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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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P A L L C O R P O R A T I O N
(Exact name of registrant as specified in its charter)
New York 11-1541330
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2200 Northern Boulevard
East Hills, New York 11548
(Address of Principal Executive Offices)
PALL CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
(Full title of the plan)
Mary Ann Bartlett, Secretary
Pall Corporation
2200 Northern Boulevard
East Hills, New York 11548
(Name and address of agent for service)
(516) 484-5400
(Telephone number, including area code, of agent for service)
----------------
Copy to:
CARTER, LEDYARD & MILBURN
2 Wall Street
New York, New York 10005-2072
Attention: Heywood Shelley, Esq.
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<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================================
Proposed Proposed Amount of
Title of securities Amount to be maximum offering maximum aggregate registration
to be registered registered price per share offering price fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.10 par value 4,000,000 shs. $23.75(1) $95,000,000(1) $26,410.00
Common Share
Purchase Rights 4,000,000 rights -- (2) -- (2) None
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to Rule 457(h) upon the basis of the average of the
high and low prices ($24 and $23 1/2 of a share of the Common Stock as
reported for New York Stock Exchange composite transactions on November 27,
1998. No options are currently outstanding under the Plan.
(2) Included in the offering price of the Common Stock being registered hereby.
Until the Distribution Date, as defined in the Rights Agreement providing
for the Common Share Purchase Rights, such Rights will be transferable only
with the Common Stock and will be evidenced by the certificates evidencing
the Common Stock.
- --------------------------------------------------------------------------------
This Registration Statement shall become effective immediately upon filing
as provided in Rule 462 under the Securities Act of 1933.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the following documents filed by it with the Commission (Commission
File No. 1-4311):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended August 1, 1998; and
(b) The descriptions of the Common Stock and the Common Share Purchase
Rights of the Registrant contained in the Registrant's Registration
Statements on Form 8-A, both dated September 10, 1992, for the registration
of the Common Stock and the Common Share Purchase Rights pursuant to
Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"),
and any updates of such descriptions contained in any registration
statement, report or amendment thereto of the Registrant hereafter filed
under the Exchange Act.
In addition, all documents subsequently filed by the Registrant pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered hereby have been sold, or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in and
made a part of this Registration Statement from the date of filing of such
documents.
Item 4. Description of Securities.
Not required.
Item 5. Interests of Named Experts and Counsel.
Carter, Ledyard & Milburn, counsel for the Registrant, has given the
opinion being filed as Exhibit 5 to this Registration Statement as to the
legality of the securities being registered hereby. Heywood Shelley, counsel to
Carter, Ledyard & Milburn, is a director of the Registrant and the owner of
12,000 shares of the Registrant's Common Stock. In addition, Mr. Shelley has
been granted options by the Registrant to purchase an additional 30,000 shares
of Common Stock and is eligible, as a non-employee director, to be granted
further options under the Stock Option Plan for Non-Employee Directors.
3
<PAGE>
Item 6. Indemnification of Directors and Officers.
Reference is made to Sections 721 through 725 of the Business Corporation
Law of the State of New York, the registrant's jurisdiction of incorporation,
which provides for indemnification of directors and officers under certain
circumstances.
Section 7.02 of the Registrant's Bylaws provides as follows:
"Indemnification. The Corporation shall indemnify any person made or
threatened to be made a party to any action or proceeding, whether civil or
criminal (and whether or not by or in the right of the corporation or of
any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise), by reason of the fact that such person, his testator or
intestate, is or was a director or officer of the corporation or served any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity at the request of the corporation, against
judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred as a result of
such action or proceeding, or any appeal therein, provided that (i) no
indemnification may be made to or on behalf of any person if a judgment or
other final adjudication adverse to such person establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that
he personally gained in fact a financial profit or other advantage to which
he was not legally entitled; (ii) no indemnification shall be required in
connection with the settlement of any pending or threatened action or
proceeding, or any other disposition thereof except a final adjudication,
unless the corporation has consented to such settlement or other
disposition, and (iii) the corporation shall not be obligated to indemnify
any person by reason of the adoption of this Section 7.02 if and to the
extent such person is entitled to be indemnified under a policy of
insurance as such policy would apply in the absence of the adoption of this
Section 7.02.
