<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
GENICOM CORPORATION
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state how it
was determined):
----------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE> 2
GENICOM CORPORATION
14800 CONFERENCE CENTER DRIVE, SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 21, 1997
TO THE HOLDERS OF GENICOM CORPORATION COMMON STOCK:
The annual meeting of stockholders of GENICOM Corporation (the "Company") will
be held at the Company's headquarters, 14800 Conference Center Drive, Suite
400, Westfields, Chantilly, Virginia 20151 on May 21, 1997 at 8:30 A.M. Eastern
Daylight Time, for the following purposes:
1. To elect three directors for a one-year term;
2. To consider and vote upon adoption of the Company's 1997 Stock Option
Plan;
3. To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent certified public accountants for fiscal year 1997; and
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
Whether or not you expect to attend the meeting, please sign, date and return
promptly the enclosed proxy. The proxy is revocable and you may vote your
shares in person if you attend the meeting and wish to do so.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the meeting,
By Order of the Board of Directors
April 24, 1997 Robert L. Burrus, Jr., Secretary
1
<PAGE> 3
GENICOM CORPORATION
14800 CONFERENCE CENTER DRIVE, SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by GENICOM Corporation, a Delaware corporation (the "Company"), from
the holders of the Company's common stock for use at the annual meeting of
stockholders to be held on May 21, 1997, and at any adjournments thereof (the
"Annual Meeting"). This Proxy Statement and the accompanying form of proxy are
being sent or given to stockholders on or about April 24, 1997. A copy of the
Company's Form 10-K as filed with the Securities and Exchange Commission for
the fiscal year ended December 29, 1996, is being mailed with this Proxy
Statement.
In addition to the solicitation of proxies by mail, the Company's officers and
regular employees, without compensation other than their regular compensation,
may solicit proxies by telephone, facsimile, telegraph and personal interview.
The Company will bear the cost of all solicitation.
On March 31, 1997, the date for determining stockholders entitled to vote at
the meeting, there were 11,010,639 shares of the Company's common stock (the
"Common Stock") outstanding and entitled to vote. Each such share of Common
Stock entitles the holder thereof to one vote at the Annual Meeting.
The presence of holders of the majority of the issued and outstanding stock of
the Company, in person or by properly executed proxies, is required to
constitute a quorum to transact business at the Annual Meeting. Abstentions,
votes withheld in the election of directors and broker non-votes are counted as
present for purposes of determining a quorum.
The directors shall be elected by a plurality of the votes cast by the holders
of Common Stock entitled to vote at the Annual Meeting, if a quorum is present.
With regard to the election of directors, stockholders may vote in favor of all
nominees, withhold their votes as to all nominees or withhold their votes as to
specific nominees. Votes withheld and broker non-votes will have no effect on
the outcome of the election of directors. Approval of the other proposals shall
be decided by majority vote of the shares of Common Stock entitled to vote held
by stockholders present in person or by proxy. With respect to the adoption of
the Company's 1997 Stock Option Plan, stockholders may vote in favor of or
against the adoption, or may abstain from voting. With respect to the
ratification of the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the current year, stockholders may vote in favor of
or against the ratification, or may abstain from voting. Abstentions will be
counted as votes against in tabulations of the votes cast on these proposals,
whereas broker non-votes will not be counted for purposes of determining
whether a proposal has been approved.
Stockholders should specify their choices on the enclosed form of proxy card.
If no specific instructions are given with respect to the matters to be acted
upon, the shares represented by a properly signed proxy card will be voted FOR
the election of all nominees for the office of director, FOR approval of the
Company's 1997 Stock Option Plan and FOR ratification of the appointment of
Coopers & Lybrand L.L.P. as the Company's independent accountants.
A stockholder who has returned a proxy may revoke it at any time before it is
voted at the Annual Meeting. Proxies may be revoked by filing with the
Secretary of the Company written notice of revocation bearing a later date than
the proxy, by duly executing a later dated proxy relating to the same shares of
Common Stock or by attending the Annual Meeting and voting in person (although
attendance at the annual meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be sent to
Secretary,
2
<PAGE> 4
GENICOM Corporation, c/o McGuire Woods Battle & Boothe L.L.P, One James Center,
901 East Cary Street, Richmond, Virginia 23219-4030, Attention: Robert L.
Burrus, Jr., Esquire.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth information as of January 31, 1997, with respect
to the ownership of shares of Common Stock by all persons known by the Company
to be beneficial owners of more than 5% of the Company's outstanding Common
Stock, each director of the Company, the named executive officers, and
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Shares of Options
Common Stock Excercisable Percentage
Beneficially Within of
Name and Address of Beneficial Owner Owned (1) 60 Days Total Class
- ------------------------------------ -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
General Electric Company (2) 1,779,376 0 1,779,376 14.7%
3135 Easton Turnpike
Fairfield, Connecticut 06431
Piedmont Capital Management Corporation 1,295,000 0 1,295,000 10.7%
One James Center, Suite 1400
Richmond, VA 23219
Dimensional Fund Advisors Inc. (3) 653,400 0 653,400 5.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FMR Corporation 630,000 0 630,000 5.2%
82 Devonshire Street
Boston, Massachusetts 02109
Don E. Ackerman (4) 200,386 100,000 300,386 2.5%
Edward E. Lucente 35,000 10,000 45,000 *
Paul T. Winn (5) 37,680 469,000 506,680 4.2%
James C. Gale 5,000 98,132 103,132 *
Arthur D. Gallo 500 10,632 11,132 *
Raymond D. Stapleton 0 97,156 97,156 *
B. Garrett Buttner 0 36,700 36,700 *
All directors and officers as a group (11 persons) 278,766 891,084 1,169,850 9.7%
</TABLE>
* Indicates beneficial ownership less than 1.0%
3
<PAGE> 5
(1) All shareholders listed have sole investment and voting power except:
Mr. Winn, who has 23,680 shares with shared voting and investment power
with his spouse; and Mr. Lucente, who has 7,000 shares with shared voting
and investment power with his spouse.
