SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [ x ]
Filed by a party other than registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ x ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
TOWN & COUNTRY CORPORATION
--------------------------
(Exact name of Registrant as specified in its charter)
Francis X. Correra, Senior Vice President & Chief Financial Officer
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
(1) Title of each class of securities to which transaction applies: N/A
----
(2) Aggregate number of securities to which transaction applies: N/A
----
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: N/A
----
(4) Proposed maximum aggregate value of transaction: N/A
----
[ ] 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:
-----------------------------------------------
(4) Date filed:
-----------------------------------------------
<PAGE>
June 26, 1995
Securities & Exchange Commission
450 Fifth Street
Washington, DC 20549
RE: DEFINITIVE PROXY MATERIAL
Ladies and Gentlemen:
Pursuant to Rule 14a-6(b) promulgated by the Securities and Exchange Commission
(the "SEC") under the Securities Exchange Act of 1934, as amended (the "1934
Act"), the following material is electronically filed on behalf of Town &
Country Corporation (the "Company"):
(1) Definitive Notice of Annual Meeting of Stockholders and Proxy
Statement of the Company, and
(2) Definitive Form of Proxy to be solicited by the Board of
Directors of the Company.
The Definitive Proxy Materials have been prepared by the Company for use in
connection with its Annual Meeting of Stockholders to be held on Thursday,
July 20, 1995.
Pursuant to Rule 14a-3(c) promulgated by the SEC under the 1934 Act, we are
forwarding under separate cover, seven (7) copies of the Company's Annual Report
for the fiscal year ended February 26, 1995. The Annual Reports are submitted
for the information of the SEC only and are not deemed "soliciting material" or
to be "filed" with the SEC. The financial statements in the Annual Report do not
reflect a change from the preceding year in any accounting principles or in the
method of applying any such principles or practices.
Pursuant to Rule 14a-6(m) promulgated by the SEC under the 1934 Act, attached is
Schedule 14A, Information Required in Proxy Statement. Pursuant to Item 10 of
Schedule 14A, we are forwarding under separate cover three (3) copies of each of
the proposed 1994 Non-Employee Directors' Nonqualified Stock Option Plan and the
1995 Stock Option and Incentive Plan. The proposed benefit plans are submitted
for the information of the SEC only and are not deemed "soliciting material" or
to be "filed" with the SEC. The Company's stockholders are voting on the benefit
plans.
Pursuant to the filing fee requirement of Rule 14a-6, the filing fee of $125 has
been wired to Mellon Bank, account number 910-8739, referencing CIK number
0000768608. This fee was designated to be non-restricted.
The Company is first mailing the Definitive Proxy Materials to its stockholders
on Tuesday, June 27, 1995.
<PAGE>
Concurrently with this filing, three copies of (a) the Definitive Notice of
Annual Meeting of Stockholders and Proxy Statement of the Company, (b) the
Definitive Form of Proxy to be solicited by the Board of Directors of the
Company, and (c) the Company's Annual Report are being sent to the American
Stock Exchange, Inc.
If you have any questions concerning any of the enclosed filings, you may call
the undersigned at (617) 884-8500.
Sincerely,
Robert C. MacCready
Vice President and
Corporate Controller
sdb
Enclosures: Seven (7) Annual Reports and Benefit Plans To:
<PAGE>
TOWN & COUNTRY CORPORATION
25 Union Street
Chelsea, Massachusetts 02150
June 27, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Town &
Country Corporation to be held at 10:30 A.M. on Thursday, July 20, 1995, at
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts.
Your Board of Directors and I look forward to greeting you at the meeting.
Enclosed are the Proxy Statement, Proxy Card and the 1995 Annual Report to
Stockholders. All Class A stockholders will be asked to vote on the election of
one new Director. All stockholders will be asked to vote on the re-election of
two Directors and to approve each of a Non-Employee Directors' Nonqualified
Stock Option Plan and a Stock Option and Incentive Plan.
The Board has given due consideration to the proposals to elect one new Director
and to re-elect two Directors to the Company's Board of Directors and to approve
each of a Non-Employee Directors' Nonqualified Stock Option Plan and a Stock
Option and Incentive Plan, and has concluded that their adoption would be in the
best interests of all the stockholders. Accordingly, the Board suggests you
carefully review the enclosed Proxy Statement and strongly recommends that you
vote for these Company proposals, and urges you to sign, date and mail the
enclosed proxy in the reply envelope provided at your earliest convenience. It
is important that your shares be represented at the meeting whether or not you
are able to be present. Your cooperation will be appreciated.
Sincerely,
/s/ C. William Carey
C. William Carey
Chairman
<PAGE>
Town & Country Corporation
Chelsea, Massachusetts 02150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 20, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Town &
Country Corporation will be held at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts, on Thursday, July 20, 1995, at 10:30
A.M., for the following purposes:
1. To elect three Directors.
2. To approve the adoption of the 1994 Non-Employee Directors' Nonqualified
Stock Option Plan.
3. To approve the adoption of the 1995 Stock Option and Incentive Plan.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on June 2, 1995 has been fixed as the record date for the
determination of the stockholders entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
Richard E. Floor, Clerk
Chelsea, Massachusetts
June 27, 1995
Management invites you to attend our annual meeting but if you are unable to be
present, please date, sign and return the enclosed proxy as promptly as
possible. No postage is required if the proxy is returned in the enclosed
envelope and mailed in the United States.
<PAGE>
TOWN & COUNTRY CORPORATION
25 Union Street
Chelsea, Massachusetts 02150
(617) 884-8500
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the Board of
Directors of Town & Country Corporation (hereinafter the "Company" or "Town &
Country") of proxies in the accompanying form to be used at the Annual Meeting
of Stockholders of the Company to be held on Thursday, July 20, 1995, and at all
adjournments thereof (the "Annual Meeting"), for the purposes set forth in the
accompanying notice of the meeting. It is intended that this statement and the
proxies solicited hereby be mailed to stockholders on or shortly after June 27,
1995. A stockholder who shall sign and return a proxy in the form enclosed with
this statement has the power to revoke the proxy at any time before it is
exercised by giving written notice to the Company, attention, Clerk, to such
effect. A stockholder also may revoke a proxy by filing a duly executed proxy
bearing a later date or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the record date stated below
attending the Annual Meeting may vote in person whether or not a proxy has been
previously given, but the presence (without further action) of a stockholder at
the Annual Meeting will not constitute revocation of a previously given proxy.
Proxies properly executed and received in time for the meeting will be voted.
The close of business on June 2, 1995, has been fixed as the record date for the
determination of the stockholders entitled to notice of, and to vote at, the
meeting. As of such date, 21,094,561 shares of Class A Common Stock and
2,664,941 shares of Class B Common Stock were outstanding and entitled to be
voted at the meeting. In addition, as of such date, 2,229,917 shares of the
Company's convertible redeemable preferred stock (the "Convertible Preferred")
were outstanding. Each share of Convertible Preferred is convertible into two
shares of Class A Common Stock and votes as if such share had been converted by
the holder. Accordingly, on an as-converted basis, 25,554,395 shares of Class A
Common Stock were outstanding as of June 2, 1995 and entitled to be voted at the
meeting. Each share of Class A Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to ten votes on all matters voted on
by that respective class at the meeting. Unless otherwise specified herein, all
references in this proxy statement to the Class A Common Stock shall be deemed
to include the Class A Common Stock into which the Convertible Preferred may be
converted. Unless otherwise specified herein, all references in this proxy
statement to the Common Stock shall be deemed to include the Class A Common
Stock into which the Convertible Preferred may be converted, the Class A Common
Stock and the Class B Common Stock.