"Reasonable expenses, including attorneys' fees, incurred in defending
any action or proceeding, whether threatened or pending, shall be paid or
reimbursed by the corporation in advance of the final disposition thereof
upon receipt of an undertaking by or on behalf of the person seeking
indemnification to repay such amount to the corporation to the extent, if
any, such person is ultimately found not to be entitled to indemnification.
"Notwithstanding any other provision hereof, no amendment or repeal of
this Section 7.02, or any other corporate action or agreement which
prohibits or otherwise limits the right of any person to indemnification or
advancement or reimbursement of expenses hereunder, shall be effective as
to any person until the 60th day following notice to such person of such
action, and no such amendment or repeal or other corporate action or
agreement shall deprive any person of any right hereunder arising out of
any alleged or actual act or omission occurring prior to such 60th day.
4
<PAGE>
"The corporation is hereby authorized, but shall not be required, to
enter into agreements with any of its directors, officers or employees
providing for rights to indemnification and advancement and reimbursement
of reasonable expenses, including attorneys' fees, to the extent permitted
by law, but the corporation's failure to do so shall not in any manner
affect or limit the rights provided for by this Section 7.02 or otherwise.
"For purposes of this Section 7.02, the term 'the corporation' shall
include any legal successor to the corporation, including any corporation
which acquires all or substantially all of the assets of the corporation in
one or more transactions. For purposes of this Section 7.02, the
corporation shall be deemed to have requested a person to serve an employee
benefit plan where the performance by such person of his duties to the
corporation or any subsidiary thereof also imposes duties on, or otherwise
involves services by, such person to the plan or participants or
beneficiaries of the plan, and excise taxes assessed on a person with
respect to an employee benefit plan pursuant to applicable law shall be
considered fines.
"The rights granted pursuant to or provided by the foregoing
provisions of this Section 7.02 shall be in addition to and shall not be
exclusive of any other rights to indemnification and expenses to which any
such person may otherwise be entitled by law, contract or otherwise."
The Registrant has policies insuring its officers and directors against
certain civil liabilities, including liabilities under the Securities Act of
1933.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The index to exhibits appears on the page immediately following the
signature pages of this Registration Statement.
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:
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<PAGE>
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Exchange Act and incorporated herein by reference;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, unless the information required to be included in
such post-effective amendment is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Exchange Act and incorporated herein by reference;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this 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 herein, 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.
(d) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) 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 provisions described in Item 6 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange 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 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.
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<PAGE>
SIGNATURES
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 Village of East Hills, State of New York, on the 30th day of
November, 1998.
PALL CORPORATION
By: /s/Jeremy Hayward-Surry
-----------------------
Jeremy Hayward-Surry
President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Eric Krasnoff,
Jeremy Hayward-Surry and Mary Ann Bartlett, and each of them singly, his true
and lawful attorneys-in-fact with full power to execute in the name of such
person, in the capacities stated below, and to file, such one or more amendments
to this Registration Statement as the Registrant deems appropriate, and
generally to do all such things in the name and on behalf of such person, in the
capacities stated below, to enable the Registrant to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission thereunder, and hereby ratifies and confirms
the signature of such person as it may be signed by said attorneys-in-fact, or
any one of them, to any and all amendments to this Registration Statement.
-------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and the above power of attorney have been signed on
November 30, 1998, by the following persons in the capacities indicated.
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<PAGE>
Signature Title
--------- -----
/s/Eric Krasnoff
- ---------------- Chairman and Chief Executive
Eric Krasnoff Officer (Principal Executive
Officer) and Director
/s/John Adamovich
- ----------------- Chief Financial Officer,
John Adamovich Group Vice President and Treasurer
(Principal Financial Officer)
/s/Viraj Patel
- -------------- Chief Corporate Accountant
Viraj Patel (Principal Accounting Officer)
/s/Abraham Appel
- ---------------- Director
Abraham Appel
/s/John H.F. Haskell, Jr.
