, as the Committee in
its sole discretion deems appropriate. For purposes of computing the
number of shares to be distributed, the Common Stock shall be valued at
fair market value on the date the option is surrendered.
(4) Should the optionee surrender the option in part for an
Appreciation Distribution and concurrently exercise the option in part
for Common Stock, then if the Committee approves the surrender, the
Appreciation Distribution on the surrendered portion of the option
shall be applied as a cash credit against the option price payable for
the Common Stock for which the option is exercised. If the
Appreciation Distribution exceeds the option price payable for the
purchased Common Stock, then the excess shall be distributed in
accordance with the terms and conditions of subsection B(3) above.
(5) The Tandem Right shall not be exercisable during the
initial six (6)-month period following the grant date, except to the
extent the instrument evidencing such right provides for exercisability
upon the optionee's death or permanent disability.
(6) If the holder of the Tandem Right (i) is at the time of
exercise considered an officer or director of the Corporation for
purposes of Section 16(b) of the Securities Exchange Act of 1934 or
(ii) was such an officer or director at any time during the six-month
period immediately preceding the date of exercise and made any purchase
or sale of Common Stock during such six-month period, then the Tandem
Right can only be exercised during the ten business day period
commencing on the third business day following public release of the
corporation's quarterly or annual summary statement of income and
earnings and ending on the twelfth business day following such release.
(7) If the exercise of a Tandem Right is disapproved by the
Committee, then the optionee shall retain whatever rights such
individual had under the surrendered option (or the surrendered portion
thereof) on the date of the surrender and may exercise such rights at
any time prior to the later of (a) the expiration of the 5 business-day
period following the date on which such individual receives
notification of the disapproval or (b) the last day on which the option
is otherwise exercisable, but in no event may such rights be exercised
at any time after ten (10) years after the date of the option grant.
(8) If the option was granted prior to January 1, 1987, such
option may be surrendered pursuant to the Tandem Right only to the
extent such option could at the date of surrender be exercised in
compliance with the "sequential exercise" rule of subsection V.6.
(9) The Tandem Right may not be transferred or assigned, and
the Tandem Right may not be exercised any time after the expiration or
sooner termination of the term of the option to which it relates.
-9-
<PAGE> 11
(10) No limitation shall exist on the aggregate amount of
cash payments the Corporation may make under the Plan in connection
with the exercise of Tandem Rights pursuant to this Article VIII.
C. The following provisions shall be in effect with respect to
any Limited Rights granted prior to the 1992 Annual Stockholder's Meeting:
(1) Limited Rights may be affixed to one or more pre-1992
options held by a Section 16(b) Insider, either at the time such
options are granted or at any time while they remain outstanding. Upon
the occurrence of a Change in Control (as such term is defined in
subsection VI.B), the Section 16(b) Insider may exercise each such
Limited Right by surrendering the underlying option to the Corporation,
to the extent such option (I) has been outstanding for at least six (6)
months and (II) is at the time exercisable for vested shares.
(2) In exchange for each option surrendered in accordance
with subparagraph (1) above, the Section 16(b) Insider shall receive an
Appreciation Distribution from the Corporation in an amount equal to
the excess of (i) the fair market value (on the date of surrender) of
the number of shares in which the Section 16(b) Insider is at the time
vested under the surrendered option over (ii) the aggregate option
price payable for such vested shares. For purposes of such
Appreciation Distribution, the fair market value per share of the
vested Common Stock subject to the surrendered option shall be deemed
to be equal to the Fair Market Value per share on the date of
surrender, as determined in accordance with the normal valuation
provisions of the Plan.
(3) The exercise of the Limited Right shall not require any
approval or consent of the Committee and the Appreciation Distribution
shall be made entirely in cash. The shares of Common Stock subject to
each surrendered option shall not be available for subsequent issuance
under this Plan.
D. The following provisions shall govern any Limited Rights
granted at or after the 1992 Annual Meeting:
(1) Limited Rights may, in the Committee's sole discretion,
be granted in tandem with one or more post-1991 options held by a
Section 16(b) Insider, either at the time such options are granted or
at any time while they remain outstanding. Upon the occurrence of a
Hostile Take-Over, each outstanding option with such a Limited Right in
effect for at least six (6) months shall automatically be canceled, to
the extent such option is at the time exercisable for vested shares of
Common Stock, and the Section 16(b) Insider shall in return be entitled
to a cash distribution from the Corporation in an amount equal to the
excess of (A) the Take-Over Price of the shares of Common Stock which
are at the time vested under the canceled option over (B) the aggregate
exercise price payable for such vested shares. The balance of the
option (if any) shall continue in full force and effect in accordance
with the instrument evidencing such grant.
(2) For purposes of subparagraph (1) above, the following
definitions shall be in effect:
A Hostile Take-Over shall be deemed to occur in the
event (i) any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of
securities possessing fifty percent (50%) or more of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept and (ii) more than fifty percent (50%) of
the securities
-10-
<PAGE> 12
so acquired in such tender or exchange offer are accepted from
holders other than officers and directors of the Corporation who
participate in the Plan.
The Take-Over Price per share shall be deemed to be
equal to the fair market value per share of Common Stock on the
date of cancellation, as determined pursuant to the valuation
provisions of Section V.1.D.
E. For purposes of this Section VIII, an individual shall be
considered to be a Section 16(b) Insider on any relevant date under the Plan if
such individual (A) is at the time an officer or director of the Corporation
subject to the short-swing profit restrictions of Section 16(b) of the
Securities Exchange Act of 1934 or (B) was such an officer or director at any
time during the six month period immediately preceding the date in question and
made any purchase or sale of Common Stock during such six-month period.
IX. LOANS OR GUARANTEE OF LOANS.
---------------------------
The Committee may assist any optionee (including an optionee who
is an officer or director of the Corporation) in the exercise of one or more
options under the Plan by (a) authorizing the extension of a loan to such
optionee from the Corporation, (b) permitting the optionee to pay the option
price for the purchased Common Stock in installments over a period of years or
(c) authorizing a guarantee by the Corporation of a third party loan to the
optionee. The terms of any loan, installment method of payment or guarantee
(including the interest rate and terms of repayment) will be established by the
Committee in its sole discretion. Loans, installment payments and guarantees
may be granted without security or collateral, but the maximum credit available
to the optionee shall not exceed the sum of (i) that portion of the aggregate
option price in excess of the amount determined to be capital pursuant to
Section 154 of the Delaware General Corporation Law plus (ii) any federal and
state income and employment tax liability incurred by the optionee in
connection with the exercise of the option.