The proxies in the accompanying form will be voted as specified, but if no
specification is made they will be voted in favor of the proposals set forth
herein. In the discretion of the proxy holders, the proxies will also be voted
for or against such other matters as may properly come before the meeting. The
Board of Directors is not aware that any other matters are to be presented for
action at the meeting.
Mr. C. William Carey, Chief Executive Officer and Chairman of the Board of
Directors of the Company, owns of record and beneficially an aggregate of
2,723,679 shares of the Company's Class A Common Stock and 2,519,787 shares of
the Company's Class B Common Stock. In addition, Mr. Carey serves as a
co-trustee for trusts holding an additional 254,571 shares of Class A Common
Stock and 140,253 shares of Class B Common Stock. As of June 2, 1995, Mr. C.
William Carey and trusts created for the benefit of his minor children owned, in
the aggregate, approximately 8.7% of the Company's Class A Common Stock and
99.8% of the Company's Class B Common Stock.
The Annual Report of the Company, including financial statements for the fiscal
year ended February 26, 1995, is being mailed to stockholders concurrently with
this proxy statement. The Annual Report, however, is not part of the proxy
solicitation material.
<PAGE>
ELECTION OF DIRECTORS (ITEM 1 ON PROXY)
The Company's by-laws provide that the power to fix the number of Directors each
year shall rest with the Board and that any vacancies shall be filled by a
majority vote of the Directors then in office. Effective as of the Annual
Meeting, the Board has set the number of Directors to serve until the next
annual meeting at five.
Pursuant to the Company's by-laws, the Board of Directors is divided into three
classes, as nearly equal in number as possible, with the members of each class
to serve for three years. Under this arrangement, Charles Hill will serve until
the 1996 Annual Meeting, and William Schawbel will serve until the 1997 Annual
Meeting, and until their successors are duly elected and qualified. The Board
has nominated C. William Carey and Richard E. Floor, who are currently Directors
of the Company, for re-election at the 1995 Annual Meeting to serve until the
1998 Annual Meeting, and until their successors are duly elected and qualified.
The Board has nominated Marcia C. Morris for election at the 1995 Annual Meeting
to serve until the 1997 Annual Meeting, and until her successor is duly elected
and qualified. Information regarding this nominee is set forth at page three.
In 1988, the Company amended its Articles of Organization to provide that at
least 25% of its Board of Directors would be elected by the Class A Shareholders
voting as a separate class. Messrs. Philip H. Cahalin and Donald H. Wheeler were
designated as Class A Directors at the 1988 Annual Meeting to serve until 1991.
Mr. Cahalin was reelected at the Annual Meeting in 1991; however, no new Class A
Director was proposed to fill the vacancy created by Mr. Wheeler's death in the
spring of 1991. In 1995, upon the retirement of Mr. Cahalin, the Board nominated
Messrs. Mone Anathan, III and William Schawbel, both of whom were elected to the
Board by the stockholders at the Company's 1994 Annual Meeting, to serve as the
Class A Directors of the Company. Mr. Mone Anathan III, who was elected to the
Board by the stockholders at the Company's 1994 Annual Meeting, resigned his
Directorship effective February 26, 1995 due to the demands of his own business.
The Board has nominated Ms. Morris to serve along with Mr. Schawbel as the Class
A Directors of the Company. Only holders of record of Class A Common Stock as of
June 2, 1995 are entitled to vote in the election of the Class A Directors.
As of June 2, 1995, Mr. C. William Carey and trusts created for the benefit of
his minor children owned, in the aggregate, approximately 8.7% of the shares of
the Company's Class A Common Stock. Following the exercise of the Company's
stock options that are exercisable within 60 days of June 2, 1995 (750,000 of
which are held by Mr. Carey) Mr. Carey's ownership would be increased to 11.0%
of the Company's outstanding Class A Common Stock.
The Company's by-laws provide that a plurality of the votes cast by the holders
of the Class A and Class B Common Stock voting together as a single class
represented in person or by proxy and entitled to vote at the 1995 Annual
Meeting is required to re-elect Messrs. Carey and Floor as Directors. The
Company's by-laws provide that a plurality of the votes cast by the holders of
the Class A Common Stock voting as a single class represented in person or by
proxy and entitled to vote at the 1995 Annual Meeting is required to elect Ms.
Morris as a Director.
The Board of Directors recommends that stockholders vote FOR the election of Mr.
Carey and Mr. Floor, and recommends that holders of Class A Common Stock vote
FOR the election of Ms. Morris.
In accordance with the provisions of Massachusetts law and the Company's
Articles of Incorporation and by-laws, the Company will treat abstentions and
broker non-votes as present at the Annual Meeting solely for purposes of
determining whether or not a quorum is present. Accordingly, shares represented
by a proxy that withhold authority to vote for a particular nominee or nominees
and broker non-votes will not be considered to be voting on the election of
Messrs. Carey and Floor and Ms. Morris as Directors.
<PAGE>
<TABLE>
The following table sets forth certain information as of June 2, 1995 regarding
the Directors of the Company and the nominees for Director based on the
information furnished by them to the Company.
<CAPTION>
Name and Principal Occupation First Became Shares of Common Percent of
for Past Five Years Age a Director Class of Stock Stock Owned Class(1)
<S> <C> <C> <C> <C> <C>
C. William Carey 58 1965 Class A 2,978,250 (2) 11.0%
Chairman and Chief Executive Class B 2,660,040 (3) 99.8%
Officer, Treasurer and President
of the Company since its
incorporation in 1965; Director,
Prospect Street High Income
Portfolio, Inc.; Director, Solomon
Brothers Limited, a Bahamas
corporation; Director and Chairman,
Little Switzerland, Inc., a Delaware
corporation.
Richard E. Floor 55 1972 Class A 153,000 (4) (5) *
Attorney whose professional Class B (4) --
corporation is a partner in the
law firm of Goodwin, Procter &
Hoar, the Company's legal counsel;
Director, New America High Income
Fund.
Charles Hill 47 1986 Class A 26,000 (5) *
Chairman of Garber Travel Service, Class B -- --
Inc. since 1981; Vice Chairman of
Towle Mfg. Co., Inc. (giftware)
1982-1983.
William Schawbel 55 1995 Class A 20,000 (6) *
Chief Executive Officer of The Class B -- --
Schawbel Corporation (technology
manufacturer) since 1981.
Marcia C. Morris 46 Nominee -- --
Chief Legal Counsel, Senior
Vice President, The Presbyterian
Hospital since March 1995; Kennedy
School of Government, Harvard
University, 1992-93; President,
the Stride Rite Children's Group,
1989-92.
</TABLE>
<PAGE>
(1) Included in calculating the percentages of the Company's Class A Common
Stock are 1,543,700 shares of the Company's Class A Common Stock that could be
acquired by the exercise of stock options or warrants within 60 days of June 2,
1995, 750,000 of which are held by Mr. Carey.
(2) Includes 254,571 shares of Class A Common Stock (0.9% of the class)
beneficially owned by Mr. Carey and Mr. Floor in their capacities as co-trustees
of various irrevocable family trusts for the benefit of Mr. Carey's minor
children, which trusts give the trustees the shared power to vote and dispose of
these shares.
(3) Includes 140,253 shares of Class B Common Stock (5.3% of the class)
beneficially owned by Mr. Carey and Mr. Floor in their capacities as co-trustees
of the trusts described in footnote 2 above.
(4) Excludes the shares of Class A and Class B Common Stock beneficially owned
by Mr. Carey and Mr. Floor, as described above in footnotes 2 and 3.