- ------------------------- Director
John H.F. Haskell, Jr.
/s/Ulric Haynes, Jr.
- -------------------- Director
Ulric Haynes, Jr.
/s/Jeremy Hayward-Surry
- ----------------------- Director
Jeremy Hayward-Surry
8
<PAGE>
Signature Title
--------- -----
/s/Edwin W. Martin, Jr.
- -----------------------
Edwin W. Martin, Jr. Director
/s/Katharine L. Plourde
- ----------------------- Director
Katharine L. Plourde
/s/Chesterfield F. Seibert
- -------------------------- Director
Chesterfield F. Seibert
/s/Heywood Shelley
- ------------------ Director
Heywood Shelley
/s/Alan B. Slifka
- ----------------- Director
Alan B. Slifka
/s/James D. Watson
- ------------------ Director
James D. Watson
9
<PAGE>
EXHIBIT INDEX
Exhibit No.
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(4)* Rights Agreement dated as of November 17, 1989,
between the Registrant and United States Trust Company
of New York, as Rights Agent, filed as Exhibit I to
the Registrant's Registration Statement on Form 8-A
(File No. 1-4311) dated September 10, 1992, for the
registration of the Common Share Purchase Rights
pursuant to Section 12(b) of the Securities Exchange
Act of 1934
(5) Opinion of Carter, Ledyard & Milburn
(23)(a) Consent of Carter, Ledyard & Milburn
(included in Exhibit 5)
(23)(b) Consent of KPMG Peat Marwick LLP
(24) Powers of Attorney (included in the signature page of
this Registration Statement)
(99) Pall Corporation 1998 Employee Stock Option Plan
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* Incorporated herein by reference.
10
E X H I B I T 5
<PAGE>
CARTER, LEDYARD & MILBURN
Counsellors at Law
2 Wall Street
New York, New York 10005
---------
(212) 732-3200
Fax (212) 732-3232
December 3, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pall Corporation
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Ladies and Gentlemen:
We have acted as counsel for Pall Corporation, a New York corporation (the
"Corporation"), in connection with the adoption of its 1998 Employee Stock
Option Plan (the "Plan"). The Plan provides for the sale upon the exercise of
options of up to an aggregate of 4,000,000 shares (the "Shares") of the Common
Stock, $.10 par value per share, of the Corporation (the "Common Stock") and up
to an aggregate of 4,000,000 Common Share Purchase Rights (the "Rights"). The
Shares may be either authorized but unissued or reacquired shares. Each Right
will be issued in connection with the issuance of one of the Shares and, prior
to the Distribution Date (as defined in the Rights Agreement providing for the
Rights), will be transferable with and only with, and will be evidenced by the
certificate evidencing, such Share.
We have examined the originals, or copies certified or otherwise identified
to our satisfaction, of such corporate records and such other documents as we
have deemed relevant as a basis for our opinion hereinafter expressed.
Based on the foregoing, we are of the opinion that up to 4,000,000
previously unissued Shares and Rights which may be the subject of options under
the Plan, when paid for in accordance with the terms of the Plan and the options
granted thereunder, will be legally issued, and such Shares will be fully-paid
and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Corporation's Form S-8 Registration Statement for the Shares and Rights.
Very truly yours,
/s/CARTER, LEDYARD & MILBURN
HS:lrh
2
E X H I B I T 23(b)
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Pall Corporation:
We consent to the incorporation by reference, in the Registration Statement
on Form S-8 of Pall Corporation relating to 4,000,000 shares of its common stock
and 4,000,000 of its common share purchase rights authorized for issuance under
its 1998 Employee Stock Option Plan, of our reports dated September 2, 1998 with
respect to the consolidated balance sheets of Pall Corporation and its
subsidiaries as of August 1, 1998, and August 2, 1997, and the related
consolidated statements of earnings, stockholders' equity and cash flows and
related schedule for each of the years in the three-year period ended August 1,
1998, which reports are incorporated by reference or appear in the annual report
on Form 10-K of Pall Corporation for the fiscal year ended August 1, 1998.