X. AMENDMENT OF THE PLAN.
---------------------
(a) The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever;
provided, however, that no such amendment or modification shall, without the
consent of the holders, adversely affect rights and obligations with respect to
options at the time outstanding under the Plan; and provided, further, that the
Board shall not, without the approval of the Corporation's stockholders, (i)
materially increase the maximum number of shares issuable under the Plan,
except for permissible adjustments under subsection IV(c), (ii) materially
modify the eligibility requirements for the grant of options under the Plan or
(iii) otherwise materially increase the benefits accruing to participants under
the Plan.
(b) Notwithstanding the provisions of subsection X(a), the Board
hereby reserves the right to amend or modify the terms and provisions of the
Plan and of any outstanding options under the Plan to the extent necessary to
qualify any or all options under the Plan for such favorable federal income tax
treatment as may be afforded employee stock options under Section 422 of the
Code and regulations subsequently promulgated thereunder.
XI. EXTENSION OF EXERCISE PERIOD.
----------------------------
The Committee shall have full power and authority to extend the
period of time for which any option granted under this Plan is to remain
exercisable following the optionee's cessation of Employee status or death from
the limited period in effect under subsection V.3 to such greater period of
time as the
-11-
<PAGE> 13
committee shall deem appropriate; provided, however, that in no event shall
such option be exercisable after the specified expiration date of the option
term.
XII. EFFECTIVE DATE AND TERM OF PLAN.
-------------------------------
(a) The Plan was initially adopted by the Board on February 21,
1980 and restated in its entirety in February 1990 to extend its term to August
12, 1996. This amendment of the Plan (including the 600,000-share increase to
the number of the shares authorized for issuance hereunder) is effective upon
adoption by the Board on February 18, 1992, but no option granted on the basis
of the 600,000-share increase shall become exercisable unless and until such
share increase shall have been approved by the Corporation's stockholders. If
such stockholder approval is not obtained at the 1992 Annual Meeting, then any
options previously granted on the basis of the 600,000-share increase shall
terminate and no further options based on such share increase shall be granted.
Those options granted under the amended Plan which are not based on the
600,000-share increase shall remain outstanding in accordance with the terms
and conditions of the respective instruments evidencing such options, whether
or not the requisite stockholder approval of the amendment is obtained.
Subject to the foregoing limitations, the committee may grant options under the
amended Plan at any time after the effective date and before the date fixed
herein for termination of the Plan.
(b) All options and stock appreciation rights issued and
outstanding under the Plan immediately prior to the adoption of the February
18, 1992 amendment shall continue to be governed by the terms and conditions of
the Plan (and the instrument evidencing each such option and right) as in
effect on the date each such option or right was previously granted, and
nothing in the amendment shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such stock options or stock
appreciation rights with respect to their acquisition of shares of Common Stock
thereunder or the exercise of their outstanding stock appreciation rights.
However, the Committee may, in its discretion, modify any option or stock
appreciation right issued and outstanding under the Plan immediately prior to
adoption of this February 18, 1992 amendment to include one or more of the
provisions added to the Plan by such amendment.
(c) Unless sooner terminated in accordance with Article VI, the
Plan shall terminate upon the earlier of (i) August 12, 1996 or (ii) the date
on which all shares available for issuance under the Plan shall have been
issued or canceled pursuant to the exercise or surrender of options granted
hereunder. If the date of termination is determined under clause (i) above,
then options outstanding on such date shall not be affected by the termination
of the Plan and shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.
(d) Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance
under the Plan, provided (i) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such option and within one year thereafter such amendment is
approved by the Corporation's stockholders and (ii) each option so granted is
not to become exercisable, in whole or in part, at any time prior to the
obtaining of such stockholder approval.
XIII. USE OF PROCEEDS.
---------------
Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
XIV. WITHHOLDING.
-----------
-12-
<PAGE> 14
The Corporation's obligation to deliver shares upon the exercise
or surrender of any option granted under the Plan shall be subject to the
option holder's satisfaction of all applicable federal, state and local income
and employment tax withholding requirements.
XV. REGULATORY APPROVALS.
--------------------
The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it.
-13-
<PAGE> 1
Exhibit 99(b)
<PAGE> 2
ANTHEM ELECTRONICS
NON-QUALIFIED STOCK OPTION PLAN
-------------------------------
(As Restated and Amended Through February 18, 1992)
I. PURPOSES OF THE PLAN
--------------------
(a) This Non-Qualified Stock Option Plan (the "Plan") is intended
to promote the interests of Anthem Electronics, Inc., a Delaware corporation
("Corporation"), by providing a method whereby (i) employees of the Corporation
or its subsidiaries who are primarily responsible for the management, growth
and financial success of the Corporation and its subsidiaries and (ii)
non-employee directors of the Corporation who perform valuable services for the
Corporation and its subsidiaries may be offered incentives and rewards which
will encourage them to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation and continue to render services
to the Corporation or its subsidiaries.
(b) The Corporation intends that options granted under the Plan
be non-statutory options not intended to meet the requirements of Section 422
of the Internal Revenue Code (the "Code").
(c) For purposes of this Plan, each corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation shall be considered to be a subsidiary of the Corporation, provided
each such corporation other than the last corporation in the unbroken chain
owns, at the time of determination, stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN
--------------------------
(a) The Plan shall be administered by a committee (the
"Committee") of the Corporation's Board of Directors (the "Board"). The
Committee shall consist of not less than two (2) non-employee members of the
Board. Each member shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time.
(b) The Committee is authorized (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
the proper administration of the Plan and to make such determinations under,
and issue such interpretations of, the Plan and any outstanding option as it
may deem necessary or advisable. Decisions shall be final and binding on all
parties who have an interest in the Plan or any outstanding option.
(c) The Committee shall have the authority to make option grants
under the Plan to any and all eligible individuals (other than the non-employee
directors of the Corporation, who are only to receive automatic grants under
subsection III(b)). The Committee shall have complete discretion to determine
the number of shares to be covered by each such option, the time or times at
which such option is to become exercisable and the maximum term for which the
option is to remain outstanding.
