<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 2, 1996
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALASKA AIR GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 91-1292054
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
19300 PACIFIC HIGHWAY SOUTH
SEATTLE, WASHINGTON 98188
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
ALASKA AIR GROUP, INC.
1996 LONG-TERM INCENTIVE EQUITY PLAN
(FULL TITLE OF THE PLAN)
STEVEN G. HAMILTON
VICE PRESIDENT/LEGAL AND GENERAL COUNSEL
ALASKA AIR GROUP, INC.
19300 PACIFIC HIGHWAY SOUTH
SEATTLE, WASHINGTON 98188
(206) 433-3131
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
STEPHEN A. MCKEON
PERKINS COIE
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SECURITIES NUMBER TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SHARE(1) PRICE(1)
<S> <C> <C> <C> <C>
Common Stock, par value 670,000
$1.00 per share(2) Shares(3) $23.625 $15,828,750 $5,459
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the amount of the registration fee. The price per share is estimated to
be $23.625 based on the average of the high ($24.125) and low ($23.125)
sales prices for the Common Stock on July 31, 1996, as reported by the
New York Stock Exchange.
(2) Includes rights to purchase Series A Participating Preferred Stock
associated with the Common Stock.
(3) Together with an indeterminate number of additional shares that may be
necessary to adjust the number of shares reserved for issuance pursuant
to the 1996 Long-Term Incentive Equity Plan as the result of any future
stock dividend, stock split, spin-off, combination or exchange of
shares, recapitalization, merger, consolidation, distribution to
stockholders other than a normal cash dividend, or similar adjustment
of the Registrant's outstanding Common Stock.
<PAGE> 2
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 filed with the Securities and Exchange Commission (the
"Commission"), which contains certified financial statements for the most recent
fiscal year for which such statements have been filed;
(b) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since the end of the fiscal year covered by the Annual Report
referred to in (a) above; and
(c) The description of the Registrant's Common Stock contained
in the Registrant's Registration Statement on Form 8-A filed with the Commission
on September 19, 1985 (Registration No. 1-8957), under Section 12(b) of the
Exchange Act, including any amendments or reports filed for the purpose of
updating such description.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment, which indicates that the securities
offered hereby have been sold or which deregisters the securities covered hereby
then remaining unsold, shall also be deemed to be incorporated by reference into
this Registration Statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his or her conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted under similar standards,
except that no indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine that despite the
II-1
<PAGE> 3
adjudication of liability, such person is fairly and reasonably entitled to
be indemnified for such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director
or officer of a Delaware corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections 145(a) and (b) or in the
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses actually and reasonably incurred by such person in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation may purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
such person or incurred by him or her in any such capacity or arising out of his
or her status as such whether or not the corporation would have the power to
indemnify such person against such liabilities under Section 145.
Article VIII of the Registrant's By-Laws requires indemnification to
the full extent permitted by the DGCL or other applicable law. Subject to any
restrictions imposed by such law, the By-Laws provide a right to indemnification
for all expense, liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts to be paid in settlement)
actually and reasonably incurred or suffered by the indemnitee in connection
with any actual or threatened action, suit or proceeding by reason of the fact
that such person is or was a director or officer of the Registrant or, being or
having been such a director, officer or an employee of the Registrant, he or she
is or was serving at the request of the Registrant as a director, officer,
employee or agent of another corporation or other entity. The By-Laws also
provide that, by action of its Board of Directors, the Registrant may approve
indemnification of any other person whom it has the power to indemnify under
DGCL.
Section 102(b)(7) of the DGCL provides that a corporation in its
original certificate of incorporation or an amendment thereto validly approved
by stockholders may eliminate or limit personal liability of members of its
board of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase that was illegal or obtaining an improper personal
benefit. A provision of this type has no effect on the availability of equitable
remedies, such as injunction or rescission, for breach of fiduciary duty. The
Registrant's Certificate of Incorporation contains such a provision.
The Registrant's officers and directors are covered by insurance (with
certain exceptions and with certain limitations) which indemnifies them against
losses and liabilities arising from certain alleged "wrongful acts," including
alleged errors or misstatements, or certain other alleged wrongful acts or
omissions constituting neglect or breach of duty.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being
registered
23.1 Consent of Arthur Andersen LLP
</TABLE>
II-2
<PAGE> 4
<TABLE>
<S> <C> <C>
23.2 Consent of Perkins Coie (included in opinion filed as Exhibit 5.1)
24.1 Powers of Attorney (see page II-5)
99.1 Alaska Air Group, Inc. 1996 Long-Term Incentive Equity Plan
</TABLE>
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) 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;
(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 thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(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;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(3) 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.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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 of controlling person of the Registrant in the
successful defense of
II-3
<PAGE> 5
any action, suit or proceeding) is asserted by such director, officer of
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 Securities Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Seattle, State of Washington, on the 31st day of
July, 1996.