/s/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Melville, New York
December 1, 1998
E X H I B I T 99
<PAGE>
PALL CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
Pall Corporation (the "Company"), in order to retain and attract personnel
for positions of responsibility with the Company and its subsidiaries and to
provide additional incentive to such personnel by offering them an opportunity
to obtain a proprietary interest in the Company, hereby authorizes options to be
granted to "executive officers" and "eligible employees" (as those terms are
hereinafter defined) of the Company and its subsidiaries to purchase shares of
Common Stock of the Company ("shares") upon the terms and conditions described
below in this Pall Corporation 1998 Employee Stock Option Plan (the "Plan").
1. Administration of the Plan. The Plan shall be administered, and the
options under the Plan shall be granted, by the Compensation Committee of the
Company as from time to time constituted (the "Committee"). The Committee shall
consist of three members of the Board of Directors who are appointed by the
Board and are (i) "Non-Employee Directors" as defined in Rule 16b-3 of the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934 (the "Exchange Act") or any successor regulation, and (ii)
"outside directors" as defined in the regulations of the Internal Revenue
Service under Section 162(m) of the Internal Revenue Code of 1986 as amended
(the "Code"). The members of the Committee shall serve, without compensation, at
the pleasure of the Board. Subject to the provisions of the Plan, the Committee
shall be authorized to interpret the Plan and the options granted under the
Plan, to establish, amend and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of the options described in Section
4 hereof, and to make all other decisions necessary or advisable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option in the
manner and to the extent the Committee deems desirable to carry it into effect.
Any decision of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive. The Committee may act only by a majority
of its members in office, except that the members thereof may authorize any one
or more of their number or any officer of the Company to execute and deliver
documents on behalf of the Committee. No member of the Committee shall be liable
for anything done or omitted to be done by him or her or by any other member of
the Committee in connection with the Plan, except for his or her own willful
misconduct or as expressly provided by statute.
2. Number of Shares Subject to Option. The aggregate number of shares which
may be issued under the Plan is four million (4,000,000) shares of Common Stock
of the Company. Such shares may be either authorized but unissued or reacquired
shares. If after July 7, 1998 the Company effects one or more stock splits,
stock dividends, combinations, exchanges of shares or similar capital
adjustments, the number and kind of shares with respect to which options may be
granted under the Plan, the number of shares which may be granted to any
individual as limited by Section 3 hereof, the number and kind of shares subject
to each outstanding option and the option price per share under each such option
shall be proportionately and appropriately adjusted by the
<PAGE>
Committee. If any option granted under the Plan, or any portion thereof, shall
expire or terminate for any reason without having been exercised in full, the
shares with respect to which it has not been exercised shall be available for
further options under the Plan.
With respect to incentive stock options granted under this Plan and under
all stock option plans of the Company and its parent and subsidiary
corporations, the aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which such incentive stock options are
exercisable for the first time by the optionee during any calendar year shall
not exceed $100,000.
3. Eligible Optionees. Options may be granted only (a) to executive
officers of the Company as that term is defined in Rule 405 of the Securities
and Exchange Commission under the Securities Act of 1933 as amended (the
"Securities Act") or successor regulation ("executive officers"), and (b) to
other employees (including officers) of the Company and of such other
corporations as are subsidiary corporations of the Company at the time of grant
who, in the judgment of the Committee, are in a position to contribute
significantly to the Company's success ("eligible employees"). The Committee is
hereby given the authority to select the particular executive officers and
eligible employees to whom options under the Plan are to be granted, to
determine the number of shares to be optioned to each such executive officer and
eligible employee (except that options may not be granted under this Plan to any
individual during any period of 24 consecutive months on more than an aggregate
of 300,000 shares, subject to adjustment in accordance with the third sentence
of Section 2 hereof) and to grant one or more options under the Plan to any such
executive officer or eligible employee from time to time, irrespective of
whether one or more options have been granted to such individual under previous
stock option plans of the Company. In exercising its authority under the
foregoing provisions of this paragraph, each member of the Committee, as
authorized by ss.717(a) of the New York Business Corporation Law, shall be
entitled to rely on information, opinions, reports and statements prepared or
presented by (i) one or more officers of the Company or any subsidiary of the
Company whom the member believes to be reliable and competent in the matters
presented or (ii) counsel, public accountants or other persons as to matters
which the member believes to be within such person's professional or expert
competence. Nothing in the Plan or in any option granted under the Plan shall
confer any rights on any officer or other employee to continue in the employ of
the Company or any of its subsidiary corporations or shall interfere in any way
with the right of the Company or any of its subsidiary corporations, as the case
may be, to terminate his or her employment at any time.