III. ELIGIBILITY FOR OPTION GRANTS
-----------------------------
(a) The persons who shall be eligible to receive options pursuant
to this Plan are:
(i) such employees (including officers and
directors) of the Corporation or its subsidiaries as the Committee
shall from time to time select; and
(ii) such non-employee directors of the Corporation
as qualify for automatic option grants in accordance with the
provisions of subsection III(b).
<PAGE> 3
(b) Each individual who was on February 17, 1987 a non-employee
member of the Board was automatically granted on such date a non- statutory
option to purchase 2,000 shares of the Corporation's Common Stock. Any
individual who, after February 17, 1987 but prior to the 1988 Annual Meeting of
the Corporation's stockholders, (i) was elected to the Board, (ii) was not, at
the time of his assumption of office as such director, an employee of the
Corporation or any subsidiary and (iii) had not previously received an
automatic option grant under this subsection III(b) was upon assumption of such
office automatically granted an option under the Plan to purchase 2,000 shares
of the Corporation's Common Stock (subject to adjustment under subsection
IV(c)).
The terms and conditions applicable to each such automatic grant
shall be as follows:
(i) The option price per share shall be equal to
one hundred percent (100%) of the fair market value of one share of the
Corporation's Common Stock on the automatic grant date.
(ii) The option shall have a maximum term of ten
(10) years measured from the automatic grant date and shall be
immediately exercisable for all or any part of the covered shares;
provided, however, that none of the automatic grants may be exercised
prior to approval of the automatic grant program by the Corporation's
stockholders at the 1990 Annual Meeting.
(iii) Exercise of the option shall be effected by
written notice to the Corporation or its designate, and the option
price for the purchased shares shall become immediately due upon
exercise. Payment may be effected in cash or cash equivalent (such as
a personal check payable to the Corporation's order), in shares of
Common Stock held for a period of at least six (6) months or with any
other property that serves as valid consideration for issuance of the
Corporation's Common Stock under Delaware law. Payment of the option
price may also be effected through the broker-dealer sale and
remittance procedure (as described in subsection V.l.B(iv)).
(iv) The shares purchased under the option will be
subject to repurchase by the Corporation at the original exercise price
in the event the optionee ceases to be a member of the Board. The
repurchase right, however, will lapse, and the optionee will vest in
the purchased shares, in a series of five (5) equal annual
installments, beginning one year after the automatic grant date,
provided the optionee continues to serve as a member of the Board. In
addition, the Corporation's repurchase right shall lapse in its
entirety should one or more of the following events occur while the
optionee is a member of the Board: (A) the optionee's death, (B) the
optionee's permanent disability, (C) a stockholder-approved Corporate
Transaction as defined in subsection VI.A, or (D) a Change in Control
(as defined in subsection VI.B).
(v) For automatic grants effected prior to the
1992 Annual Stockholders Meeting, the following limited stock
appreciation right shall be available to the optionee:
In the event there should occur a Change in Control of the
Corporation (as such term is defined in subsection VI.B below),
then the optionee shall have the right, exercisable during the
thirty (30)-day period following the Change in Control, to
surrender each pre-1992 automatic grant which has been outstanding
with such right for at least six (6) months in exchange for a cash
payment from the Corporation in an amount equal to the excess of
(i) the Fair Market Value (on the date of such surrender) of the
shares of Common Stock purchasable under the surrendered option,
whether or not such shares are otherwise at the time vested, over
(ii) the aggregate option price payable for such shares. For
purposes of this paragraph (v), the Fair Market Value per share of
Common Stock subject to the surrendered option shall be deemed to
be equal to the greater of (a) the Fair Market Value per share on
the date of such surrender, as determined in accordance with the
normal valuation provisions of the Plan, or
-2-
<PAGE> 4
(b) the highest reported price per share paid by the acquiring
entity in effecting the Change in Control of the Corporation's
outstanding voting stock.
(vi) following limited stock appreciation right
shall be in effect for each automatic option grant made at or after the
1992 Annual Meeting:
Upon the occurrence of a Hostile Take-Over, each automatic option
grant effected at or after the 1992 Annual Stockholders Meeting
which has been outstanding under this subsection III(b) for a
period of at least six (6) months shall automatically be canceled
in return for a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to the canceled option
(whether or not such shares are otherwise at the time vested) over
(ii) the aggregate exercise price payable for such shares. The
cash distribution payable upon such cancellation shall be made
within five (5) days following the consummation of the Hostile
Take-over. Neither the approval of the Committee nor the consent
of the Board shall be required in connection with such option
cancellation and cash distribution. For purposes of this
subparagraph (vi), the following definitions shall be in effect:
A Hostile Take-Over shall be deemed to occur in the event (i)
any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the
Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934) of securities possessing more than
fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such
stockholders to accept and (ii) more than fifty percent (50%)
of the securities so acquired in such tender or exchange
offer are accepted from holders other than officers and
directors of the Corporation who participate in this Plan.
The Take-Over Price per share shall be deemed
to be equal to the greater of (a) the Fair Market Value per
share on the date of cancellation, as determined pursuant to
the valuation provisions of subsection V.1.C, or (b) the
highest reported price per share paid in effecting such
Hostile Take-Over.
The shares of Common Stock subject to any option surrendered or
canceled for an appreciation distribution pursuant to this subsection
(v) or (vi) shall not be available for subsequent option grants under
the Plan.
(vii) The remaining terms and conditions of the
option shall be as set forth in the prototype Non-Employee Director
Stock Option Agreement attached as Exhibit A to the Plan.
On the date of the 1988 Annual Meeting of the Corporation's
stockholders and on the date of each subsequent Annual Meeting, each individual
who is elected or re-elected at such Annual Meeting to serve as a non-employee
member of the Board (including any individual who may have already received one
or more automatic option grants under the Plan) shall automatically be granted
at such time an option under
-3-
<PAGE> 5
the Plan to purchase an additional 1,500 shares of the Corporation's Common
Stock (subject to adjustment under subsection IV(c)) upon the terms and
conditions specified above.
Except for the automatic option grants under this subsection
III(b), non-employee members of the Board shall not be eligible to receive any
additional option grants under this Plan.
IV. STOCK SUBJECT TO THE PLAN
-------------------------
(a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock. The number
of shares issuable in the aggregate over the term of this Plan and the
Corporation's Incentive Stock Option Plan (the "ISO Plan") shall not exceed
2,340,000*/ shares, subject to adjustment from time to time in accordance with
subsection IV(c) of the Plan. The maximum number of shares for which stock
appreciation rights may be granted under this Plan and the ISO Plan shall not
exceed 2,100,000**/ shares of Common Stock, subject to adjustment from time to
time in accordance with subsection IV(c) of the Plan.