(2) Includes 262,209 shares owned by General Electric Investment Corporation,
the administrator of General Electric Pension Trust, General Electric
Insurance Plan Trust and General Electric Medical Care Trust. General
Electric Company disclaims beneficial ownership of these shares.
(3) Based solely on our review of Form 13G, Dimensional Fund Advisors, Inc.
("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 653,400 shares of GENICOM Corporation stock as of
December 29, 1996, all of which shares are held in portfolios of DFA
Investment Dimensions Group, Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(4) Includes 54,000 shares held in family trusts, of which Mr. Ackerman
disclaims beneficial ownership.
(5) Includes 14,000 shares owned by Mr. Winn's children, of which Mr. Winn
disclaims beneficial ownership.
ELECTION OF DIRECTORS
The terms of Messrs. Don E. Ackerman, Edward E. Lucente and Paul T. Winn as
directors of the Company will expire at the time of the 1997 Annual Meeting.
The Company proposes the re-election of each of Messrs. Ackerman, Lucente and
Winn for a term ending at the 1998 Annual Meeting.
Although all of the nominees have indicated their willingness to serve if
elected, if at the time of the meeting any nominee is unable or unwilling to
serve, shares represented by properly executed proxies will be voted at the
discretion of the persons named therein for such other person as the Board of
Directors may designate.
DON E. ACKERMAN, 63, Chairman of the Board of Directors and a director since
the Company was founded in 1983, is currently the President of Chandelle
Ventures, Inc., a private investment company. Mr. Ackerman serves as a
director of Schlumberger Ltd.
EDWARD E. LUCENTE, 57, a director of the Company since 1993, is currently Chief
Executive Officer and President of Liant Software Corporation. Prior to
assuming this position, he was a marketing consultant from 1994 until 1995.
Previously, Mr. Lucente served as Vice President of Sales and Marketing of
Digital Equipment Corporation ("DEC") from 1993 until 1994. Prior to joining
DEC, he was the Executive Vice President of Northern Telecom Limited from 1991
until 1993. Mr. Lucente serves as a director of Information Resources, Inc.
and Compuserve, Inc.
PAUL T. WINN, 52, President and Chief Executive Officer of the Company since
his employment with Genicom in April 1990, has been a director since May 1990.
Mr. Winn serves as a director of Indigo NV.
4
<PAGE> 6
CERTAIN INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 5 meetings during the fiscal year ended December
29, 1996. All Board of Directors members attended at least 75% of the
aggregate of the total number of Board of Directors meetings plus meetings of
committees of which they were members. In addition, the Board of Directors
took action by unanimous consent on numerous occasions during the fiscal year
ended December 29, 1996.
The Board of Directors has an Audit Committee which is responsible for
reviewing the adequacy of the Company's internal accounting controls, as well
as the independent auditors' proposed audit scope, conducting a post-audit
review of the audit findings and the Company's financial statements and
performing other oversight functions as requested by the Board of Directors.
During the 1996 fiscal year, the Audit Committee, which was composed of Messrs.
Ackerman and Lucente, held 3 meetings.
The Board of Directors also had a Compensation Committee which was disbanded on
February 22, 1996. This committee was responsible for setting overall policies
that governed the Company's compensation programs, administering the Company's
Stock Option Plan and the Incentive Compensation Plan and establishing the cash
compensation of executive officers. Currently, the Board of Directors handles
all compensation matters.
During the 1996 fiscal year, the Board of Directors did not have a nominating
committee. The Chairman of the Board receives annual compensation of $65,000.
Directors who are not employees receive annual compensation of $10,000.
Employees who are also directors do not receive directors' fees.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table on page 6 reports the compensation for the past
three years of the Company's Chief Executive Officer ("CEO"), and the
Company's four most highly compensated executive officers other than the Chief
Executive Officer, who were serving as executive officers at the end of the
l996 fiscal year.
OPTION/SAR GRANTS TABLE
The Company has in effect an employee stock option plan pursuant to which
options to purchase Common Stock of the Company are granted to officers and
other key employees of the Company and its subsidiaries. The table on page 7
shows stock option grants during the 1996 fiscal year to the CEO and the four
most highly compensated executive officers other than the Chief Executive
Officer ("named executive officers").
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The table on page 7 shows information concerning the fiscal year-end value of
unexercised options held by the named executive officers.
5
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------------------------------------------
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($)(a) ($) ($) SARs(#) ($) ($)(b)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
P. T. WINN 1996 333,269 0 21,322 20,000 83,809
President and 1995 311,062 193,320 25,000 25,618
CEO 1994 288,465 146,253 100,000 18,102
J. C. GALE 1996 188,808 0 22,433 13,160 4,750
Sr. V-Pres 1995 182,956 51,156 17,500 39,557
Finance and CFO 1994 158,742 48,750 11,513
A. D. GALLO 1996 175,000 0 4,905 13,160 20,635
Corporate V-Pres 1995 149,427 30,363 20,000 3,650
and Gen Mgr.
Document Solutions
R. D. STAPLETON 1996 157,750 0 7,473 4,280 4,750
Sr. V-Pres 1995 155,764 42,261 12,000 3,650
Marketing & Sales 1994 144,290 43,876 10,000 1,004
Enterprising Service
Solutions
B. G. BUTTNER 1996 130,000 0 17,557 3,000 4,388
V-Pres and Gen Mgr. 1995 130,100 30,875 9,000 3,650
Annuities 1994 97,881 37,360 20,000 1,132
</TABLE>
(a) Mr. Winn's 1995 bonus includes $157,500 incentive compensation award and
$35,820 supplemental salary program award. For all other listed officers,
1995 bonuses were incentive compensation awards. All bonuses were
incentive compensation awards in 1994.