4. Terms of Options. Options granted under the Plan may be "incentive stock
options" meeting the requirements for such options prescribed by Section 422 of
the Code, or may be options not so qualifying as incentive stock options
("nonqualified options"). The determination as to whether or not an option
granted under the Plan is intended to be an incentive stock option shall be made
by the Committee.
2
<PAGE>
Each option granted under the Plan shall comply with the following terms
and conditions:
(a) The option price shall be the fair market value of the shares
subject to the option at the time the option is granted. Fair market value
shall be as determined in good faith by the Committee. In no event shall
the option price be less than the par value of the shares.
(b) The option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be
exercisable during his or her lifetime only by him or her except that, at
the discretion of the Committee, a nonqualified option may provide that the
option is transferable to any "family member" of the optionee, as the term
"family member" is defined in the General Instructions to Form S-8
promulgated by the Commission under the Securities Act.
(c) An option shall not be exercisable
(i) after the expiration of ten years from the date it is
granted (the "date of grant"); and
(ii) unless counsel for the Company shall be satisfied that the
issuance of shares upon exercise will be in compliance with
the Securities Act and applicable state laws; and
(iii)unless written notice of exercise, in form satisfactory to
the Committee, is given to the Company; and
(iv) unless the optionee has been, at all times during the period
beginning with the date of grant of an option and ending on
the date of exercise thereof, an employee of the Company or
of one of its subsidiary corporations, or of a corporation
or a parent or subsidiary of a corporation assuming the
option in a transaction to which Section 424(a) of the Code
applies, except that
(A) if the optionee shall cease to be an employee by reason
of his or her disability or by reason of his or her
retirement under an approved retirement program of the
Company or a subsidiary thereof while holding an option
which has not expired and has not been fully exercised,
the option shall remain in full force and effect and
may be exercised in accordance with its terms until it
expires by its terms by the passage of time or is
canceled or terminated in accordance with its terms (it
being understood, however, that incentive stock option
federal income tax treatment will not be
3
<PAGE>
accorded with respect to an option exercise made more
than three months after the optionee ceased to be an
employee by reason of such retirement or one year after
he ceased to be an employee by reason of disability
within the meaning of Section 22(e)(3) of the Code or
successor section); and
(B) if any person to whom an option has been granted shall
die holding an option which has not been fully
exercised, his or her estate or any person who acquired
the right to exercise the option by bequest or
inheritance or by reason of the death of such person
may, at any time within one year after the date of such
death (but in no event after the option has expired by
its terms by the passage of time or has been canceled
or terminated in accordance with its terms) exercise
the option with respect to any shares as to which the
decedent could have exercised the option at the time of
his or her death; and
(v) unless the person exercising the option makes payment to the
Company in full in United States dollars by cash or check of
such amount as is sufficient to satisfy the Company's
obligation, if any, to withhold federal, state and local
taxes by reason of such exercise or makes such other
arrangement satisfactory to the Committee as will enable the
Company to satisfy such obligation.