(b) Should an option granted under this Plan or the ISO Plan be
terminated or canceled for any reason prior to exercise or surrender in full,
the shares subject to the portion of the option not so exercised or surrendered
shall be available for subsequent option grants under this Plan or the ISO
Plan. Shares subject to any option or portion thereof surrendered or canceled
in accordance with the stock appreciation rights provisions of this Plan and
shares repurchased by the Corporation pursuant to its repurchase rights under
this Plan shall not be available for subsequent option or stock appreciation
right grants under this Plan or the ISO Plan.
(c) In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made by the Committee to (A) the maximum
number and/or class of shares issuable in the aggregate under this Plan and the
ISO Plan, (B) the number of shares of Common Stock for which options may be
granted annually to each non- employee member of the Board pursuant to the
automatic grant provisions of subsection III(b), (C) the number and/or class of
shares and the option price per share of the stock subject to each outstanding
option, (D) the maximum number of shares for which stock appreciation rights
may be granted under this Plan and the ISO Plan and (E) the number of shares
and the base price or exercise price per share in effect under each outstanding
stock appreciation right. The adjustments determined by the Committee shall be
final, binding and conclusive.
V. TERMS AND CONDITIONS OF OPTIONS
-------------------------------
Options granted pursuant to the Plan (other than the automatic
option grants to non-employee directors under subsection III(b)) shall be
authorized by action of the Committee. Each granted option shall be evidenced
by an instrument in such form as the Committee shall from time to time approve;
provided, however, that each such instrument shall comply with and incorporate
the terms and conditions specified below.
1. Option Price.
------------
- ----------------------------------
* From and after February 18, 1992, not more than 2,940,000 shares may be
issued in the aggregate under both this Plan and the ISO Plan, assuming
stockholder approval of the 600,000-share increase is obtained at the
1992 Annual Meeting.
** From and after February 18, 1992, the maximum number of shares for
which stock appreciation rights may be granted under this Plan and the
ISO Plan shall not exceed 2,700,000 shares, assuming stockholder
approval of the 600,000-share increase is obtained at the 1992 Annual
Meeting.
-4-
<PAGE> 6
A. Except as otherwise provided in Article VI of the Plan,
the option price per share shall be fixed by the Committee, but in no
event shall the option price per share be less than eighty-five percent
(85%) of the fair market value per share of Common Stock on the date of
the option grant.
B. Exercise of the option shall be effected by written
notice to the Corporation or its designate, and the option price shall
become immediately due upon exercise. Payment of the option price
may, subject to the provisions of Article IX, be effected in one of the
alternative forms specified below:
(i) full payment in cash or cash equivalents;
(ii) full payment in shares of Common Stock held by
the optionee for at least six (6) months and having a fair market value
on the Exercise Date (as such term is defined below) equal to the
option price;
(iii) full payment in a combination of shares of
Common Stock held for at least six (6) months and valued at fair market
value on the Exercise Date and cash or cash equivalents;
(iv) payment effected through a broker-dealer sale
and remittance procedure pursuant to which the optionee (I) shall
provide irrevocable written instructions to the designated
broker-dealer to effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds available on the
settlement date, an amount equal to the aggregate Option Price payable
for the purchased shares plus all applicable Federal and State income
and employment taxes required to be withheld by the Corporation by
reason of such purchase and (II) shall provide written directives to
the Corporation to deliver the certificates for the purchased shares
directly to such broker-dealer; or
(v) payment with any other property acceptable to
the Committee which has a fair market value on the Exercise Date equal
to the option price and serves as valid consideration for the issuance
of the Corporation's Common Stock under Delaware law.
For purposes of this subsection B, the Exercise Date shall be the
first date on which there shall have been delivered to the Corporation: (i)
written notice of the exercise of the option and (ii) any representations by
the optionee the Corporation should determine are required by Federal and State
securities laws. Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the option price
for the purchased shares must accompany such notice.
C. The fair market value of a share of Common Stock on any
relevant date under subsection A or B above (and for all other
valuation purposes under the Plan) shall be determined in accordance
with the following provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any stock exchange but is traded in the
over-the-counter market, the fair market value shall be the mean
between the highest bid and lowest asked prices (or, if such
information is available, the closing selling price) of one share of
Common Stock on the day preceding the date in question in the
over-the-counter market, as such prices are reported by the National
Association of Securities Dealers through its NASDAQ system or any
successor system. If there are no reported bid and asked prices (or
closing selling price) for the Common Stock on such day, then the mean
between the highest bid and lowest asked prices (or closing selling
price) on the last preceding date for which such quotations exist shall
be determinative of fair market value.
-5-
<PAGE> 7
(ii) If the Common stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price of one share of Common Stock on the
day preceding the date in question on the stock exchange determined by
the Committee to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on such
exchange on such day, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such
quotation exists.
2. Term and Exercise of Options. Each option granted under the
Plan shall be exercisable at such time or times, during such period, and for
such number of shares as shall be determined by the Committee and set forth in
the instrument evidencing such option; provided, however, that no option
granted under this Plan shall have a term in excess of 15 years from the grant
date. During the lifetime of the optionee, the option shall be exercisable
only by the optionee and shall not be assignable or transferable by the
optionee otherwise than by will or by the laws of descent and distribution.
3. Effect of Termination of Employment.
-----------------------------------
A. Should an optionee cease to be an Employee of the
Corporation for any reason (including death or permanent disability as
defined in Section 22(e)(3) of the Code) while the holder of one or
more outstanding options granted to such optionee under the Plan, then
(except as otherwise provided pursuant to Article XI below) such option
or options shall in no event remain exercisable for more than a twelve
(12) month period (or such shorter period as is determined by the
Committee and set forth in the instrument evidencing the option)
following the date of such cessation of Employee status, and under no
circumstances shall any such option be exercisable after the specified
expiration date of the option term. Each such option shall, during
such twelve (12) month or shorter period, be exercisable only to the
extent of the number of shares (if any) for which the option is
exercisable on the date of such cessation of Employee status. Upon the
expiration of such twelve (12) month or shorter period or (if earlier)
upon the expiration of the option term, the option shall terminate and
cease to be exercisable.