(b) Includes for Mr. Winn: $79,059 for temporary living expenses in 1996,
$21,968 for relocation costs in 1995 and $17,202 for personal living
expenses in 1994 and $4,750, $3,650 and $900 for 401(k) matching
contributions in 1996, 1995 and 1994, respectively. Includes for Mr. Gale:
$35,907 and $10,613 for relocation costs in 1995 and 1994, respectively and
$4,750, $3,650 and $900 for 401(k) matching contributions in 1996, 1995 and
1994, respectively. Includes for Mr. Gallo: $15,895 for relocation costs
in 1996 and $4,740 and $3,650 for 401(k) matching contributions in 1996 and
1995, respectively. Includes for Mr. Stapleton: $4,750, $3,650 and $1,004
for 401(k) matching contributions in 1996, 1995 and 1994, respectively.
Includes for Mr. Buttner: $4,388, $3,650 and $1,132 for 401(k) matching
contributions in 1996, 1995 and 1994, respectively.
6
<PAGE> 8
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term ($)
------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or Market
SARs Employees Base Price Price Expiration
Name Granted(a) in Fiscal Year ($/Sh) ($/Sh) Date 0% 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. T. WINN 20,000 7.78% 3.825 4.50 1-19-2006 13,500 70,100 156,937
J. C. GALE 13,160 5.12% 3.825 4.50 1-19-2006 8,883 46,126 103,264
A. D. GALLO 13,160 5.12% 3.825 4.50 1-19-2006 8,883 46,126 103,264
R. D. STAPLETON 4,280 1.67% 3.825 4.50 1-19-2006 2,889 15,001 33,584
B. G. BUTTNER 3,000 1.17% 3.825 4.50 1-19-2006 2,025 10,515 23,540
</TABLE>
(a) The options vest at a 20% annual rate beginning one year after the grant
date.
- --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FY AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($) (a)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
P. T. WINN 0 0 430,000/140,000 1,168,750/312,500
J. C. GALE 0 0 89,000/39,160 194,125/60,250
A. D. GALLO 0 0 4,000/29,160 6,500/26,000
R. D. STAPLETON 0 0 88,900/29,880 239,675/62,450
B. G. BUTTNER 0 0 30,300/29,200 81,975/66,650
</TABLE>
(a) Based on fair market value of $3.75 per share at fiscal year end.
7
<PAGE> 9
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has an employment agreement with Mr. Winn, the President and CEO.
Upon termination without cause, the Company will pay Mr. Winn the then existing
base salary and benefits until the earlier of twenty-four months or the date of
his employment with another entity. In the event Mr. Winn becomes employed
prior to the end of the twenty-four month severance period, the Company will
pay 25% of the remaining unpaid monthly payments in final settlement and
benefits would cease.
The named executive officers have been granted options under the Company's
Stock Option Plan which include a provision accelerating exercisability of the
options in the event the Company terminates the officer's employment within 13
months following a change of control of the Company. The same provision
applies if the officer leaves the Company during this time period following a
reduction in compensation.
COMPENSATION REPORT OF THE BOARD OF DIRECTORS
The Board of Directors (the "Board") is currently responsible for setting
overall policies that govern the Company's compensation programs, administering
the Company's Stock Option Plan and the Incentive Compensation Plan and
establishing the cash compensation of executive officers. Prior to February
22, 1996 the Compensation Committee was responsible for these functions.
Section 162(m) of the Internal Revenue Code places a $1 million per person
limitation on the tax deduction the Company may take for compensation paid to
its Chief Executive Officer and its four other highest paid employees unless,
in general, the compensation constitutes performance-based compensation as
defined by the Internal Revenue Code. To the extent that any compensation
exceeds this limitation, it is expected that such cases will represent
isolated, nonrecurring situations arising from special circumstances. The
Board would expect to take actions in the future that may be necessary to
preserve the deductibility of executive compensation to the extent possible.
The Board's philosophy regarding executive compensation seeks to align
executive compensation with Company values and objectives, business strategy,
management initiatives and business financial performance. To act on this
philosophy, the focus is on the following goals and objectives:
- - To attract and retain key executives critical to the long-term success of
the Company and each of its business units.
- - To reward executives for long-term strategic management and the enhancement
of shareholder value.
- - To integrate compensation programs with both the Company's annual and
long-term strategic planning and measuring processes.
- - To provide a performance-oriented environment that rewards performance not
only with respect to Company goals but also Company performance as compared
to its industry performance.
ANNUAL COMPENSATION
The annual compensation program consists of cash, management awards and officer
perquisites. The Board determines salary ranges for executive officers based
on surveys of salary data regarding similar positions held by executives in
similar sized companies (some of which companies may not be included in the
Computers, Subsystems and Peripherals Industry Group referred to in the
Performance Graph) in the computer printer and other peripherals industry. The
Board intends for salaries to remain at or near the industry median. Actual
salary changes are primarily based upon the Company's financial performance
8
<PAGE> 10
and to a lesser extent the survey of salary data. Due to job performance and
adjustments for market changes some executive salaries were raised in fiscal
year 1996.
The Board has authorized the CEO to pay special, one-time event management
awards to, among others, executive officers to reward notable achievements that
contribute to significant improvements in quality, productivity, customer
service, cost control, or the work environment. Determination of such awards
is subjective and thus not tied to specific criteria. During 1996, a total of
$77,669 in such awards were paid to 83 employees.
LONG-TERM INCENTIVE COMPENSATION
The Company provides long-term incentives through stock options, and the
GENICOM Retirement Savings Plan which is qualified under Section 401(k) of the
Internal Revenue Code.
INCENTIVE COMPENSATION PLAN
In fiscal year 1984, the Company adopted an Incentive Compensation Plan ("IC
Plan"). The Board reviews and approves the participation of executive
officers and key employees in the IC Plan. Payments under the IC Plan are
contingent upon the Company's substantial achievement of certain corporate
performance criteria. If these objectives are met, the payment is determined
by the achievement of a combination of corporate goals and specific functional
objectives. Corporate goals are weighted at 70% of the aforementioned
combination, while functional objectives comprise 30%. Corporate goals focus
on the Company's sales, net income, working capital investment and debt levels,
while the functional objectives vary depending on the officer's position. The
Board approves these criteria each year.