(d) Each option granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to
time in accordance with the Plan and all applicable laws and
regulations and shall be subject to such terms and conditions relating
to the time at which the option may first be exercised and the number
of shares with respect to which it may thereafter be exercised from
time to time (for example, in cumulative annual or other periodic
installments), and to such additional terms and conditions not
inconsistent with the Plan or applicable laws and regulations, as the
Committee may in its discretion determine. Each nonqualified option
granted under the Plan shall state that it is not to be treated as an
incentive stock option. Each option granted under the Plan shall
require that the person exercising the option shall, at the time
notice of exercise is given pursuant to Section 4(c)(iii) hereof, make
full payment in United States dollars by cash or check of the option
exercise price of the shares being acquired except that, at the
election of the Committee, an option may provide that, at the time
notice of exercise is given pursuant to Section 4(c)(iii) hereof, the
person exercising the option, at his or her election, shall either
make full payment in United States dollars by cash or check of the
option exercise price of the shares being acquired (sometimes
hereafter called the "purchase price") or agree to pay such purchase
price on an installment payment basis on the following terms and
conditions:
4
<PAGE>
(i) The installments payable shall be the minimum amounts
required to be paid by Section 221.4(b) of Regulation U of
the Board of Governors of the Federal Reserve System as in
effect as of the date of exercise of the option (hereinafter
"Regulation U") or such greater installment payments as the
Committee may prescribe.
(ii) The person exercising the option shall not be required to
pay interest to the Company on the unpaid balance of the
purchase price.
(iii)The unpaid balance of the purchase price shall be
immediately payable in full upon demand made by the Company
to the optionee (or to the successor owner of the stock if
the optionee has died).
(iv) The shares for which the option is exercised shall be issued
to and registered in the name of the person exercising the
option but shall be endorsed by the person exercising the
option in blank (either on the certificate or on a separate
stock power) and held by the Company as collateral security
for the unpaid balance of the purchase price. The person
exercising the option shall not be permitted to sell, with
draw, pledge or otherwise dispose of all or any part of such
collateral except at a time when such sale, withdrawal,
pledge or other disposition is permitted by Regulation U.
Subject to compliance with the immediately preceding
sentence, the person exercising the option shall have the
right at any time and from time to time to withdraw part or
all of the shares from the collateral so held by the Company
upon payment of the unpaid balance of the purchase price of
the shares withdrawn. For purposes of determining such
unpaid balance, each payment made otherwise than to obtain
withdrawal of shares under the immediately preceding
sentence shall be applied pro rata to all shares which at
the time of such payment are held by the Company as
collateral for the payment of the purchase price by the
person exercising the option. Upon default by the person
exercising the option in the making of any payment due under
the foregoing provisions of this subparagraph (d), the
Company shall have with respect to the collateral all of the
rights of a secured party under the Uniform Commercial Code
as in effect in the State of New York.
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(E) The person exercising an option shall be entitled, from
the date of exercise of such option, to all of the
rights of a shareholder, including the right to vote
the shares and to receive and retain all dividends paid
thereon.
(e) The Committee is authorized in its discretion and with the consent
of the optionee to make amendments, not in conflict with the Plan or any
applicable law or regulation, in the terms of any option granted under the
Plan.
(f) In addition to the methods of payment of the option exercise price
authorized by subparagraph (d) next above, the option may provide that the
person exercising the option, at his or her election, shall have the right
to make payment at the time of exercise by delivering to the Company shares
of Common Stock of the Company having a total fair market value equal to
the option exercise price, or a combination of cash and such shares having
a total fair market value equal to the option exercise price, provided,
however, that all shares so delivered must have been beneficially owned by
the person exercising the option for at least six months prior to the
option exercise date and, upon request, the Company shall be given
satisfactory proof of such beneficial ownership. For the purposes of the
preceding sentence, the fair market value of a share of Common Stock shall
be the mean between the high and low sale prices of the Common Stock on the
trading day preceding the option exercise date as such prices are reported
by and for the New York Stock Exchange, Inc. Composite Transactions.
Certificates representing shares delivered to the Company pursuant to this
paragraph shall be duly endorsed or accompanied by appropriate stock
powers, in either case with signature guaranteed if so required by the
Company.
5. Change in Control.
(a) In the event of a "Change in Control" of the Company (as defined
in paragraph (b) below), options outstanding under the Plan on the day
preceding the date on which the Change in Control occurs (x) shall become
exercisable in full on the date of the Change in Control (i.e., to the
extent that any such option or portion thereof is not yet exercisable, the
right to exercise such option in full shall be accelerated) and (y) shall
remain fully exercisable, irrespective of whether the optionee ceases to be
an employee of the Company or a subsidiary, until the date on which the
option would otherwise expire by its terms by the passage of time.