B. If (i) the optionee's status as an Employee is
terminated for cause (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement or any
unauthorized disclosure or use of confidential information or trade
secrets) or (ii) the optionee makes or attempts to make any
unauthorized use or disclosure of confidential information or trade
secrets of the Corporation or any subsidiary, then in any such event
all outstanding options granted the optionee under the Plan shall
immediately terminate and cease to be exercisable.
C. Any option granted to an optionee under the Plan and
exercisable in whole or in part on the date of the optionee's death may
be subsequently exercised, but only to the extent of the number of
shares (if any) for which the option is exercisable on the date of the
optionee's death, by the personal representative of the optionee's
estate or by the person or persons to whom the option is transferred
pursuant to the optionee's will or in accordance with the laws of
descent and distribution, provided and only if such exercise occurs
prior to the earlier of (i) the first anniversary of the date of the
optionee's death or (ii) the specified expiration date of the option
term. Upon the occurrence of the earlier event, the option shall
terminate and cease to be exercisable.
D. The Committee shall have complete discretion,
exercisable either at the time the option is granted or at any time
while the option remains outstanding, to permit one or more options
held by the optionee under this subsection V.3 to be exercised, during
the limited period of exercisability provided under subsections V.3.A
and V.3.C above, not only with respect to the number of shares for
which each such option is exercisable at the time of the optionee's
cessation of Employee status but also with respect to one or more
subsequent installments of purchasable shares for which the option
would have otherwise become exercisable had such cessation of Employee
status not occurred.
-6-
<PAGE> 8
E. For purposes of the foregoing provisions of this
subsection V.3, the optionee shall be deemed to be an Employee of the
Corporation for so long as the optionee remains in the employ of the
Corporation or one or more of its subsidiaries.
4. Stockholder Rights. An option holder shall have none of the
rights of a stockholder with respect to any shares covered by the option until
such individual shall have exercised the option in accordance with the
provisions of the Plan and the option agreement evidencing the grant.
5. Repurchase Rights. The Committee may in its discretion
determine that it shall be a term and condition of one or more options granted
under the Plan (other than the automatic grants under subsection III(b)) that
the Corporation (or its assigns) shall have the right, exercisable upon the
optionee's cessation of Employee status, to repurchase at the original option
price any or all of the shares of Common Stock previously acquired by the
optionee upon the exercise of such option. Any such repurchase right shall be
exercisable by the Corporation (or its assigns) upon such terms and conditions
(including the establishment of the appropriate vesting schedule and other
provisions for the expiration of such right in one or more installments) as the
Committee may specify in the instrument evidencing such right. All of the
Corporation's outstanding repurchase rights shall automatically terminate, and
all shares subject to such terminated rights shall immediately vest in full,
upon the occurrence of any Corporate Transaction under Article VI, except to
the extent: (i) the Corporation's outstanding repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
the Corporate Transaction or (ii) such termination of repurchase rights and
acceleration of vesting are precluded by other limitations imposed by the
Committee at the time of the option grant. The Committee shall have the
discretionary authority, exercisable either before or after the optionee's
cessation of Employee status, to cancel the Corporation's outstanding
repurchase rights with respect to one or more shares subject to such rights and
thereby accelerate the vesting of such shares in whole or in part at any time.
VI. CORPORATE TRANSACTION/CHANGE IN CONTROL
---------------------------------------
A. In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the
Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the
Corporation is incorporated,
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation, or
(iii) any other corporate reorganization or business
combination in which fifty percent (50%) or more of the Corporation's
outstanding voting stock is transferred to different holders in a
single transaction or a series of related transactions,
then the exercisability of each option outstanding under the Plan shall be
automatically accelerated so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock
purchasable under such option and may be exercised for all or any portion of
such shares. However, an outstanding option under the Plan shall not be so
accelerated if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof or (ii) the
acceleration of such option is subject to other applicable limitations imposed
by the Committee at the time of grant. The determination of comparability
under clause (i) above shall be made by the Committee, and its determination
shall be final, binding and conclusive. The Committee shall have the
discretion, exercisable either in advance of any actually- anticipated
Corporate Transaction or at the time of an actual Corporate Transaction, to
provide (upon such terms and conditions as it may deem appropriate) for the
automatic acceleration of one or more outstanding options assumed or replaced
in the Corporate Transaction,
-7-
<PAGE> 9
in the event the optionee's employment should subsequently terminate within a
designated period following the effective date of such Corporate Transaction.
B. A change in control ("Change in Control") shall be deemed to
occur:
(i) should a person or related group of persons,
other than the Corporation or a person that directly or indirectly
controls, is controlled by or is under common control with the
Corporation, acquire ownership of twenty-five percent (25%) or more of
the Corporation's outstanding voting stock pursuant to a tender or
exchange offer which the Board does not recommend the shareholders of
the Corporation to accept; or
(ii) on the first date within any period of
twenty-four (24) consecutive months or less on which there is effected
a change in the composition of the Board such that a majority of the
Board members (rounded up to the next whole number) cease, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (A) have been members of the Board
continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time such election or nomination was
approved by the Board.
With respect to any such Change in Control, the Committee shall have full power
and authority, exercisable either in advance of any actually anticipated Change
in Control or at the time of an actual Change in Control, to provide for the
acceleration of each option outstanding under the Plan which is not then fully
exercisable so that each such option shall become fully exercisable as of the
Change in Control for the total number of shares at the time subject to such
option and may be exercised for all or any portion of such shares as fully
vested shares of Common Stock. The Committee shall also have full power and
authority to condition such option acceleration, and the termination of any of
the Corporation's repurchase rights with respect to any unvested shares
purchased or purchasable under such option, upon the subsequent termination of
the optionee's employment within a designated period following the Change in
Control.
C. Upon the consummation of a Corporate Transaction, all
outstanding options under the Plan shall, to the extent not previously
exercised or assumed by the successor corporation or its parent company,
terminate and cease to be outstanding. Upon a Change in Control, all
outstanding options accelerated pursuant to subsection VI.B above shall remain
fully exercisable until the expiration or sooner termination of the option term
specified in the instrument evidencing the option.
D. Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have
been issuable, in consummation of such Corporate Transaction, to an actual
holder of the same number of shares of Common Stock as are subject to such
option immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities shall remain the same.