ALASKA AIR GROUP, INC.
By /s/ John F. Kelly
-----------------------------------------------
John F. Kelly
Chairman of the Board, Chief Executive Officer and
President
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
John F. Kelly and Harry G. Lehr and each of them as his or her attorney-in-fact,
with full power of substitution, to execute in the name and on behalf of such
person, individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments, with the Securities and Exchange Commission or any regulatory
authority.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the 31st day of July, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/John F. Kelly Chairman of the Board, Chief Executive Officer and President
--------------------------
John F. Kelly (Principal Executive Officer)
/s/ Harry G. Lehr Senior Vice President/Finance (Principal Financial and Accounting
--------------------------
Harry G. Lehr Officer)
/s/ Bradley D. Tilden Controller
--------------------------
Bradley D. Tilden
/s/ William H. Clapp Director
--------------------------
William H. Clapp
/s/ Ronald F. Cosgrave Director
--------------------------
Ronald F. Cosgrave
</TABLE>
II-5
<PAGE> 7
<TABLE>
<S> <C>
/s/ Mary Jane Fate Director
--------------------------
Mary Jane Fate
/s/ Bruce R. Kennedy Director
--------------------------
Bruce R. Kennedy
/s/ R. Marc Langland Director
--------------------------
R. Marc Langland
/s/ Byron I. Mallott Director
--------------------------
Byron I. Mallott
/s/ Robert L. Parker, Jr. Director
--------------------------
Robert L. Parker, Jr.
/s/ Richard A. Wien Director
--------------------------
Richard A. Wien
</TABLE>
II-6
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being
registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in opinion filed as Exhibit 5.1)
24.1 Powers of Attorney (see page II-5)
99.1 Alaska Air Group, Inc. 1996 Long-Term Incentive Equity Plan
</TABLE>
II-7
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
PERKINS COIE
A LAW PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
1201 THIRD AVENUE, 40TH FLOOR, SEATTLE, WASHINGTON 98101-3099
TELEPHONE: (206) 583-8888 FACSIMILE (206)583-8500
July 31, 1996
Alaska Air Group, Inc.
19300 Pacific Highway South
Seattle, Washington 98188
RE: REGISTRATION ON FORM S-8 OF SHARES OF COMMON STOCK, PAR VALUE
$1.00 PER SHARE, OF ALASKA AIR GROUP, INC. (THE "COMPANY")
Gentlemen and Ladies:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission with respect to 670,000 shares of Common
Stock, $1.00 par value per share, of the Company (the "Shares"), which are to be
issued pursuant to the Alaska Air Group, Inc. 1996 Long-Term Incentive Equity
Plan (the "Plan").
We have examined the Registration Statement and such documents and
records of the Company and other documents as we have deemed necessary for the
purpose of this opinion. In giving this opinion, we are assuming the
authenticity of all instruments presented to us as originals, the conformity
with originals of all instruments presented to us as copies and the genuineness
of all signatures.
Based upon and subject to the foregoing, we are of the opinion that the
Shares that will be issued pursuant to the Plan have been duly authorized and
that, upon the due execution by the Company and the registration by its
registrars of the Shares, issuance thereof by the Company and receipt of the
consideration therefor in accordance with the terms of the Plan, the Shares will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
PERKINS COIE
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our report dated January
25, 1996 included in Alaska Air Group, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Seattle, Washington
July 31, 1996
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
ALASKA AIR GROUP, INC.
1996 LONG-TERM INCENTIVE EQUITY PLAN
1. PURPOSE
The purpose of the Alaska Air Group, Inc. 1996 Long-Term Incentive
Equity Plan (the "Plan") is to promote the long-term profitability of Alaska Air
Group, Inc. (the "Company") and to enhance value for its stockholders by
offering incentives and rewards to key employees and officers of the Company, to
retain their services and to encourage them to acquire and maintain stock
ownership in the Company.
2. TERM
The Plan shall become effective upon its approval by the Company's
stockholders and shall terminate at the close of business on the fifth
anniversary of such approval date unless terminated earlier by the Board (as
defined in Section 3). After termination of the Plan, no future awards may be
granted but previously granted awards shall remain outstanding in accordance
with their applicable terms and conditions and the terms and conditions of the
Plan.
3. PLAN ADMINISTRATION
The Compensation Committee (the "Committee") of the Board of Directors
of the Company (the "Board") shall be responsible for administering the Plan.
The members of the Committee shall be appointed by the Board and shall consist
of three or more nonemployee members of the Board who shall qualify to
administer the Plan as contemplated by (a) Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rules,
and (b) Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Committee shall have full and exclusive power to interpret the Plan
and to adopt such rules, regulations and guidelines for carrying out the Plan as
it may deem necessary or proper, all of which power shall be executed in the
best interests of the Company and in keeping with the objectives of the Plan.