(5) Includes 25,000 shares of Class A Common Stock that each Director could
acquire by the exercise of stock options within 60 days of June 2, 1995, 20,000
of which are contingent upon stockholder approval of the 1994 Non-Employee
Directors' Nonqualified Stock Option Plan (Item 2 on the proxy).
(6) Includes 20,000 shares of Class A Common Stock that this Director could
acquire by the exercise of stock options within 60 days of June 2, 1995, all of
which are contingent upon stockholder approval of the 1994 Non-Employee
Directors' Nonqualified Stock Option Plan (Item 2 on the proxy).
(*) The amount of Common Stock held by this individual is less than one percent
of the outstanding shares of that class of Common Stock.
<PAGE>
BOARD MEETINGS, COMMITTEES, ATTENDANCE AND FEES
BOARD MEETINGS
The Board of Directors held four meetings during the 1995 fiscal year. The Board
has no nominating committee. Each of the incumbent Directors attended more than
75% of the aggregate number of meetings of the Board of Directors and of the
committees of which he was a member which were held during the period he was a
Director or committee member.
COMPENSATION COMMITTEE
This committee reviews and makes recommendations to the Board concerning major
compensation policies, the granting of stock options, and compensation of
officer-Directors. Because the full Board of Directors determined that the
employment agreements and performance-based compensation arrangements with
Messrs. Carey and Correra defined the salary and bonus arrangements for the
Company's executive officers, the Compensation Committee did not meet during the
past fiscal year.
The committee members are Directors Hill and Schawbel.
AUDIT COMMITTEE
This committee held one meeting during the past fiscal year. This committee is
responsible for reviewing the financial condition of the Company, its internal
controls and any action to be taken thereon by management. It reviews audit and
examination reports of the independent auditors. The committee elects the
independent auditors for appointment by the Board.
The committee members are Directors Floor, Hill and Schawbel.
REMUNERATION OF DIRECTORS
Each Director of the Company, other than those who are officers, receives
$10,000 per year plus $2,500 per Board meeting. Directors serving on committees
receive $1,000 per meeting attended, other than those held in conjunction with
regularly scheduled Board meetings. Each Director is reimbursed for expenses
incurred in connection with his or her duties as Director. Assuming approval of
the plan by the Company's stockholders, pursuant to the 1994 Non-Employee
Directors' Nonqualified Stock Option Plan, each non-employee Director, upon his
or her initial election to the Board of Directors, will receive an option to
purchase 20,000 shares of Class A Common Stock. Each non-employee Director who
is a Director on the last day of the Company's fiscal year which is more than
four full years after the date of the initial option grant will receive on such
date and annually thereafter an option to purchase 4,000 additional shares of
Class A Common Stock. All such options will be immediately exercisable at the
fair market value of the Class A Common Stock on the date of issuance.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of June 2, 1995 except where a
different date is indicated by footnote, with respect to the beneficial
ownership of the Company's voting securities by all persons known by the Company
to own more than 5% of either class of the Company's outstanding voting
securities, by the named executive officers, and by all Directors, nominees for
Director, and executive officers of the Company as a group. Approximately 8.7%
and 99.8% of the Company's Class A and Class B securities, respectively,
entitled to vote at the 1995 Annual Meeting are owned by Mr. Carey and by trusts
established for his minor children. See the table and accompanying footnotes
below.
<TABLE>
<CAPTION>
Amount
Title of Class Name and Address of Beneficially Percent
Beneficial Owner Owned of Class (1)
<S> <C> <C> <C>
Class A Common Stock C. William Carey
$.01 par value Town & Country Corporation
25 Union Street
Chelsea, Massachusetts 02150 2,978,250 (2) 11.0%
Francis X. Correra
Town & Country Corporation
25 Union Street
Chelsea, Massachusetts 02150 482,960 (3) 1.8%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109-3614 1,505,770 (4) 5.6%
Northeast Investors Trust
50 Congress Street
Boston, Massachusetts 02109 1,626,773 (5) 6.0%
Directors and Executive
Officers as a Group (6 Persons) 3,660,210 (6) 13.6%
Class B Common Stock C. William Carey
$.01 par value Town & Country Corporation
25 Union Street
Chelsea, Massachusetts 02150 2,660,040 (7) 99.8%
Francis X. Correra
Town & Country Corporation
25 Union Street
Chelsea, Massachusetts 02150 1,462 *
Directors and Executive
Officers as a Group (6 Persons) 2,661,502 (8) 99.9%
<PAGE>
</TABLE>
(1) Included in calculating the percentages of the Company's Class A Common
Stock are 1,543,700 shares of the Company's Class A Common Stock that could be
acquired by the exercise of stock options or warrants within 60 days of June 2,
1995.
(2) Includes all of the shares set forth in footnote 2 above to Election of
Directors.
(3) Includes 475,000 shares which Mr. Correra could acquire by the exercise of
stock options within 60 days of June 2, 1995.
(4) As reported by FMR Corp. in an amended Schedule 13G dated January 9, 1995
and filed with the Securities and Exchange Commission.
(5) As reported by Northeast Investors Trust in a Schedule 13G dated February
14, 1995 and filed with the Securities and Exchange Commission.
(6) See footnote 2 above to Election of Directors. Includes 1,295,000 shares
which Directors and executive officers could acquire by the exercise of stock
options within 60 days of June 2, 1995.
(7) Includes all of the shares set forth in footnote 3 above to Election of
Directors.
(8) See footnote 3 above to Election of Directors.
(*) The amount of Common Stock held by this individual is less than one percent
of the outstanding shares of that class of common stock.
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the name, age and position held by each executive
officer of the Company during the fiscal year ended February 26, 1995:
<TABLE>
<CAPTION>
Name Age Capacities in which Served
<S> <C> <C>
C. William Carey 58 Chairman and Chief Executive
Officer, Treasurer and
President of the Company since
its incorporation in 1965.
Francis X. Correra 57 Senior Vice President and Chief
Financial Officer since 1983;
associated with the Company since
1979.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth compensation awarded to, earned by or paid to
each of the Company's executive officers, including the Chief Executive Officer,
who were serving as executive officers at the end of fiscal 1995, for services
rendered to the Company during fiscal 1995. Information with respect to salary,
bonus, other annual compensation and options is included for the 1993, 1994 and
1995 fiscal years. The Company does not provide any long term incentive plans.
The Company has not granted any restricted stock awards or stock appreciation
rights, nor paid compensation that would qualify as "All Other Compensation".
<TABLE>
<CAPTION>
Fiscal Other Annual
Name Year Salary Bonus Compensation Options
<S> <C> <C> <C> <C> <C>
C. William Carey 1995 $975,000
1994 $973,558 $546,000 $9,333 (1) (2) 1,000,000
1993 $905,769 $37,333 (1) (2)
Francis X. Correra 1995 $373,915
1994 $364,231 $127,750 $9,333 (1) (2) 500,000
1993 $327,597 $37,333 (1) (2)
</TABLE>
(1) The aggregate amount of perquisites and other personal benefits provided to
each named executive officer did not exceed the lesser of $50,000 or 10% of his
total annual salary and bonus.
(2) In fiscal 1992, Mr. Carey and Mr. Correra each purchased 20,000 shares of
Common Stock of Essex International Company, Ltd., a subsidiary of the Company,
at a purchase price of $0.40 per share. Two-thirds of the shares purchased were
subject to restrictions on voting and disposition which lapsed ratably through
May 1993.