In addition, the class and number of securities available for issuance under
the plan following the consummation of the Corporate Transaction shall be
appropriately adjusted.
E. Should the Corporation, in connection with any merger or
other business consolidation with, or any purchase or acquisition of the stock
or assets of another corporation, enter into an agreement with such other
corporation providing for the substitution of the Corporation's options for the
outstanding options of such other corporation upon the consummation of the
transaction, then the Committee shall have full power and authority to issue
new options under this Plan in substitution for one or more outstanding options
of the other corporation, subject, however, to the following special terms and
conditions:
-8-
<PAGE> 10
(i) The number of shares covered by each incentive
stock option of the other corporation (the "old option") and the price
per share payable thereunder will be appropriately adjusted to apply to
the number and class of securities of the Corporation which would be
issuable, in connection with the merger or other transaction, to an
actual holder of the same number of shares of stock of the other
corporation which are purchasable under the old option immediately
prior to such transaction, and the option issued hereunder in
substitution (the "new option") will be for such adjusted number of
shares exercisable at such adjusted option price, subject however to
the further limitations of clauses (ii), (iii) and (iv) below.
(ii) On a share-by-share basis, the ratio of the
option price to the fair market value of stock covered by the new
option immediately after the substitution will not be more than the
ratio of the option price to the fair market value of the stock covered
by the old option immediately prior to the substitution.
(iii) The excess of the aggregate fair market value
of the shares subject to the new option immediately after the
substitution over the aggregate option price payable for such shares
will not be more than the excess of the aggregate fair market value of
all shares subject to the old option immediately before such
substitution over the aggregate option price payable for such shares.
(iv) The new option will not give the option holder
any additional benefits not otherwise provided under the old option.
F. The grant of options under this Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
VII. CANCELLATION AND NEW GRANT OF OPTIONS
-------------------------------------
The Committee shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan (other than the
automatic option grants under subsection III(b)) and to grant in substitution
therefor new options under the Plan covering the same or different numbers of
shares of Common Stock but having an option price per share not less than
eighty-five percent (85%) of fair market value of the Common Stock on the new
grant date.
VIII. STOCK APPRECIATION RIGHTS
-------------------------
A. The Committee shall have full power and authority,
exercisable in its sole discretion, to grant to selected optionees stock
appreciation rights pertaining to all or part of the shares of Common Stock
subject to one or more of their option grants under the Plan.
B. Three types of stock appreciation rights shall be authorized
for issuance under the Plan:
(i) Tandem Stock Appreciation Rights which require
the optionee to elect between the exercise of the underlying option for
shares of Common stock or the surrender of such option for an
appreciation distribution equal to the excess of the fair market value
of the vested shares of Common stock purchasable under the surrendered
option and the aggregate option price payable for such vested shares.
(ii) Independent Stock Appreciation Rights which
are to be exercisable concurrently with (or within a period not to
exceed twelve (12) months following) the exercise of the underlying
option and without the surrender of all or part of such option. The
appreciation distribution to which the holder of such independent right
shall be entitled upon Committee approval of the exercise
-9-
<PAGE> 11
of such right shall be in an amount not to exceed the product of (I)
the number of shares of Common Stock covered by the exercised right and
(II) the lower of (A) the excess of the fair market value per share of
Common Stock on the date of exercise over the base price per share in
effect under the exercised right or (B) the ordinary income per share
recognized by the holder in connection with the exercise of the
underlying option for the same number of shares.
(iii) Limited Stock Appreciation Rights which will
result in the automatic cancellation of the underlying option upon a
Hostile Take-Over (as defined below) and will entitle the optionee to
receive in return an appreciation distribution from the Corporation
equal in amount to the excess of the Take-Over Price of the number of
shares in which the optionee is at the time vested under the canceled
option over the aggregate option price payable for such vested shares.
C. The terms and conditions applicable to each Tandem Stock
Appreciation Right ("Tandem Right"), Independent Stock Appreciation Right
("Independent Right") or Limited Stock Appreciation Right ("Limited Right")
shall be as follows:
1. Tandem Rights.
-------------
a. Except as specifically set forth in this subsection
VIII.C.l, Tandem Rights shall be subject to the same terms and conditions
applicable to stock option grants made pursuant to Article V of the Plan.
b. Tandem Rights may be granted at the same time the
underlying option is granted or at any time thereafter while such option
remains outstanding. The exercise of a Tandem Right shall be effective only if
approved by the Committee, which shall have sole discretion in the matter.
c. The Tandem Right shall be exercised by surrendering the
underlying option to the Corporation, in whole or in part to the extent such
option is at the time exercisable for vested shares of the Corporation's Common
Stock. If the Committee approves the exercise of the Tandem Right, then the
optionee shall become entitled to a distribution from the Corporation
("Appreciation Distribution") equal to the excess of (i) the fair market value
(at date of exercise) of the shares of the Corporation's Common Stock in which
the optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
d. If the entire option is surrendered or if a portion of
the option is surrendered without a concurrent exercise of all or part of the
remainder, then the Appreciation Distribution to which the optionee becomes
entitled upon approval of the surrender by the Committee shall be made in the
form of shares of Common Stock or in cash or in a combination of Common Stock
and cash, as the Committee in its sole discretion deems appropriate. For
purposes of computing the number of shares to be distributed, the Common Stock
shall be valued at fair market value on the date the option is surrendered.
e. Should the optionee surrender the option in part for an
Appreciation Distribution and concurrently exercise the option in part for
Common Stock, then if the Committee approves the surrender, the Appreciation
Distribution on the surrendered portion of the option shall be applied as a
cash credit against the option price payable for the Common Stock for which the
option is exercised. If the Appreciation Distribution exceeds the option price
payable for the purchased Common Stock, then the excess shall be distributed in
accordance with the terms and conditions of subparagraph C.1.d above.
2. Independent Rights.
------------------
a. Except as specifically set forth in this subsection
VIII.C.2, Independent Rights shall be subject to the same terms and conditions
applicable to stock option grants made pursuant to Article V of the Plan.