This power includes but is not limited to selecting award recipients,
establishing all award terms and conditions and adopting modifications,
amendments and procedures, as well as rules and regulations governing awards
under the Plan, and to make all other determinations necessary or advisable for
the administration of the Plan. In no event, however, shall the Committee have
the power to cancel outstanding stock options or stock appreciation rights
("SARs") for the purpose of replacing or regranting such options or SARs with a
purchase price that is less than the purchase price of the original option or
SAR. The interpretation and construction of any provision of the Plan or any
option or right granted hereunder and all determinations by the Committee in
each case shall be final, binding and conclusive with respect to all interested
parties.
<PAGE> 3
4. ELIGIBILITY
Any employee of the Company shall be eligible to receive awards under
the Plan. "Employee" shall also include any former employee of the Company
eligible to receive an assumed or replacement award as contemplated in Sections
5 and 8, and "Company" includes any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee, except that with respect to
incentive stock options ("ISOs") intended to comply with Section 422 of the
Code, "Company" includes only any parent or subsidiary of the Company in
accordance with Section 422 of the Code.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 6 of the Plan, the aggregate
number of shares of Common Stock ($1.00 par value) of the Company ("shares")
which may be transferred to participants under the Plan shall be 670,000. The
aggregate number of shares that may be issued under awards pursuant to Section
8(c) of the Plan shall not exceed 335,000 shares. No more than 67,000 shares may
be issued pursuant to Section 8(c) of the Plan as stock awards subject to
restrictions based solely on continuous employment of less than three (3) years.
The aggregate number of shares that may be covered by awards granted to any
single individual under the Plan shall not exceed 300,000 shares for any
consecutive three-year period, such limitation to be applied in a manner
consistent with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code. The aggregate number of shares
that may be represented by ISOs shall not exceed 670,000.
Shares subject to awards under the Plan which expire, terminate or are
canceled prior to exercise or, in the case of awards granted under Section 8(c),
do not vest shall thereafter be available for the granting of other awards.
Shares otherwise issuable pursuant to an award which have been exchanged by a
participant as full or partial payment to the Company in connection with any
award under the Plan also shall thereafter be available for the granting of
other awards. In instances where an SAR or other award is settled in cash, the
shares covered by such award shall remain available for the granting of other
awards. Likewise, the payment of cash dividends and dividend equivalents paid in
cash in conjunction width outstanding awards shall not be counted against the
shares available for issuance.
Any shares issued under the Plan may consist in whole or in part of
authorized and unissued shares or of treasury shares, and no fractional shares
shall be issued under the Plan. Cash may be paid in lieu of any fractional
shares in settlements of awards under the Plan.
6. ADJUSTMENTS AND REORGANIZATIONS
In the event of any stock dividend, stock split, combination or
exchange of shares, merger, consolidation, spin-off, recapitalization or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting shares or share
-2-
<PAGE> 4
price, the Committee shall make a proportionate adjustment with respect to: (a)
the aggregate number of shares that may be issued under the Plan; (b) each
outstanding award made under the Plan; and (c) the exercise price per share for
any outstanding stock options, SARs or similar awards under the Plan.
7. FAIR MARKET VALUE
Fair Market Value for all purposes under the Plan shall mean the
closing price of a share of Common Stock as reported daily in The Wall Street
Journal or similar readily available public source for the date in question. If
no sales of shares were made on such date, the closing price of a share as
reported for the preceding day on which a sale of shares occurred shall be used.
8. AWARDS
The Committee shall determine the type or types of award(s) to be made
to each participant. Awards may be granted singly, in combination or in tandem.
Awards also may be made in combination or in tandem with, in replacement of, as
alternative to, or as the payment form for grants or rights under any other
compensation plan or individual contract or agreement of the Company including
those of any acquired entity. The types of awards that may be granted under the
Plan are:
(a) Stock Options--This is a grant of a right to purchase a
specified number of shares during a specified period as determined by the
Committee. The purchase price per share for each stock option shall be not less
than 100% of Fair Market Value on the date of grant (except if a stock option is
granted retroactively in tandem with or as a substitution for an SAR, the
exercise price may be no lower than the exercise price per share for such tandem
or replaced SAR). A stock option may be in the form of an ISO which, in addition
to being subject to applicable terms, conditions and limitations established by
the Committee, complies with Section 422 of the Code. The exercise price for a
stock option shall be paid in full by the optionee at the time of the exercise
in cash or such other method permitted by the Committee, including (i) tendering
(either actually or by attestation) shares, (ii) authorizing a third party to
sell the shares (or a sufficient portion thereof) acquired upon exercise of a
stock option and assigning the delivery to the Company of a sufficient amount of
the sale proceeds to pay for all the shares acquired through such exercise, or
(iii) any combination of the above.