<PAGE>
AGGREGATE FISCAL YEAR-END OPTION VALUE TABLE
On May 14, 1993, the Board of Directors issued options to purchase 1,000,000
shares of Class A Common Stock to C. William Carey and options to purchase
500,000 shares of Class A Common Stock to Francis X. Correra. The options are
exercisable at a price of $2.75 per share. Twenty-five percent of the options
vested upon issuance and twenty-five percent vest on each of the first three
anniversary dates of the recapitalization of the Company.
The following table sets forth certain information concerning unexercised stock
options held by the named executive officers as of the end of fiscal 1995. No
stock options were granted to or exercised by any of the named executive
officers during the 1995 fiscal year. No stock appreciation rights have been
granted or are outstanding.
OPTION EXERCISES DURING 1995 FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Number of Unexercised In-the-Money Options
Shares Acquired Value at Options at 1995 at 1995 Fiscal Year
Name on Exercise Realization Fiscal Year End End ($) (1)
- - ---------------- --------------- ----------- ---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
C. William Carey 0 0 500,000 500,000 0 0
Francis X. Correra 0 0 372,000 250,000 0 0
</TABLE>
(1) The closing price for the Company's Class A Common Stock on February 26,
1995, as reported by the American Stock Exchange was $0.8125.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of Messrs. Hill and Schawbel. Following
review by the full Board of preliminary financial results for fiscal 1995, it
was agreed that the provisions of new employment agreements and
performance-based compensation plan described below define fiscal 1995 salary
and bonus arrangements for Messrs. Carey and Correra and that no Compensation
Committee Report on Executive Compensation would be required.
Messrs. William Schawbel and Charles Hill.
PERFORMANCE GRAPH
The following graph compares changes in the cumulative total shareholder return
on the Company's Class A Common Stock for the previous five-years to the
Standard & Poor's 500 Composite Index and to a peer group of publicly traded
companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG TOWN & COUNTRY
CORPORATION, S&P 500 INDEX AND PEER COMPANY GROUP INDEX
<TABLE>
<CAPTION>
2/91 2/92 2/93 2/94 2/95
<S> <C> <C> <C> <C> <C>
Town & Country Corp. Class A $ 47.62 $52.38 $50.00 $47.62 $16.67
S&P 500 Comp-Ltd. $114.67 $133.00 $147.17 $159.44 $171.17
Peer Group Weighted Average $121.92 $124.00 $ 87.63 $115.64 $112.98
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENTS
In fiscal 1995, the Company entered into new employment agreements with C.
William Carey, the Chairman, President and Treasurer of the Company, and Francis
X. Correra, the Senior Vice President and Chief Financial Officer of the
Company. Mr. Carey's employment agreement may, in certain circumstances, provide
for the payment of compensation in excess of $1 million. Section 162(m) of the
Internal Revenue Code provides that, with certain exceptions, a public company
may not deduct compensation in excess of $1 million. Deductions of amounts paid
in excess of $1 million are allowed for performance-based compensation that is
paid solely on the basis of performance goals established by an independent
compensation committee and approved by the corporation's shareholders. During
fiscal 1994, the Compensation Committee recommended, and the full Board of
Directors approved, new employment agreements for Mr. Carey and Mr. Correra
which include performance-based compensation that could result in payments in
excess of $1 million to Mr. Carey. To enable the Company to deduct this
compensation and take advantage of the tax benefits to the Company that such
deductions would provide, in fiscal 1995, the Board of Directors sought and
received shareholder approval at the 1994 Annual Meeting of the
performance-based compensation arrangements set forth in the new employment
agreements for Messrs. Carey and Correra.
The agreements provide for annual compensation and benefits for a five-year term
commencing March 1, 1994. Mr. Carey's agreement provides for a base salary of
$975,000 and an annual bonus, based on increasing earnings per share targets, of
up to 120% of his salary. Mr. Carey's base salary will remain constant unless
Section 162(m) is amended or repealed and thereafter would be subject only to
cost of living increases. Mr. Correra's agreement provides for a base salary of
$365,000, subject to annual cost of living increases, and an annual bonus, based
on increasing earnings per share targets, of up to 110% of his base salary. The
bonuses are linked to earnings per share goals which the Compensation Committee
and the Board of Directors believe would constitute, even at the lowest levels,
above average performance.
Each of Mr. Carey and Mr. Correra are eligible to receive a bonus if the
Company's net income per common share (excluding extraordinary items and
material capital transactions and after provision for the payment of any such
bonus) equals or exceeds certain targeted earnings per share levels. These
levels increase over the term of the employment agreements so that the targets
in each year are higher than the previous year's targets. If the applicable
target is not achieved, no bonus will be paid. The percentage bonus to be paid
depends upon the earnings per share target achieved. The maximum bonus which may
be paid to Mr. Carey is equal to 120% of his salary and the maximum bonus which
may be paid to Mr. Correra is equal to 110% of his salary. Neither the Board of
Directors nor the Compensation Committee has any power to alter the performance
targets contained in the employment agreements.
NEW PLAN BENEFITS
Employment Agreements with C. William Carey and Francis X. Correra
<TABLE>
<CAPTION>
Name and Position Dollar Value
<S> <C>
C. William Carey, Chairman, President
and Treasurer (1)
Francis X. Correra, Senior Vice President
and Chief Financial Officer (1)
</TABLE>
<PAGE>
(1) Pursuant to the performance-based compensation arrangements contained in Mr.
Carey's and Mr. Correra's employment agreements, Mr. Carey is eligible
to receive a bonus of up to 120% of his base salary, currently $975,000, and Mr.
Correra is eligible to receive a bonus of up to 110% of his base salary,
currently $365,000. The amount of the bonuses to be paid, if any, is
indeterminate because such bonus payments will be based solely upon the
achievement of certain targeted earnings per share goals.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers, and persons who own more than ten percent of the
Company's Common Stock to file with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of changes in ownership of
Common Stock. Officers, Directors and greater than ten percent shareholders are
required by the SEC to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and representations that no other reports were
required, during the fiscal year ended February 26, 1995, all Section 16(a)
filing requirements applicable to its officers, Directors and greater than ten
percent beneficial owners were complied with, except that Charles Hill, a
Director of the Company, did not timely file a Form 4 reporting one transaction
in the Company's Common Stock. This transaction was reported on a Form 5 filed
by Mr. Hill.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
During fiscal year 1995, the Company leased a portion of its Chelsea,
Massachusetts facility comprising approximately 44,000 square feet of
administrative space from Carey Realty Trust, a Massachusetts business trust
(the "Trust") which is wholly owned by C. William Carey, the President and
principal stockholder of the Company. The lease expires on August 31, 1998 and
the Company has four five-year options to renew. The current lease provides for
an annual rental (subject to Consumer Price Index adjustment) on a net lease
basis of $483,426. The Company believes that these lease arrangements represent
terms no less favorable to the Company than could be obtained from unaffiliated
third parties.
The professional corporation of Richard E. Floor, the Clerk and a Director of
the Company, is a partner in the law firm of Goodwin, Procter & Hoar, which
provides legal services for the Company.