-10-
<PAGE> 12
b. Independent Rights may be granted at the same time the
underlying option is granted or at any time thereafter while such option
remains outstanding; provided, however, that in no event shall the number of
shares of Common Stock to which the Independent Right pertains exceed the
number of shares at the time subject to the underlying option. Independent
Rights shall be effective only if approved by the Committee, which shall have
sole discretion in the matter.
c. The base price in effect for measuring the Appreciation
Distribution payable with respect to each Independent Right granted under the
Plan shall be fixed by the Committee at the time of grant, but in no event
shall such base price be less than fifty percent (50%) of the fair market value
per share of Common Stock on the grant date of the Independent Right.
d. The Independent Right may be exercised either (i)
concurrently with the exercise of the underlying option or (ii) at any time
thereafter within a period not to exceed twelve (12) months, but in no event
after the specified expiration date of such right. The Committee shall
establish the exercise schedule to be in effect for each Independent Right at
the time of grant. The number of shares as to which the Independent Right may
in each instance be exercised shall not exceed in the aggregate the
corresponding number of shares for which the underlying option has been
exercised (either concurrently or within the preceding twelve (12)-month or
shorter period). If the Independent Right is not exercised within the
applicable exercise period, it shall terminate and cease to be exercisable with
respect to the particular shares as to which the Independent Right could have
been (but was not) exercised during such period.
e. The Appreciation Distribution to which the holder of the
Independent Right shall become entitled upon approval of the exercise by the
Committee shall not exceed in amount the product of (I) the number of shares as
to which such right is exercised and (II) the lower of (A) the excess of the
fair market value of one share of Common Stock on the date of exercise over the
base price per share in effect for the exercised right or (B) the ordinary
income per share recognized in connection with the exercise of the underlying
option for the same number of shares. The Committee shall, at the time of
grant, determine the specific percentage (not to exceed 100%) of such product
to be paid upon the subsequent exercise of the Independent Right.
f. Unless the instrument evidencing the Independent Right
specifies the particular method of payment, the Appreciation Distribution shall
be paid in cash, in shares of Common Stock (valued as of the date of exercise)
or in a combination of cash and Common Stock, as the Committee shall in its
sole discretion deem appropriate.
3. Terms Applicable to Both Tandem Rights and Independent
------------------------------------------------------
Rights.
- ------
a. Neither a Tandem Right nor an Independent Right shall be
exercisable during the initial six (6)-month period following the grant date,
except to the extent the instrument evidencing such right provides for
exercisability upon the optionee's death or permanent disability.
b. Neither a Tandem Right nor an Independent Right may be
transferred or assigned, nor may such right be exercised any time after the
expiration or sooner termination of the particular option to which it pertains.
c. If the holder of the Tandem or Independent Right (i) is at
the time of exercise considered an officer or director of the Corporation for
purposes of Section 16(b) of the Securities Exchange Act of 1934 or (ii) was
such an officer or director at any time during the six-month period immediately
preceding the date of exercise and made any purchase or sale of Common Stock
during such six-month period, then the right can only be exercised during the
so-called "window period" commencing on the third and ending on the twelfth
business day following the day on which the Corporation's quarterly or annual
summaries of income and earnings are released to the public.
-11-
<PAGE> 13
d. If the exercise of a Tandem Right is disapproved by the
Committee, then the optionee shall retain whatever rights such individual had
under the surrendered option (or the surrendered portion thereof) on the date
of the surrender and may exercise such rights at any time prior to the later of
(a) the expiration of the 5 business-day period following the date on which
such individual receives notification of the disapproval or (b) the last day on
which the option is otherwise exercisable, but in no event may such rights be
exercised at any time after fifteen (15) years after the date of the option
grant.
e. If the exercise of an Independent Right is disapproved by the
Committee, then such right shall terminate and cease to be exercisable with
respect to the particular shares of Common Stock for which such exercise is
disapproved.
f. No limitation shall exist on the aggregate amount of cash
payments the Corporation may make under the Plan in connection with the
exercise of Tandem Rights or Independent Rights pursuant to this Article VIII.
4. Limited Rights.
--------------
a. The following provisions shall be in effect with respect
to any Limited Rights granted prior to the 1992 Annual Stockholder's Meeting:
(i) Limited Rights may be affixed to one or more
pre-1992 options held by a Section 16(b) Insider, either at the time
such options are granted or at any time while they remain outstanding.
Upon the occurrence of a Change in Control (as such term is defined in
subsection VI.B), the Section 16(b) Insider may exercise each such
Limited Right by surrendering the underlying option to the Corporation,
to the extent such option (A) has been outstanding for at least six (6)
months and (B) is at the time exercisable for vested shares.
(ii) In exchange for each option surrendered in
accordance with clause (i) above, the Section 16(b) Insider shall
receive an Appreciation Distribution from the Corporation in an amount
equal to the excess of (A) the Fair Market Value (on the date of
surrender) of the number of shares in which the Section 16(b) Insider
is at the time vested under the surrendered option over (B) the
aggregate option price payable for such vested shares. For purposes of
such Appreciation Distribution, the Fair Market Value per share of the
vested Common Stock subject to the surrendered option shall be deemed
to be equal to the greater of (I) the Fair Market Value per share on
the date of surrender, as determined in accordance with the normal
valuation provisions of the Plan, or (II) the highest reported price
per share paid in acquiring ownership of the twenty-five percent (25%)
or greater interest in the Corporation's outstanding voting securities.
(iii) The exercise of the Limited Right shall not
require any approval or consent of the Committee, and the Appreciation
Distribution shall be made entirely in cash. The shares of Common
Stock subject to each surrendered option shall not be available for
subsequent issuance under this Plan.
b. The following provisions shall govern any Limited Rights
granted at or after the 1992 Annual Meeting:
(i) Limited Rights may, in the Committee's sole
discretion, be granted in tandem with one or more post-1991 options
held by a Section 16(b) Insider, either at the time such options are
granted or at any time while such options remain outstanding, be
granted Limited Rights in tandem with their outstanding options under
the Plan. Upon the occurrence of a Hostile Take- Over, each
outstanding option with such a Limited Right in effect for at least six
(6) months shall automatically be canceled, to the extent such option
is at the time exercisable for vested shares of Common Stock, and the
Section 16(b) Insider shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of
(A) the Take-Over Price of the shares of Common
-12-
<PAGE> 14
Stock which are at the time vested under the canceled option over (B)
the aggregate exercise price payable for such vested shares. The
balance of the option (if any) shall continue in full force and effect
in accordance with the instrument evidencing such grant.
(ii) The cash distribution payable upon such
cancellation shall be made within five (5) days following the
consummation of the Hostile Take-Over. Neither the approval of the
Committee nor the consent of the Board shall be required in connection
with such option cancellation and cash distribution.