The IC Plan is funded from a pre-set portion of the Company's pre-tax net
income. The Board approves the IC Plan award value each year as a percentage
of base salary. Each participant, depending on position, could potentially
receive an award equal to a percentage of salary ranging from 15% to 70%, in
the case of the CEO. The Board has broad authority to alter the manner in
which payments are made in any given year based on performance. The Board did
not make awards for fiscal year 1996 because the Company did not substantially
achieve targeted corporate performance criteria.
STOCK OPTION PLAN
Under the Stock Option Plan (the "Plan"), the Board grants stock options
annually with the objective of aligning executive officers' long-range
interests with those of the stockholders. Management makes recommendations to
the Board regarding the number of stock options awarded and to whom the stock
options are given. Management considers the amount and terms of the options
already held by the executive officer. Management's methodology used to make
recommendations are not based on specific criteria. Instead its goal is to
achieve the retention of key employees by providing them with the opportunity
to build a meaningful investment in the Company. The Board believes that the
Plan encourages superior performance that can result in significantly enhanced
shareholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee members determined the CEO's compensation for fiscal
year 1996. The CEO's salary was primarily based upon the Company's financial
performance and to a lesser extent the review of the salaries of CEOs for
companies with comparable sales and upon the Board of Directors' review of the
CEO's performance. Due to the Company's performance and competitive market
changes in 1995, the Compensation Committee increased the CEO's salary in 1996.
9
<PAGE> 11
The Board grants stock options to the CEO annually under the Company's Stock
Option Plan in order to promote long-term retention and to balance the
risk/reward element of the position. In determining the number of shares to be
awarded as stock options in fiscal year 1996, the Board considered the amount
concurrently awarded to the other officers and the performance of the CEO. In
January 1996, the Board granted the CEO an option to purchase 20,000 shares of
common stock.
The Compensation Committee established a supplemental salary program to the
benefit of the CEO, effective January 2, 1995. Under this program the CEO will
receive for 1995 and 1996 a salary supplement equal to 1% of the increase in
net income of the Company over the preceding year. The salary supplement for
each year will be paid within thirty days of the Company's release of annual
earnings for such year. The CEO did not receive any payment for 1996 pursuant
to this program.
BOARD OF DIRECTORS
Don E. Ackerman, Chairman
Edward E. Lucente
Paul T. Winn
PERFORMANCE GRAPH
Set forth on page 11 is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends, with the cumulative total return
of companies on the National Association of Securities Dealers Automated
Quotations ("NASDAQ") Stock Index and the Computers, Subsystems and Peripherals
Industry Group created by Media General Financial Services, Inc.
10
<PAGE> 12
<TABLE>
Comparison of Five-Year Cumulative Return
Among GENICOM Corporation,
NASDAQ Stock Index and the
Computers, Subsystems and Peripherals Industry Group
<CAPTION>
Measurement Period Computers, Subsystems
-------------------- GENICOM and Peripherals
(Fiscal Year Covered) Corporation NASDAQ Stock Index Industry Group
--------------------- ----------- ------------------ --------------
<S> <C> <C> <C>
Measurement Point 12/29/91 100 100 100
FYE 12/29/92 120.00 87.77 100.98
FYE 12/29/93 133.33 100.20 121.13
FYE 12/29/94 266.67 120.73 127.17
FYE 12/29/95 546.67 168.39 164.96
FYE 12/29/96 400.00 228.23 204.98
</TABLE>
11
<PAGE> 13
CERTAIN TRANSACTIONS
OFFICERS. On August 26, 1996 the Company extended Mr. Winn a loan in the
amount of $175,000. Under the terms of the promissory note, the principal
amount, plus interest accrued at a rate of 5.1875% per annum, was due on March
31, 1997. The due date was subsequently extended to May 15, 1997. On March
31, 1997 Mr. Winn paid in full the owed principal amount plus interest.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
beneficial ownership and changes in beneficial ownership with the Securities
and Exchange Commission. Officers, directors and greater than 10 percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms.
Based solely on its review of the copies of such forms received by the Company,
or written representations from certain reporting persons that no Form 5's were
required for those persons, the Company believes that during fiscal year 1996
all filing requirements applicable to its officers, directors, and greater than
10 percent beneficial owners were complied with except that Messrs. Don E.
Ackerman, Edward E. Lucente and Arthur D. Gallo did not complete one report
each in a timely manner for stock purchases made in 1996.
PROPOSAL 1 - ADOPTION OF THE COMPANY'S
1997 STOCK OPTION PLAN
INTRODUCTION
The Board of Directors has adopted and recommends that you vote for approval of
the Genicom Corporation 1997 Stock Option Plan. A brief summary of the Stock
Option Plan follows, with the full text printed in Exhibit A. Exhibit A
contains definitions for capitalized terms used in this summary.
The Stock Option Plan is intended to further the long term stability and
financial success of the Company by attracting and retaining key employees
through the use of Options. It is believed that ownership of Company Stock
through the exercise of Options granted under this Stock Option Plan will
stimulate the efforts of those employees upon whose judgment and interests the
Company is and will be largely dependent for the successful conduct of its
business. It is also believed that Options granted to such employees under
this Plan will strengthen their desire to remain employed with the Company and
will further the identification of those employees' interests with those of the
Company's stockholders. The Stock Option Plan is intended to operate in
compliance with the provisions of Securities and Exchange Commission Rule 16b-3
and is also structured so that it can be operated in compliance with Section
162(m) of the Internal Revenue Code.
The Company has had a stock option program for key employees for some time.
However, only a limited number of shares are available for grants under the
Previous Plan and the Previous Plan expires later this year. The Stock Option
Plan is designed to replace the Previous Plan.
The Common Stock is traded on the NASDAQ Stock Market and on April 4, 1997, the
closing price was $4.6875.
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<PAGE> 14
ADMINISTRATION OF THE STOCK OPTION PLAN; ELIGIBILITY
The Stock Option Plan will be administered by the Board. The Board may
delegate administration of the Stock Option Plan to a Committee, consisting of
not less than two members of the Board, appointed by the Board. All present
and future employees of the Company or its Subsidiaries are eligible to receive
Options under the Stock Option Plan if the Board determines that an employee
has contributed, or can be expected to contribute, significantly to their
employer. The Board has the power and complete discretion to select eligible
employees to receive the Options and to determine for each employee the terms
and conditions of each Option. Approximately 1660 employees are currently
eligible to receive awards under the Stock Option Plan.