In connection with the Company's recapitalization completed in May 1993, certain
funds managed by Fidelity Management & Research Company and Fidelity Management
Trust Company (the "Fidelity Funds") committed to purchase all of the Company's
11-1/2% Senior Secured Notes due September 15, 1997 (the "New Senior Secured
Notes") not purchased by other holders of the Company's then-outstanding
subordinated indebtedness. As a result of such commitment, the Fidelity Funds
purchased an aggregate of $27,000,000 principal amount of New Senior Secured
Notes. In exchange for their commitment to purchase all of the New Senior
Secured Notes not purchased by such other holders, the Company issued to the
Fidelity Funds 750,000 shares of Class A Common Stock and paid the fees and
expenses of the Fidelity Funds' legal counsel (approximately $220,000). As part
of the recapitalization, the Fidelity Funds exchanged the Company's 10-1/4%
Subordinated Notes due July 1, 1995 and the Company's 13% Senior Subordinated
Notes due December 15, 1998 held by them for an aggregate of $22,886,639
principal amount of the Company's 13% Senior Subordinated Notes due May 31, 1998
(the "New Senior Subordinated Notes"), 1,084,069 shares of the Company's
exchangeable preferred stock, $1.00 par value per share (the "Exchangeable
Preferred Stock"), and 4,276,160 shares of Class A Common Stock. In addition,
pursuant to an agreement with the Fidelity Funds, the Company has registered
<PAGE>
under the Securities Act of 1933, as amended (the "Securities Act"), the New
Senior Secured Notes, the New Senior Subordinated Notes, the Exchangeable
Preferred Stock and the Class A Common Stock held by the Fidelity Funds and has
agreed to keep the registration statement covering such securities effective
until the earlier of (a) the date on which the Fidelity Funds notify the Company
that they may dispose of such securities without being subject to the
restrictions of Rule 144(e)(i) of the Securities Act or (b) the date on which
the Fidelity Funds no longer own any of such securities.
<PAGE>
APPROVAL OF 1994 NON-EMPLOYEE DIRECTORS' NONQUALIFIED
STOCK OPTION PLAN (ITEM 2 ON THE PROXY)
On September 12, 1994, the Board of Directors of the Company adopted the 1994
Non-Employee Directors' Nonqualified Stock Option Plan (the "Directors' Stock
Option Plan"), subject to the approval of the Company's stockholders at the 1995
Annual Meeting. The purpose of the Directors' Stock Option Plan is to provide an
incentive to obtain and retain the services of highly qualified persons who are
not employees of the Company to serve as members of the Board of Directors of
the Company through the granting of options. The Directors' Stock Option Plan is
designed to give each participant an ownership interest in the Company and to
align their interests with those of the Company's stockholders. The Directors'
Stock Option Plan authorizes only the grant of options to purchase Class A
Common Stock that do not qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended ("Nonqualified Options").
SUMMARY OF THE DIRECTORS' STOCK OPTION PLAN
The Directors' Stock Option Plan provides for the grant of options to purchase
up to 200,000 shares of Class A Common Stock of the Company. Based solely upon
the closing price of the Company's Common Stock on the American Stock Exchange
on June 10, 1995, the maximum aggregate market value of the securities to be
issued under the Directors' Stock Option Plan is $125,000. The actual value of
the securities to be issued will be determined by the fair market value of the
underlying securities on the dates such securities are issued. The actual
aggregate amount to be received by the Company upon issuance of such shares will
be determined by the aggregate exercise price of options granted under the
Directors' Stock Option Plan.
Pursuant to the Directors' Stock Option Plan, each non-employee Director of the
Company at October 1, 1994 was granted an option to purchase 20,000 shares of
Class A Common Stock at a per share exercise price of $1.875, the fair market
value of a share of Class A Common Stock on that date. Upon his or her initial
election to the Board of Directors, each non-employee Director will be granted
an option to purchase 20,000 shares of Class A Common Stock. Each non-employee
Director who is a Director on the last day of the Company's fiscal year which is
more than four full years after the date of the initial option grant will
receive on such date and annually thereafter an option to purchase 4,000
additional shares of Class A Common Stock. All such options will be immediately
exercisable at the fair market value of the Class A Common Stock on the date of
issuance.
Each option will have a term of ten years from the date of grant. No options
granted under the Directors' Stock Option Plan may be exercised after the date
on which the Director to whom the option was granted ceases to serve as a
Director of the Company, provided that in the event of the termination of a
Director as a result of disability, death or mandatory retirement due to age,
the Director or his or her personal representative may exercise any outstanding
options during the one-year period following such disability, death or
retirement. No options may be transferred by the optionee other than by will or
the laws of descent or distribution. Each option may be exercised, during the
lifetime of the optionee, only by such optionee.
The Directors' Stock Option Plan is administered by the Compensation Committee
of the Board of Directors (the "Committee"). All members of the Committee must
be "disinterested persons" as that term is defined under rules promulgated by
the SEC.
The Company will receive no consideration upon the grant of options under the
Directors' Stock Option Plan. Upon exercise of options, the option exercise
price must be paid in full either in cash, by certified or bank check, by other
instrument acceptable to the Committee or, if the Committee so determines, by
delivery of shares of Common Stock already owned by the optionee.
<PAGE>
Federal Income Tax Consequences
The following is a general summary of the principal federal income tax
consequences of transactions under the Directors' Stock Option Plan. It does not
describe all federal tax consequences under the Directors' Stock Option Plan,
nor does it describe state or local tax consequences.
No income is realized by the optionee at the time an option is granted under the
Directors' Stock Option Plan. Generally, (1) at exercise, ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise, and the
Company receives a tax deduction for the same amount, and (2) at disposition,
appreciation or depreciation after the date of exercise is treated as either
short-term or long-term capital gain or loss depending on how long the shares
have been held.
New Plan Benefits
The table below shows the aggregate number of options that will be granted to
non-employee Directors by the Company in 1995, assuming adoption of the
Directors' Stock Option Plan. Each option granted will have an option exercise
price equal to 100% of the fair market value of the Company's Common Stock on
the date of grant.
<TABLE>
1994 Non-Employee Directors' Nonqualified Stock Option Plan
<CAPTION>
Name of Group Number of Common Shares Underlying Stock Options
<S> <C>
Non-Employee Directors 20,000 (1)
</TABLE>
(1) The above grant will be made to Marcia C. Morris if she is elected as a
Director by the holders of Class A Common Stock and if the Directors' Stock
Option Plan is approved by the Company's stockholders. On October 1, 1994, each
of Richard E. Floor, Charles Hill and William Schawbel were granted options to
purchase 20,000 shares of Class A Common Stock at an exercise price of $1.875,
contingent on stockholder approval of the Directors' Stock Option Plan.
The description of the Directors' Stock Option Plan, as it is proposed to be
approved, is qualified in its entirety by reference to the text of the Town &
Country Corporation 1994 Non-Employee Directors' Stock Option Plan, a copy of
which is attached as Exhibit A to the Proxy Statement.
The Board of Directors recommends that the Directors' Stock Option Plan be
approved and therefore recommends a vote FOR this proposal.
The Directors' Stock Option Plan will become effective upon the affirmative vote
of the holders of at least a majority of the shares of Common Stock present or
represented and entitled to vote at the 1995 Annual Meeting. For purposes of the
vote on the Directors' Stock Option Plan, abstentions will have the same effect
as votes against the Directors' Stock Option Plan and broker non-votes will have
no effect on the results of the vote. Both abstentions and broker non-votes will
count towards the presence of a quorum.
<PAGE>
APPROVAL OF 1995 STOCK OPTION AND INCENTIVE PLAN (ITEM 3 ON THE PROXY)
The Board of Directors has adopted the 1995 Stock Option and Incentive Plan (the
"1995 Plan") for officers, employees and other key persons of the Company and
its subsidiaries, subject to the approval of the 1995 Plan by the Company's
stockholders at the 1995 Annual Meeting.