(b) SARs--This is a right to receive a payment, in cash and/or
shares, equal to the excess of the Fair Market Value of a specified number of
shares on the date the SAR is exercised over the Fair Market Value on the date
the SAR was granted (except that if an SAR is granted retroactively in tandem
with or in substitution for a stock option, the designated Fair Market Value
shall be no lower than the exercise price per share for such tandem or replaced
stock option).
(c) Stock Awards--This is an award made or denominated in
shares or units equivalent in value to shares. All or part of any stock award
may be subject to conditions and
-3-
<PAGE> 5
restrictions established by the Committee which may be based on continuous
service with the Company or the achievement of performance goals related to
profits, profit growth, profit-related return ratios, cash flow or shareholder
returns, where such goals may be stated in absolute terms or relative to
comparison companies.
9. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that any awards under the Plan earn dividends
or dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant's account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
shares or share equivalents.
10. DEFERRALS AND SETTLEMENTS
Payment of awards may be in the form of cash, stock, other awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
participants to elect to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish under the
Plan. It also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting of
dividend equivalents where the deferral amounts are denominated in shares.
11. TRANSFERABILITY AND EXERCISABILITY
Awards granted under the Plan shall not be transferable or assignable
other than by will or the laws of descent and distribution, except to the extent
permitted by the Committee, in its sole discretion, and by Rule 16b-3 under the
Exchange Act and, with respect to ISOs, by Section 422 of the Code. However, any
award so transferred shall continue to be subject to all the terms and
conditions contained in the instrument evidencing such award.
12. AWARD AGREEMENTS
Awards under the Plan shall be evidenced by agreements as approved by
the Committee that set forth the terms, conditions and limitations for each
award which may include the term of an award (except that in no event shall the
term of any ISO exceed a period of ten years from the date of its grant), the
provisions applicable in the event the participant's employment terminates, and
the Committee's authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind any award.
13. ACCELERATION AND SETTLEMENT OF AWARDS
The Committee shall have the discretion, exercisable at any time before
a sale, merger, consolidation, reorganization, liquidation or change in control
in the Company, as defined by the Committee, to provide for the acceleration of
vesting and for settlement, including cash
-4-
<PAGE> 6
payment, of an award granted under the Plan upon or immediately before such
event is effective. However, the granting of awards under the Plan shall in no
way affect the right of the Company to adjust, reclassify, reorganize, or
otherwise change its capital or business structured or to merge, consolidate,
dissolve, liquidate, sell or transfer all or any portion of its businesses or
assets.
14. PLAN AMENDMENT
The Plan may be amended only by the Board as it deems necessary or
appropriate to better achieve the purposes of the Plan, except that no such
amendment shall be made without the approval of the Company's stockholders which
would increase the number of shares available for issuance in accordance with
Sections 5 and 6 of the Plan, or cause the Plan not to comply with Rule 16b-3
(or any successor rule) under the Exchange Act.
15. TAX WITHHOLDING
The Company shall have the right to deduct from any settlement of an
award made under the Plan, including the delivery or vesting of shares, a
sufficient amount to cover withholding of any federal, state or local taxes
required by law, or to take such other action as may be necessary to satisfy any
such withholding obligations. The Committee may, in its discretion and subject
to such rules as it may adopt, permit participants to use shares to satisfy
required tax withholding, and such shares shall be valued at the Fair Market
Value as of the settlement date of the applicable award.
16. OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee and not
inconsistent with the terms of any benefit plan, severance program or severance
pay law, settlements of awards received by participants under the Plan shall not
be deemed a part of a participant's regular, recurring compensation for purposes
of calculating payments or benefits from any Company benefit plan, severance
program or severance pay law. Further, the Company may adopt other compensation
programs, plans or arrangements as it deems appropriate or necessary.
17. UNFUNDED PLAN
Unless otherwise determined by the Board, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Company and any participant or other person. To the extent any person holds any
rights by virtue of an award granted under the Plan, such rights (unless
otherwise determined by the Committee) shall be no greater than the rights of an
unsecured general creditor of the Company.
-5-
<PAGE> 7
18. USE OF PROCEEDS
The cash proceeds received by the Company from the issuance of shares
pursuant to awards under the Plan shall constitute general funds of the Company.
19. REGULATORY APPROVALS
The implementation of the Plan, the granting of any award under the
Plan, and the issuance of shares upon the exercise or settlement of any award
shall be subject to the Company's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the awards
granted under it or the shares issued pursuant to it.
20. FUTURE RIGHTS
No person shall have any claim or rights to be granted an award under
the Plan, and no participant shall have any rights under the Plan to be retained
in the employ of the Company.
21. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a
participant including, without limitation, the estate of such participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the participant's creditors.