(b) A "Change in Control" for purposes of the Plan shall mean the
occurrence of any of the following:
(i) the "Distribution Date" as defined in Section 3 of the
Rights Agreement dated as of November 17, 1989 between the
Company
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and United States Trust Company of New York, as Rights Agent
as the same may have been amended or extended to the time in
question or in any successor agreement (the "Rights
Agreement"); or
(ii) any event described in Section 11(a)(ii)(B) of the Rights
Agreement; or
(iii)any event described in Section 13 of the Rights Agreement,
or
(iv) the date on which the number of duly elected and qualified
directors of the Company who were not either elected by the
Company's Board of Directors or nominated by the Board of
Directors or its Nominating Committee for election by the
share holders shall equal or exceed one-third of the total
number of directors of the Company as fixed by its by-laws;
provided, however, that no Change in Control shall be deemed to
have occurred, and no rights arising upon a Change in Control
pursuant to paragraph (a) of this Section 5 shall exist, to the
extent that the Board of Directors of the Company so determines
by resolution adopted prior to the Change in Control. Any such
resolution may be rescinded or countermanded by the Board at any
time. If the Board so determines by such resolution, and such
resolution has not been rescinded or countermanded as permitted
by the preceding sentence, the Board shall have the right to
authorize (I) the cancellation and termination of all options
then outstanding as of a date to be fixed by the Board, provided,
however, that not less than 30 days written notice of the date so
fixed shall be given to each optionee, and each optionee shall
have the right during such period (irrespective of whether the
optionee ceases to be an employee of the Company or a subsidiary
during such period) to exercise his or her option as to all or
any part of the shares covered thereby, including any shares as
to which the option has not yet become exercisable, or (II) the
substitution for each outstanding option of a new option meeting
the requirements of Section 424(a) of the Code.
6. Interpretation. The words "employee", "own", "outstanding" and
"disposition", the term "subsidiary corporation" and any other words or terms
used in the Plan or in the options granted under the Plan which are defined or
used in Section 422 or 424 of the Code shall, unless the context clearly
requires otherwise, have the meanings assigned to them therein, irrespective of
whether or not such options are incentive stock options.
7. Reports and Returns. The appropriate officers of the Company shall cause
to be filed, or furnished to all employees to whom options have been granted,
any reports, returns or other information regarding the options granted
hereunder or any shares issued pursuant to the exercise thereof as may be
required by the Code, the Securities Act, the Exchange Act, the
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Employee Retirement Income Security Act of 1974, Regulation U or any other
applicable statute, rule or regulation, as any such statute, rule or regulation
has been amended to the time in question.
8. Amendment. The Plan may be amended at any time and from time to time by
the Board of Directors of the Company, but no amendment increasing the aggregate
number of shares which may be issued under options granted pursuant to the Plan
or affecting this sentence shall be effective unless the same be approved by the
shareholders of the Company not later than the date 12 months after the Board
adopts the amendment. No amendment of the Plan shall alter or impair any of the
rights or obligations of any person, without his or her consent, under any
option theretofore granted under the Plan.
9. Termination. The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board of Directors of the
Company terminating the Plan; or
(b) July 6, 2008.
No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his or her consent, under any option
theretofore granted under the Plan.
10. Shareholder Approval. The Plan shall be submitted to the shareholders
of the Company for their approval before July 7, 1999. No option granted
hereunder shall be exercisable until such approval has been obtained. If the
shareholders do not approve the Plan before July 7, 1999, the Plan shall
terminate and any options theretofore granted hereunder shall there upon be void
without further action of the Company. The shareholders shall be deemed to have
approved the Plan only if it is approved at a meeting of the shareholders duly
held before July 7, 1999, by vote taken in the manner required by the laws of
the State of New York.
[Note: This Plan was adopted by the
Board of Directors on July 7, 1998
and approved by shareholders at the
annual meeting on November 19, 1998]
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