The Board of Directors of the Company believes that stock options and other
stock-based incentive awards can play an important role in the success of the
Company by encouraging and enabling the officers and other employees of the
Company and its subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. The Board of Directors anticipates that
providing such persons with a direct stake in the Company will assure a closer
identification of the interests of participants in the 1995 Plan with those of
the Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company. The Board of Directors
believes that the proposed 1995 Plan, which provides for a greater range of
stock-based incentive awards and permits greater flexibility in the terms of
such awards than the Company's 1985 Amended and Restated Stock Option Plan (the
"1985 Plan"), will help the Company to achieve its goals by keeping the
Company's incentive compensation program dynamic and competitive with those of
other companies. Effective May 20, 1995, additional options may no longer be
granted under the 1985 Plan. However, 755,700 options granted under the 1985
Plan before May 20, 1995 will continue to be governed by the 1985 Plan.
The 1995 Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee, at its discretion, may grant a
variety of stock incentive awards based on the Class A Common Stock of the
Company. Awards under the 1995 Plan include stock options (both incentive
options and non-qualified options), stock appreciation rights, restricted stock,
performance shares, unrestricted stock and dividend equivalent rights. These
awards are described in greater detail below.
Subject to adjustment for stock splits, stock dividends and similar events, the
total number of shares of Class A Common Stock that can be issued under the 1995
Plan is 2,000,000 shares. In order to satisfy the performance-based compensation
exception to the $1 million cap on the Company's tax deduction imposed by
Section 162(m) of the Internal Revenue Code, the Plan also provides that stock
options or stock appreciation rights with respect to no more than 500,000 shares
of Class A Common Stock may be granted to any one individual in any one calendar
year. The shares issued by the Company under the 1995 Plan may be authorized but
unissued shares, or shares reacquired by the Company. To the extent that awards
under the 1995 do not vest or otherwise revert to the Company, the shares of
Class A Common Stock represented by such awards may be the subject of subsequent
awards.
Summary of the 1995 Plan
The following description of certain features of the 1995 Plan is intended to be
a summary only. The summary is qualified in its entirety by the full text of the
1995 Plan which is attached hereto as Exhibit B.
Plan Administration; Eligibility. The 1995 Plan is administered by the
Committee. All members of the Committee must be "disinterested persons" as that
term is defined under the rules promulgated by the Securities and Exchange
Commission and "outside directors" as defined in Section 162 of the Internal
Revenue Code and the regulations promulgated thereunder.
The Committee has full power to select, from among the employees eligible for
awards, the individuals to whom awards will be granted, to make any combination
of awards to participants, and to determine the specific terms and conditions of
each award, subject to the provisions of the 1995 Plan. The Committee may permit
Class A Common Stock, and other amounts payable pursuant to an award, to be
deferred. In such instances, the Committee may permit interest, dividend or
deemed dividends to be credited to the amount of deferrals.
<PAGE>
Persons eligible to participate in the 1995 Plan will be those employees and
other key persons, such as consultants, of the Company and its subsidiaries who
are responsible for or contribute to the management, growth or profitability of
the Company and its subsidiaries, as selected from time to time by the
Committee.
Stock Options. The 1995 Plan permits the granting of (i) options to purchase
Class A Common Stock intended to qualify as incentive stock options ("Incentive
Options") under Section 422 of the Internal Revenue Code and (ii) Nonqualified
Stock Options that do not so qualify. The option exercise price of each option
will be determined by the Committee but may not be less than 100% of the fair
market value of the Class A Common Stock on the date of grant in the case of
Incentive Options, and may not be less than 85% of the fair market value of the
Class A Common Stock on the date of grant in the case of Nonqualified Options.
However, employees participating in the 1995 Plan may elect, with the consent of
the Committee, to receive discounted Nonqualified Options in lieu of cash
bonuses. In the case of such grants, the option exercise price must be at least
50% of the fair market value of the Class A Common Stock on the date of grant.
The term of each option will be fixed by the Committee and may not exceed ten
years from date of grant in the case of an Incentive Option. The Committee will
determine at what time or times each option may be exercised and, subject to the
provisions of the 1995 Plan, the period of time, if any, after retirement,
death, disability or termination of employment during which options may be
exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Committee.
Upon exercise of options, the option exercise price must be paid in full either
in cash or by certified or bank check or other instrument acceptable to the
Committee or, if the Committee so permits, by delivery of shares of Common Stock
already owned by the optionee. The exercise price may also be delivered to the
Company by a broker pursuant to irrevocable instructions to the broker from the
optionee.
At the discretion of the Committee, stock options granted under the 1995 Plan
may include a "re-load" feature pursuant to which an optionee exercising an
option by the delivery of shares of Common Stock would automatically be granted
an additional stock option (with an exercise price equal to the fair market
value of the Class A Common Stock on the date the additional stock option is
granted) to purchase that number of shares of Class A Common Stock equal to the
number delivered to exercise the original stock option. The purpose of this
feature is to enable participants to maintain any equity interest in the Company
without dilution.
To qualify as Incentive Options, options must meet additional Federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders. Awards of Incentive Options may be granted under the 1995 Plan
until ten years after the date the 1995 Plan is adopted by the Board of
Directors.
Stock Appreciation Right. The Committee may award a stock appreciation right
("SAR") either as a freestanding award or in tandem with a stock option. Upon
exercise of the SAR, the holder will be entitled to receive an amount equal to
the excess of the fair market value on the date of exercise of one share of the
Class A Common Stock over the exercise price per share specified in the related
stock option (or, in the case of freestanding SAR, the price per share specified
in such right, which price may not be less than 85% of the fair market value of
the Class A Common Stock on the date of grant) times the number of shares of the
Class A Common Stock with respect to which the SAR is exercised. This amount may
be paid in cash, Common Stock, or a combination thereof, as determined by the
Committee. If the SAR is granted in tandem with a stock option, exercise of the
SAR cancels the related option to the extent of such exercise.
<PAGE>
Restricted Stock. The Committee may also award shares of the Class A Common
Stock to officers, other employees and key persons subject to such conditions
and restrictions as the Committee may determine ("Restricted Stock"). These
conditions and restrictions may include the achievement of certain performance
goals and/or continued employment with the Company through a specified
restricted period. The purchase price, if any, of shares of Restricted Stock
will be determined by the Committee. If the performance goals and other
restrictions are not attained, the employees will forfeit their awards of
Restricted Stock.
Unrestricted Stock. The Committee may also grant shares (at no cost or for a
purchase price determined by the Committee) which are free from any restrictions
under the 1995 Plan ("Unrestricted Stock"). Unrestricted Stock may be issued to
employees and key persons in recognition of past services or other valid
consideration, and may be issued in lieu of cash bonuses to be paid to such
employees and key persons.
Subject to the consent of the Committee, an employee or key person of the
Company may make an irrevocable election to receive a portion of his
compensation in Unrestricted Stock (valued at fair market value on the date the
cash compensation would otherwise be paid).
Performance Share Awards. The Committee may also grant performance share awards
to employees or other key persons entitling the recipient to receive shares of
the Class A Common Stock upon the achievement of individual or Company
performance goals and such other conditions as the Committee shall determine
("Performance Share Award").
Dividend Equivalent Rights. The Committee may grant dividend equivalent rights,
which entitle the recipient to receive credits for dividends that would be paid
if the grantee had held specified shares of the Class A Common Stock. Dividend
equivalent rights may be granted as a component of another award or as a
freestanding award. Dividend equivalents credited under the 1995 Plan may be
paid currently or be deemed to be reinvested in additional shares of the Class A
Common Stock, which may thereafter accrue additional dividend equivalents at
fair market value at the time of deemed reinvestment or on the terms then
governing the reinvestment of dividends under the Company's dividend
reinvestment plan, if any. Dividend equivalent rights may be settled in cash,
shares, or a combination thereof, in a single installment or installments, as
specified in the award. Awards payable in cash on a deferred basis may provide
for crediting and payment of interest equivalents.