AMOUNT OF COMPANY STOCK AVAILABLE FOR OPTIONS
The total shares of Company Stock for which Options may be granted under the
Stock Option Plan shall be three hundred thousand (300,000) shares, plus (i)
any shares of Company Stock for which options have not been granted under the
Previous Plan, and (ii) shares of Company Stock allocable to options or
portions thereof under the Previous Plan that expire or otherwise terminate
unexercised after the effective date of the Stock Option Plan. Shares of
Company Stock that may be subject to Options under the Stock Option Plan may be
(i) authorized but unissued shares; or, (ii) shares reacquired at any time and
now or hereafter held as treasury stock. Shares allocable to Options or
portions thereof granted under the Stock Option Plan that expire or otherwise
terminate unexercised may be subjected to new awards under the Stock Option
Plan. No Participant may be granted Options for more than two hundred thousand
(200,000) shares of Company Stock during any single taxable year.
TYPES OF OPTIONS THAT MAY BE GRANTED UNDER THE STOCK OPTION PLAN; EXERCISE
The following types of Options may be granted under the Stock Option Plan:
Incentive Stock Options and Nonstatutory Stock Options.
Incentive Stock Options. The Board may grant Incentive Stock Options to
eligible employees and establish the terms and conditions for the grant and the
exercise of the Options. Incentive Stock Options qualify for favorable income
tax treatment under Section 422 of the Internal Revenue Code. The exercise
price of shares of Company Stock covered by an Incentive Stock Option may not
be less than 100% of the Fair Market Value of such shares on the Date of Grant
(110% of Fair Market Value if the Incentive Stock Option is granted to an
employee who is a 10% Stockholder).
Nonstatutory Stock Options. The Board may grant Nonstatutory Stock Options to
eligible employees and establish the terms and conditions for the grant and the
exercise of the Options. Nonstatutory Stock Options do not qualify for
favorable income tax treatment under Section 422 of the Internal Revenue Code.
The exercise price of shares of Company Stock covered by a Nonstatutory Stock
Option may not be less than 85% of the Fair Market Value of such shares on the
Date of Grant.
Exercise. Options granted under the Stock Option Plan may, once exercisable in
accordance with their terms, be exercised through payment of the exercise price
for the shares to be purchased in the manner specified in the stock option
agreement. The agreement may specify payment in cash, through delivery of
already owned shares, through withholding of option shares, through delivery of
an irrevocable exercise notice, or by promissory note, which may be secured or
unsecured in the discretion of the Board.
TRANSFERABILITY OF OPTIONS; MODIFICATION OF OPTIONS
Options, by their terms, will not be transferable except by will or by the laws
of descent and distribution and will be exercisable, during the Participant's
life, only by the Participant; provided, however, that
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<PAGE> 15
Nonstatutory Stock Options may be transferable to the extent specifically
provided in the stock option agreement.
The terms of any Option may provide for the Option to become fully exercisable
or vested upon a Change of Control.
TERM; MODIFICATION OF STOCK OPTION PLAN
The Stock Option Plan became effective as of March 19, 1997. Participants
cannot exercise any Options granted until stockholders approve the Stock Option
Plan and federal and state securities laws requirements are met. The Stock
Option Plan will terminate at the close of business on March 18, 2007, unless
the Board terminates it prior to that date.
The Board can amend or terminate the Stock Option Plan, except that only the
stockholders can approve amendments that would (i) increase the number of
shares of Company Stock that are reserved and available for issuance pursuant
to Options under the Stock Option Plan (except for certain changes which are
made pursuant to Section 10 of the Stock Option Plan in the event of stock
dividends or other changes in the Company's capital structure); (ii) materially
change which employees are eligible to participate in the Stock Option Plan; or
(iii) materially increase the benefits accruing to employees under the Stock
Option Plan. However, the Board can amend the Stock Option Plan as necessary
and without stockholder approval to ensure that the Stock Option Plan complies
with Rule 16b-3 and Section 162(m) of the Internal Revenue Code.
FEDERAL INCOME TAX CONSEQUENCES
A Participant will not incur federal income tax liabilities when granted a
Nonstatutory Stock Option or an Incentive Stock Option.
Upon exercise of a Nonstatutory Stock Option, the Participant, in most
circumstances, will be treated as having received ordinary income equal to the
difference between the Fair Market Value of the Company Stock on the date of
the exercise and the price of the Option. This income is subject to income tax
withholding by the Company. No income is received for tax purposes when an
Incentive Stock Option is exercised, unless the Participant is subject to the
alternative minimum tax.
The Company usually will be entitled to a business expense deduction at the
time and in the amount that the recipient of a Nonstatutory Stock Option
recognizes ordinary income. As stated above, this usually occurs upon exercise
of Nonstatutory Stock Options.
No deduction is allowed in connection with an Incentive Stock Option unless the
Participant disposes of Company Stock received upon exercise in violation of
the holding period requirements. Also the deduction is not allowed under
certain circumstances upon the exercise of an Option that has been accelerated
as a result of a Change of Control.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote "FOR" Proposal 1 to approve the
adoption of the Genicom Corporation 1997 Stock Option Plan.
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<PAGE> 16
PROPOSAL 2 - TO RATIFY SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. to serve as
independent certified public accountants of the Company for the 1997 fiscal
year and has directed a vote of stockholders be taken to ascertain their
approval or disapproval of that selection. In the event the stockholders do
not ratify the appointment of Coopers & Lybrand L.L.P., the Board of Directors
will consider selection of other independent certified public accountants.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote "FOR" Proposal 2 to ratify the
selection of Coopers & Lybrand L.L.P. as the Company's independent certified
public accountants for the 1997 fiscal year.
Representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting. Such representatives will have the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
OTHER BUSINESS
If any other business properly comes before the meeting, your proxy may be
voted by the persons named in it in such manner as they deem proper. Presently
management does not know of any other business which will be presented at the
meeting.