(iii) For purposes of this subsection VIII.C.4, the
following definitions shall be in effect:
- A Hostile Take-Over shall be deemed to
occur in the event (i) any person or related group of persons
(other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing fifty percent
(50%) or more of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such
stockholders to accept and (ii) more than fifty percent (50%)
of the securities so acquired in such tender or exchange
offer are accepted from holders other than officers and
directors of the Corporation who participate in the Plan.
- The Take-Over Price per share shall be
deemed to be equal to the greater of (a) the fair market
value per share on the date of cancellation, as determined
pursuant to the valuation provisions of subsection V.l.C, or
(b) the highest reported price per share paid in effecting
such Hostile Take-Over.
c. For purposes of this subsection VIII.C., an individual
shall be considered to be a Section 16(b) Insider on any relevant date under
the Plan if such individual (A) is at the time an officer or director of the
Corporation subject to the short-swing profit restrictions of Section 16(b) of
the Securities Exchange Act of 1934 or (B) was such an officer or director at
any time during the six month period immediately preceding the date in question
and made any purchase or sale of Common Stock during such six-month period.
IX. LOANS OR GUARANTEE OF LOANS
---------------------------
The Committee may assist any optionee (including an optionee who
is an officer or director of the Corporation) in the exercise of one or more
options (other than the automatic grants) under the Plan by (a) authorizing the
extension of a loan to such optionee from the Corporation, (b) permitting the
optionee to pay the option price for the purchased Common Stock in installments
over a period of years or (c) authorizing a guarantee by the Corporation of a
third party loan to the optionee. The terms of any loan, installment method of
payment or guarantee (including the interest rate and terms of repayment) will
be established by the Board in its sole discretion. Loans, installment
payments and guarantees may be granted without security or collateral, but the
maximum credit available to the optionee shall not exceed the sum of (i) that
portion of the aggregate option price payable in excess of the amount
determined to be capital pursuant to Section 154 of the Delaware General
Corporate Law plus (ii) any federal and state income and employment tax
liability incurred by the optionee in connection with the exercise of the
option.
X. AMENDMENT OF THE PLAN
---------------------
(a) The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever;
provided, however, that no such amendment or modification shall, without the
consent of the holders, adversely affect rights and obligations with respect to
options at the time
-13-
<PAGE> 15
outstanding under the Plan; and provided, further, that the Board shall not,
without the approval of the Corporation's stockholders, (i) materially increase
the maximum number of shares issuable under the Plan, except for permissible
adjustments under subsection IV(b), (ii) materially modify the eligibility
requirements for the grant of options under the Plan or (iii) otherwise
materially increase the benefits accruing to participants under the Plan.
(b) The provisions of subsection III(b) under the Plan, including
any automatic option grants outstanding under such subsection, may not be
amended at intervals more frequently than once every six (6) months, other than
to the extent necessary to comply with applicable federal income tax laws and
regulations.
XI. EXTENSION OF EXERCISE PERIOD.
----------------------------
The Committee shall have full power and authority to extend the
period of time for which any option granted under this Plan is to remain
exercisable following the optionee's cessation of Employee status or death from
the limited period in effect under subsection V.3 to such greater period of
time as the Committee shall deem appropriate; provided, however, that in no
event shall such option be exercisable after the specified expiration date of
the option term.
XII. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
(a) The Plan was initially adopted by the Board on February 21,
1980 and restated in its entirety in February 1990 to extend its term to
January 15, 2000. This amendment of the Plan (including the 600,000-share
increase to the number of the shares authorized for issuance hereunder) is
effective immediately upon adoption by the Board on February 18, 1992, but no
option granted on the basis of the 600,000-share increase shall become
exercisable unless and until such share increase shall have been approved by
the Corporation's stockholders. If such stockholder approval is not obtained
at the 1992 Annual Meeting, then any options previously granted on the basis of
the 600,000-share increase shall terminate and no further options based on such
share increase shall be granted. Those options granted under the amended Plan
which are not based on the 6000,000-share increase shall remain outstanding in
accordance with the terms and conditions of the respective instruments
evidencing such options, whether or not the requisite stockholder approval of
the amendment is obtained. Subject to the foregoing limitations, the Committee
may grant options under the amended Plan at any time after the effective date
and before the date fixed herein for termination of the Plan.
(b) All options and stock appreciation rights issued and
outstanding under the Plan immediately prior to the adoption of the February
18, 1992 amendment shall continue to be governed by the terms and conditions of
the Plan (and the instrument evidencing each such option and right) as in
effect on the date each such option or right was previously granted, and
nothing in the amendment shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such stock options or stock
appreciation rights with respect to the acquisition of shares of Common Stock
thereunder or the exercise of their outstanding stock appreciation rights.
However, the Committee may, in its discretion, modify any option or stock
appreciation right issued and outstanding under the Plan immediately prior to
adoption of this February 18, 1992 amendment to include one or more of the
provisions added to the Plan by such amendment.
(c) Unless sooner terminated in accordance with Article VI, the
Plan shall terminate upon the earlier of (i) January 15, 2000, or (ii) the date
on which all shares available for issuance under the Plan shall have been
issued or canceled pursuant to the exercise, surrender or cash-out of options
granted hereunder. If the date of termination is determined under clause (i)
above, then options outstanding on such date shall not be affected by the
termination of the Plan and shall continue to have force and effect in
accordance with the provisions of the instruments evidencing such options.
-14-
<PAGE> 16
(d) Options may be granted under this Plan to purchase shares of
Common Stock in excess of the number of shares then available for issuance
under the Plan, provided (i) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such option and within one year thereafter such amendment is
approved by the Corporation's stockholders and (ii) each option so granted is
not to become exercisable, in whole or in part, at any time prior to the
obtaining of such stockholder approval.
XIII. USE OF PROCEEDS
---------------
Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
XIV. WITHHOLDING
-----------
The Corporation's obligation to deliver shares upon the exercise
or surrender of any option granted under the Plan shall be subject to the
option holder's satisfaction of all applicable federal, state and local income
and employment tax withholding requirements.
XV. REGULATORY APPROVALS
--------------------
The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock upon the exercise or surrender of any such
option shall be subject to the Corporation's procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan,
the options granted under it and the stock issued pursuant to it.
-15-
<PAGE> 17
EXHIBIT A
FORM OF AUTOMATIC OPTION GRANT