Adjustments for Stock Dividends, Mergers, Etc. The Committee will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Company or similar event, the Committee, in its discretion, may provide for
substitution or adjustments of outstanding options and SARs, or may terminate
all unexercised options and SARs with or without payment of cash consideration.
Amendments and Termination. The Board of Directors may at any time amend or
discontinue the 1995 Plan and the Committee may at any time amend or cancel
outstanding awards for the purpose of satisfying changes in the law or for any
other lawful purpose. However, no such action may be taken which adversely
affects any rights under outstanding awards without the holder's consent.
Further, plan amendments shall be subject to approval by the Company's
stockholders if and to the extent required by the Securities Exchange Act of
1934, as amended (the "Exchange Act"), to ensure that awards granted under the
1995 Plan are exempt under Rule 16b-3 promulgated under the Exchange Act, or
required by the Internal Revenue Code to preserve the qualified status of
Incentive Options.
<PAGE>
New Plan Benefits
The number of shares that may be granted to executive officers and non-executive
officers is undeterminable at this time, as such grants are subject to the
discretion of the Committee.
Federal Income Tax Consequences
The following is a summary of the principal Federal income tax consequences of
stock incentive awards under the 1995 Plan. It does not describe all Federal tax
consequences under the 1995 Plan, nor does it describe state or local tax
consequences.
Incentive Options. Under the Internal Revenue Code, an employee will not realize
taxable income by reason of the grant or the exercise of an Incentive Option. If
an employee exercises an Incentive Option and does not dispose of the shares
until the later of (a) two years from the date the option was granted or (b) one
year from the date the shares were transferred to the employee, the entire gain,
if any, realized upon disposition of such shares will be taxable to the employee
as long-term capital gain, and the Company will not be entitled to any
deduction. If an employee disposes of the shares within such one-year or
two-year period in a manner so as to violate the holding period requirements (a
"disqualifying disposition"), the employee generally will realize ordinary
income in the year of disposition, and, provided the Company complies with
applicable withholding requirements, the Company will receive a corresponding
deduction, in an amount equal to the excess of (1) the lesser of (x) the amount,
if any, realized on the disposition and (y) the fair market value of the shares
on the date the option was exercised over (2) the option price. Any additional
gain realized on the disposition will be long-term or short-term capital gain
and any loss will be long-term or short-term capital loss. The employee will be
considered to have disposed of his shares if he sells, exchanges, makes a gift
of or transfers legal title to the shares (except by pledge or by transfer on
death). If the disposition of shares is by gift and violates the holding period
requirements, the amount of the employee's ordinary income (and the Company's
deduction) is equal to the fair market value of the shares on the date of
exercise less the option price. If the disposition is by sale or exchange, the
employee's tax basis will equal the amount paid for the shares plus any ordinary
income realized as a result of the disqualifying distribution. The exercise of
an Incentive Option may subject the employee to the alternative minimum tax.
Special rules apply if an employee surrenders shares of Common Stock in payment
of the exercise price of his Incentive Option.
An Incentive Option that is exercised by an employee more than three months
after an employee's employment terminates will be treated as a Nonqualified
Option for Federal income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in the case of an
employee who dies, the three-month employment rule does not apply.
Nonqualified Options. There are no Federal income tax consequences to either the
optionee, or the Company on the grant of a Nonqualified Option. On the exercise
of a Nonqualified Option, the optionee (except as described below) has taxable
ordinary income equal to the excess of the fair market value of the Common Stock
received on the exercise date over the option price of the shares. The
optionee's tax basis for the shares acquired upon exercise of a Nonqualified
Option is increased by the amount of such taxable income. The Company will be
entitled to a Federal income tax deduction in an amount equal to such excess,
provided the Company complies with applicable withholding rules. Upon the sale
of the shares acquired by exercise of a Nonqualified Option, the optionee will
realize long-term or short-term capital gain or loss depending upon his or her
holding period for such shares.
<PAGE>
Section 83 of the Internal Revenue Code and the regulations thereunder provide
that the date for recognition of ordinary income (and the Company's equivalent
deduction) upon exercise of a Nonqualified Option and for the commencement of
the holding period of the shares thereby acquired by a person who is subject to
Section 16 of the Exchange Act will be delayed until the date that is the
earlier of (i) six months after the date of the exercise and (ii) such time as
the shares received upon exercise could be sold at a gain without the person
being subject to such potential liability.
Special rules apply if an optionee surrenders shares of Common Stock in payment
of the exercise price of a Nonqualified Option.
Limitation on Company's Deductions. As a result of Section 162(m) of the
Internal Revenue Code, the Company's deduction for certain awards under the 1995
Plan may be limited to the extent that the Chief Executive Officer or other
executive officer whose compensation is required to be reported in the summary
compensation table receives compensation (other than performance-based
compensation) in excess of $1 million a year.
The Board of Directors recommends that the 1995 Plan be approved, and therefore
recommends a vote FOR this proposal.
The 1995 Plan will become effective upon the affirmative vote of the holders of
at least a majority of the shares of Common Stock present or represented and
entitled to vote at the 1995 Annual Meeting. For purposes of the vote on the
1995 Plan, abstentions will have the same effect as votes against the 1995 Plan
and broker non-votes will have no effect on the results of the vote. Both
abstentions and broker-non votes will count towards the presence of a quorum.
INDEPENDENT AUDITORS
Management has selected the firm of Arthur Andersen LLP, independent public
accountants, to serve as the Company's independent accountants for the fiscal
year ending February 25, 1996. Arthur Andersen LLP has served as the Company's
independent accountants since 1981. A partner in that firm will be present at
the Annual Meeting of Stockholders to answer questions and will be given the
opportunity to make a statement, if he so desires.
OTHER MATTERS
Management of the Company knows of no other matters to be presented for action
at the meeting by or on behalf of the Company or its management. If any other
matters shall be brought before the meeting, it is the intention of the person
named in the accompanying proxy to vote on such matters in accordance with their
judgment.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, officers and regular employees of the Company may solicit
proxies personally and by telephone, telefax or other means, for which they will
receive no compensation in addition to their normal compensation. Arrangements
may also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial owners
of stock held of record by such persons and the Company may reimburse them for
their reasonable out-of-pocket and clerical expenses.
Proxies, ballots and voting tabulations identifying stockholders are secret and
will not be available to anyone, except as actually necessary to meet legal
requirements.
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 1996 Annual Meeting must be
received by the Company for inclusion in the Company's proxy statement and form
of proxy by February 29, 1996. The by-laws of the Company provide that any
Director nominations by stockholders must be filed with the Clerk of the Company
not less than (i) with respect to an election to be held at an Annual Meeting of
stockholders, 90 days prior to the date one year from the date of the
immediately preceding Annual Meeting of stockholders, and (ii) with respect to
an election to be held at a special meeting of stockholders for the election of
Directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to stockholders.
Richard E. Floor
Clerk
June 27, 1995
<PAGE>
EXHIBIT A
TOWN & COUNTRY CORPORATION
1994 NON-EMPLOYEE DIRECTORS' NONQUALIFIED STOCK OPTION PLAN
The purpose of this 1994 Non-Employee Directors' Nonqualified Stock Option Plan
(the "Plan") is to promote the interests of Town & Country Corporation (the
"Company") by providing an incentive to obtain and retain the services of highly
qualified persons who are not employees of the Company to serve as members of
the Board of Directors of the Company through the granting of options, as herein
provided, to acquire shares of its Class A Common Stock, $.01 par value ("Common
Stock"). The effective date of the Plan shall be October 1, 1994 (the "Effective
Date"). Options granted under the Plan are not intended to qualify and shall not
be treated as "incentive stock options" under Internal Revenue Code Section 422.