PROPOSALS BY STOCKHOLDERS FOR PRESENTATION
AT 1998 MEETING
Proposals that any stockholder intends to present at the 1998 Annual Meeting of
Stockholders must be received by the Company no later than December 25, 1997.
By Order of the Board of Directors
April 24, 1997 Robert L. Burrus, Jr., Secretary
15
<PAGE> 17
EXHIBIT A
GENICOM CORPORATION
1997 STOCK OPTION PLAN
As Adopted Effective
March 19, 1997
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purpose 1
2. Definitions 1
3. Stock 3
4. Eligibility 3
5. Stock Options 4
6. Method of Exercise of Options 5
7. Nontransferability of Options 5
8. Effective Date of the Plan 6
9. Termination, Modification, Change 6
10. Change in Capital Structure 6
11. Administration of the Plan 7
12. Notice 7
13. Interpretation 8
</TABLE>
<PAGE> 19
GENICOM CORPORATION
1997 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Genicom Corporation 1997 Stock Option Plan
is to further the long term stability and financial success of Genicom
Corporation by attracting and retaining key employees through the use of
stock options. It is believed that ownership of Company Stock through
the exercise of stock options granted under this Plan will stimulate the
efforts of those employees upon whose judgment and interests the Company
is and will be largely dependent for the successful conduct of its
business. It is also believed that stock options granted to such
employees under this Plan will strengthen their desire to remain employed
with the Company and will further the identification of those employees'
interests with those of the Company's stockholders. The Plan is intended
to continue the stock option program initially established under the
Previous Plan. The Plan also is intended to operate in compliance with
the provisions of Securities and Exchange Commission Rule 16b-3 and Code
section 162(m).
2. DEFINITIONS. As used in the Plan, the following terms have the meanings
indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amount of
federal, state and local income and payroll taxes that an Employer
is required to withhold in connection with the exercise of a
Nonstatutory Stock Option.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means the occurrence of any of the following
events:
(i) A third person, including a "group" as defined in Section
13(d)(3) of the Act, becomes, or obtains the right to
become, the beneficial owner of Company Stock having 25%
or more of the combined voting power of the then
outstanding securities of the Company that may be cast for
the election of directors to the Board of the Company. An
acquisition shall be excluded if made by the Company, a
Subsidiary or a Company employee benefit plan;
(ii) A reorganization, merger or consolidation in which the
beneficial owners of the Company Stock and voting
securities of the Company immediately prior thereto do not
immediately thereafter beneficially own, directly or
indirectly, more than 75% of the outstanding shares of
common stock and the combined voting power of the
outstanding voting securities of the corporation resulting
from such organization, merger or consolidation; or
(iii) A complete liquidation or dissolution of the Company or the
sale or other disposition of all or substantially all of
the assets of the Company.
<PAGE> 20
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Committee of the Board referred to in
Section 11.
(g) "Company" means Genicom Corporation, a Delaware corporation.
(h) "Company Stock" means common stock of the Company. In the event
of a change in the capital structure of the Company (as provided
in Section 10), the shares resulting from such a change shall be
deemed to be Company Stock within the meaning of the Plan.
(i) "Date of Grant" means the date on which an Option is granted under
the Plan.
(j) "Disability" or "Disabled" means, as to an Incentive Stock Option,
a Disability within the meaning of Code section 22(e)(3). As to a
Nonstatutory Stock Option, the Board shall determine whether a
Disability exists and such determination shall be conclusive.
(k) "Effective Date" means March 19, 1997, subject to provisions of
Section 8 of the Plan.
(l) "Employer" means the Company and each Subsidiary that employs one
or more Participants.
(m) "Fair Market Value" per share of Company Stock as of any day means
the average of the closing prices of sales of shares of Company
Stock on all the national securities exchanges on which the
Company Stock may at the time be listed or, if there shall have
been no sales on any such day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day,
or, if on any day the Company stock shall not be so listed, the
average of the representative bid and asked prices quoted in the
NASDAQ system as of 3:30 p.m., New York time, on such day, or, if
on any day the Company Stock shall not be quoted in the NASDAQ
system, the average of the high and low bid and asked prices on
such day in the over-the-counter market as reported by National
Quotation Bureau Incorporated, or any similar successor
organization.
(n) "Incentive Stock Option" means an Option intended to meet the
requirements of, and qualify for favorable federal income tax
treatment under, Code section 422.
(o) "Mature Shares" means shares of Company Stock for which the holder
thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at
least six months or (ii) has purchased on the open market.
(p) "Nonstatutory Stock Option" means an Option that does not meet the
requirements of Code section 422, or, even if meeting the
requirements of Code section 422, is not intended to be an
Incentive Stock Option and is so designated.
(q) "Option" means a right to purchase Company Stock granted under the
Plan, at a price determined in accordance with the Plan. Options
granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options.
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<PAGE> 21
(r) "Participant" means any employee of the Company or a Subsidiary
who receives an Option under the Plan.
(s) "Previous Plan" means the Genicom Corporation Stock Option Plan,
as amended and restated effective February 7, 1991, and as
subsequently amended.
(t) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to
Rule 16b-3 shall include a reference to any corresponding rule (or
number redesignation) of any amendments to Rule 16b-3 enacted
after the effective date of the Plan's adoption.
(u) "Subsidiary" means another corporation in which the Company owns
stock possessing at least 50 percent of the combined voting power
of all classes of stock.
(v) "Taxable Year" means the fiscal period used by the Company for
reporting taxes on income under the Code.
(w) "10% Stockholder" means a person who owns, directly or indirectly,
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary. Indirect
ownership of stock shall be determined in accordance with Code
section 424(d).
3. STOCK. Subject to Section 10 of the Plan, the total shares of Company
Stock for which Options may be granted under the Plan shall not exceed in
the aggregate 300,000 shares of Company Stock, plus the number of shares
of Company Stock for which options have not been granted under the
Previous Plan as of the Effective Date. In addition, shares of Company
Stock allocable to options or portions thereof under the Previous Plan
that expire or otherwise terminate unexercised after the Effective Date
may be subjected to an Option under the Plan, and shares allocable to
Options or portions thereof granted under the Plan that expire or
otherwise terminate unexercised under this Plan may again be subjected to
an Option under the Plan. The shares of Company Stock that may be
subject to Options under the Plan may either be authorized but unissued
shares, or shares reacquired at any time and now or hereafter held as
treasury stock as the Board may determine. No Participant shall be
granted Options for more than 200,000 shares during any single taxable
year.
4. ELIGIBILITY.
(a) All present and future employees of the Company or a Subsidiary
(whether now existing or hereafter created or acquired) whom the
Board determines has contributed or whom the Board determines can
be expected to contribute significantly to the Company or a
Subsidiary shall be eligible to receive Options under the Plan.
The Board shall have the power and complete discretion, as
provided in Section 11, to select eligible employees to receive
Options and to determine for each employee the terms and
conditions of each Option.
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<PAGE> 22
(b) The grant of an Option shall not obligate an Employer to pay an
employee any particular amount of remuneration, to continue the
employment of the employee after the grant or to make further
grants to the employee at any time thereafter.
5. STOCK OPTIONS.
(a) The Board may make grants of Options to Participants. Whenever
the Board deems it appropriate to grant Options, notice shall be
given to the Participant stating the number of shares for which
Options are granted, the Option price per share, whether the
Options are Incentive Stock Options or Nonstatutory Stock Options,
and the conditions to which the grant and exercise of the Options
are subject. This notice, when duly accepted in writing by the
Participant, shall become a stock option agreement.
(b) The exercise price of shares of Company Stock covered by an
Incentive Stock Option shall be not less than 100% of the Fair
Market Value of such shares on the Date of Grant; provided,
however, that if an Incentive Stock Option is granted to a
Participant who is a 10% Stockholder, then the exercise price of
the shares covered by the Incentive Stock Option shall not be less
than 110% of the Fair Market Value of each shares on the Date of
Grant. The exercise price of shares of Company Stock covered by a
Nonstatutory Stock Option shall not be less than 85% of the Fair
Market Value of such shares on the Date of Grant.
(c) Options may be exercised in whole or in part at such times as may
be specified by the Board in the Participant's stock option
agreement; provided that, the exercise provisions for Incentive
Stock Options shall in no event be more liberal than the following
provisions:
(i) No Incentive Stock Option may be exercised after the first
to occur of (x) ten years from the Date of Grant, (y) three
months following the date of the Participant's retirement
or termination of employment with all Employers for reasons
other than Disability or death, or (z) one year following
the date of the Participant's termination of employment on
account of Disability or death.
(ii) An Incentive Stock Option by its terms, shall be
exercisable in any calendar year only to the extent that
the aggregate Fair Market Value (determined at the Date of
Grant) of the Company Stock with respect to which Incentive
Stock Options are exercisable for the first time during the
calendar year does not exceed $100,000 (the "Limitation
Amount"). Incentive Stock Options granted under the Plan
and all other plans of any Employer shall be aggregated for
purposes of determining whether the Limitation Amount has
been exceeded. The Board granting the Option may impose
such conditions as it deems appropriate on an Incentive
Stock Option to ensure that the foregoing requirement is
met. If Incentive Stock Options that first become
exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory
Stock Options to the extent permitted by law.
(d) The Board may, in its discretion, grant Options that by their
terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock
option agreement.
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<PAGE> 23
6. METHOD OF EXERCISE OF OPTIONS.
(a) Options may be exercised by the Participant giving written notice
of the exercise to the Employer, stating the number of shares the
Participant has elected to purchase under the Option the
Participant has elected to exercise. In the case of the purchase
of shares under an Option, such notice shall be effective only if
accompanied by the exercise price in full in cash; provided,
however, that to the extent the Participant's stock option
agreement so provides, the Participant may (i) deliver Mature
Shares (valued at their Fair Market Value on the date of
exercise) in satisfaction of all or any part of the exercise
price, (ii) cause to be withheld from the Option shares, shares
of Company Stock (valued at their Fair Market Value on the date
of exercise) in satisfaction of all or any part of the exercise
price, (iii) deliver a properly executed exercise notice together
with irrevocable instructions to a broker to deliver promptly to
the Company, from the sale or loan proceeds with respect to the
sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the exercise price and, if allowed by the
terms of the Option, Applicable Withholding Taxes, or (iv)
deliver an interest bearing promissory note, payable to the
Company, in payment of all or part of the exercise price together
with such collateral as may be required by the Board at the time
of exercise. The interest rate under any such promissory note
shall be established by the Board and shall be at least equal to
the minimum interest rate required at the time to avoid imputed
interest under the Code.
(b) The Company may place on any certificate representing Company
Stock issued upon the exercise of an Option any legend deemed
desirable by the Company's counsel to comply with federal or
state securities laws, and the Company may require a customary
written indication of the Participant's investment intent. Until
the Participant has made any required payment, including any
Applicable Withholding Taxes, and has had issued a certificate
for the shares of Company Stock acquired, he or she shall possess
no stockholder rights with respect to the shares.
(c) Each Participant shall agree as a condition of the exercise of an
Option, to pay to the Company, or make arrangements satisfactory
to his or her Employer regarding the payment to the Employer of,
Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made, no
stock certificate shall be issued upon the exercise of an Option.
(d) As an alternative to making a cash payment to satisfy Applicable
Withholding Taxes, the Participant may, to the extent the
Participant's stock option agreement so provides, elect to (i)
deliver Mature Shares or (ii) have the Company retain that number
of shares of Company Stock that would satisfy all or a specified
portion of the Applicable Withholding Taxes. Any such election
shall be made only in accordance with procedures established by
the Board.
7. NONTRANSFERABILITY OF OPTIONS. Options, by their terms, shall not be
transferable except by will or by the laws of descent and distribution
and shall be exercisable, during the Participant's lifetime, only by the
Participant; provided, however that Nonstatutory Stock Options may be
transferable to the extent specifically provided in the stock option
agreement.
5
<PAGE> 24
8. EFFECTIVE DATE OF THE PLAN. The effective date of the Plan is March 19,
1997. The Plan shall be submitted to the stockholders of the Company
for approval. Until (i) the Plan has been approved by the Company's
stockholders, and (ii) the requirements of any applicable federal or
state securities laws have been met, no Option granted under the Plan
shall be exercisable.
9. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on March 18,
2007. No Options shall be granted under the Plan after its termination.
The Board may amend or terminate the Plan in such respects as it shall
deem advisable; provided that, if and to the extent required by the Code,
no change shall be made that increases the total number of shares of
Company Stock reserved for issuance pursuant to Options granted under the
Plan (except pursuant to Section 10), materially modifies the
requirements as to eligibility for participation in the Plan, or
materially increases the benefits accruing to Participants under the
Plan, unless such change is authorized by the stockholders of the
Company. Notwithstanding the foregoing, the Board may unilaterally amend
the Plan and Options with respect to Participants as it deems appropriate
to ensure compliance with Rule 16b- 3 and to cause Incentive Stock
Options to meet the requirements of the Code, including Code sections
162(m) and 422, and regulations thereunder. Except as provided in the
preceding two sentences, a termination or amendment of the Plan shall
not, without the consent of the Participant, adversely affect a
Participant's rights under an Option previously granted to him or her.
10. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the
surviving corporation or other change in the Company's capital
stock (including, but not limited to, the creation or issuance to
stockholders generally of rights, options or warrants for the
purchase of common stock or preferred stock of the Company), the
number and kind of shares of stock or securities of the Company to
be subject to the Plan and to Options then outstanding or to be
granted thereunder, the maximum number of shares or securities
which may be delivered under the Plan, the exercise price, the
annual award limit for a Participant under Section 4, and other
relevant provisions shall be appropriately adjusted by the Board,
whose determination shall be binding on all persons. If the
adjustment would produce fractional shares with respect to any
unexercised Option, the Board may adjust appropriately the number
of shares covered by the Option so as to eliminate the fractional
shares.
(b) If the Company is a party to a consolidation or a merger in which
the Company is not the surviving corporation, a transaction that
results in the acquisition of substantially all of the Company's
outstanding stock by a single person or entity, or a sale or
transfer of substantially all of the Company's assets, the Board
may take such actions with respect to outstanding Options as the
Board deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the Board
may take the foregoing actions without the consent of any
Participant, and the Board's determination shall be conclusive and
binding on all persons for all purposes.
6
<PAGE> 25
11. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board. Subject to the
express provisions of the Plan, the Board shall have the authority
to take any and all actions necessary to implement the Plan and to
interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other determinations
necessary or advisable in administering the Plan. All of such
determinations shall be final and binding upon all persons. The
Board may request advice or assistance or employ such other
persons as are necessary for proper administration of the Plan.
(b) The Board may delegate administrative responsibilities to a
Committee, consisting of not less than two members of the Board
appointed by the Board (the "Committee"). The Board from time to
time may appoint members previously appointed and may fill
vacancies, however caused, in the Committee. The Board may
abolish the Committee at any time and revest the administration of
the Plan in the Board. Service on the Committee shall constitute
service as a director of the Company so that members of the
Committee shall be entitled to indemnification and reimbursement
as directors of the Company pursuant to its Certificate of
Incorporation and Bylaws.
(c) The Board shall have the power and complete discretion to
determine (i) which eligible employees shall receive Options and
the nature of each Option, (ii) the number of shares of Company
Stock to be covered by each Option, (iii) whether Options shall
be Incentive Stock Options or Nonstatutory Stock Options, (iv)
the time or times when an Option shall be granted, (v) whether an
Option shall become vested over a period of time and when it
shall be fully vested, (vi) when Options may be exercised, (vii)
whether a Disability exists, (viii) the manner in which payment
will be made upon the exercise of Options, (ix) conditions
relating to the length of time before disposition of Company
Stock received upon the exercise of Options is permitted, (x)
whether to authorize a Participant (A) to deliver Mature Shares
to satisfy Applicable Withholding Taxes or (B) to have the
Employer withhold from the shares to be issued upon the exercise
of a Nonstatutory Stock Option the number of shares necessary to
satisfy Applicable Withholding Taxes, (xi) notice provisions
relating to the sale of Company Stock acquired under the Plan,
and (xii) any additional requirements relating to Options that
the Board deems appropriate. Notwithstanding the foregoing, no
"tandem stock Options" (where two stock Options are issued
together and the exercise of one Option affects the right to
exercise the other Option) may be issued in connection with
Incentive Stock Options. The Board shall have the power to amend
the terms of previously granted Options that were granted by the
Board so long as the terms as amended are consistent with the
terms of the Plan and provided that the consent of the
Participant is obtained with respect to any amendment that would
be detrimental to him or her, except that such consent will not
be required if such amendment is for the purpose of complying
with Rule 16b-3 or any requirement of the Code applicable to the
Option.
(d) The Board may adopt rules and regulations for carrying out the
Plan with respect to Participants. The interpretation and
construction of any provision of the Plan by the Board shall be
final and conclusive as to any Participant. The Board may
consult with counsel, who may be counsel to the Company, and
shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.
12. NOTICE. All notices and other communications required or permitted to be
given under this Plan shall be in writing and shall be deemed to have
been duly given if delivered personally or mailed
7
<PAGE> 26
first class, postage prepaid, as follows (a) if to an Employer - at the
principal business address of the Company to the attention of the Chief
Financial Officer; (b) if to any Participant - at the last address of
the Participant known to the sender at the time the notice or other
communication is sent.
13. INTERPRETATION. This Plan shall be subject to all present and future
regulations and rulings of the Secretary of the Treasury or his or her
delegate relating to the qualification of Incentive Stock Options and
deductibility of compensation under the Code. If any provision of the
Plan conflicts with any such regulation or ruling, then that provision of
the Plan shall be void and of no effect. The terms of this Plan shall be
governed by the laws of the State of Delaware without regard to choice of
law provisions.
8