1. Shares of Stock Subject to the Plan
The stock that may be issued and sold pursuant to options granted under the Plan
shall not exceed, in the aggregate, 200,000 shares of the Common Stock of the
Company, which may be (i) authorized but unissued shares, (ii) treasury shares
or (iii) shares previously reserved for issuance upon the exercise of options
under the Plan, which options have expired or been terminated; provided,
however, that the number of shares subject to the Plan shall be subject to
adjustment as provided in Section 6.
2. Eligibility
Options will be granted only to persons who are Directors of the Company on the
date of grant of options hereunder and who are not also employees of the Company
or any majority-owned subsidiary (as such term is defined in Rule 1-02 of
Regulation S-X) of the Company ("non-employee Directors").
3. Grant of Options - Purchase Price
A. Grant of Options. Each non-employee Director who is a Director on the
Effective Date shall automatically be granted (an "Initial Grant") on such date
an option to purchase 20,000 shares of Common Stock. Each non-employee Director
who becomes a Director subsequent to the Effective Date shall automatically be
granted as an Initial Grant an option to purchase 20,000 shares of Common Stock
on the date of his or her election to the Board of Directors. Each Director who
is a Director on the last day of the Company's fiscal year which is more than
four full years following his or her Initial Grant shall automatically be
granted on such date and annually thereafter an option to purchase 4,000 shares
of Common Stock. All options granted under this Plan shall be immediately vested
upon grant; provided, however, that all options granted under this Plan prior to
stockholder approval of this Plan shall be contingent upon and shall vest
immediately upon such approval.
B. Purchase Price. The purchase price of shares which may be purchased under
each option shall be equal to the Fair Market Value of the Common Stock on the
date the option is granted. Fair Market Value shall mean (a) the closing sale
price of the Common Stock as reported by The American Stock Exchange, if the
Common Stock is then quoted on such an exchange, on the date the option is
granted, or the last preceding date on which a sale was reported, (b) the
closing sale price of the Common Stock on a national marketing system, if the
Common Stock is then listed on such a system, on the date the option is granted,
or the last preceding date on which a sale was reported, or (c) the closing bid
price (or average of such bid prices) of the Common Stock as quoted by an
established quotation service if the Common Stock is then traded on the
over-the-counter market, on the date the option is granted, or the last
preceding date on which a sale was reported.
<PAGE>
C. Limitations. All grants of options hereunder shall be subject to the
availability of shares hereunder, and no option shall be granted under this Plan
except as provided in this Section 3. No options shall be granted hereunder to
the extent necessary to prevent non-employee Directors serving as the
administrators of any of the Company's other stock option or other employee
benefit plans from failing to qualify as "disinterested persons " under Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3").
4. Period of Option and Certain Limitations on Right to Exercise.
A. Period. Each option shall become exercisable as provided in Section 3 hereof,
but in no event shall any such option be exercisable after the earlier of (a)
the date ten years after the date such option is granted or (b) the date on
which the Director to whom such option was granted ceases for any reason to
serve as a Director of the Company; provided, however, that in the event of
termination as a result of disability, death or mandatory retirement due to age,
the Director or his or her personal representative may exercise any outstanding
options not theretofore exercised, to the extent exercisable on the date of such
disability, death or retirement, during the one-year period following such
disability, death or retirement.
B. Exercise. The delivery of certificates representing shares under any option
will be contingent upon receipt by the Company from the optionee (or a purchaser
acting in his or her stead in accordance with the provisions of the option) of
the full purchase price for such shares by one or more of the methods specified
below and the fulfillment of any other requirements provided in the option or
under applicable provisions of law; and until such receipt of the purchase price
and fulfillment of such other requirements and delivery of such certificates no
optionee or person entitled to exercise the option shall be, or shall be deemed
to be, a holder of any shares subject to the option for any purpose.
Options may be exercised in whole or in part, by giving written notice of
exercise to the Company, specifying the number of shares to be purchased.
Payment of the purchase price may be made by one or more of the following
methods:
(i) In cash, by certified or bank check or other instrument acceptable to the
Board of Directors or its authorized committee;
(ii) In the form of shares of Common Stock that are not then subject to
restrictions under any Company plan, if permitted by the Board or its authorized
committee, in its discretion. Such surrendered shares shall be valued at Fair
Market Value on the exercise date; or
(iii) By the optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Company shall prescribe as a condition of such payment procedure. Payment
instruments will be received subject to collection.
5. Non-Transferability of Option
Each option granted under the Plan shall provide that it is personal to the
optionee, is not transferable by the optionee in any manner otherwise than by
will or the laws of descent and distribution and is exercisable, during the
optionee's lifetime, only by the optionee. However, the rights and obligations
of the Company under the Plan and any option may be assigned by the Company to a
successor to the whole or any substantial part of its business provided that
such successor assumes in writing all of such rights and obligations.
<PAGE>
6. Dilution or Other Adjustment
The terms of the options and the number of shares subject to this Plan shall be
equitably adjusted in such manner as to prevent dilution or enlargement of
option rights in the following instances:
(i) The declaration of a dividend payable to the holders of Common Stock in
stock of the same class;
(ii) A split-up of the Common Stock or a reverse split thereof;
(iii) A recapitalization of the Company under which shares of one or more
different classes of stock are distributed in exchange for or upon the Common
Stock without payment of any valuable consideration by the holders thereof.
The terms of any such adjustment shall be conclusively determined by the Board.
7. Effect of Certain Transactions
In the case of (a) the dissolution or liquidation of the Company, (b) a merger,
reorganization or consolidation in which the Company is acquired by another
person or in which the Company is not the surviving corporation, or (c) the sale
of all or substantially all of the outstanding Common Stock or assets of the
Company to another entity, the Plan and options issued thereunder shall
terminate on the effective date of such dissolution, liquidation, merger,
reorganization, consolidation or sale, unless provision is made in such
transaction for the assumption of options theretofore granted under the Plan or
the substitution for such options of a new stock option of the successor
corporation or a parent or subsidiary thereof, with appropriate adjustment as to
the number and kind of shares and the per share exercise price, as provided in
Section 6 of the Plan. In the event of any transaction which will trigger such
termination, the Company shall give written notice thereof to the Optionees at
least twenty days prior to the effective date of such transaction or the record
date on which shareholders of the Company entitled to participate in such
transaction shall be determined, whichever comes first. In the event of such
termination, any unexercised portion of outstanding options, which is vested and
exercisable at that time, shall be exercisable for at least 15 days prior to the
date of such termination; provided, however, that in no event shall options be
exercisable after the applicable expiration date for an option.
8. Administration and Amendment of the Plan
The Plan shall be administered in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934 by the Board or an authorized committee thereof
(in which case all references to the Board shall refer to such committee while
such committee administers this Plan), which shall make any determination under
or interpretation of any provision of the Plan and any option. Any of the
foregoing actions taken by the Board shall be final and conclusive. The Board
may amend and make such changes in and additions to the Plan (and, with the
consent of the applicable optionee, any outstanding option) as it may deem
proper and in the best interest of the Company; provided, however, that no such
action shall adversely affect or impair any options theretofore granted under
the Plan without the consent of the applicable optionee; and provided further,
however, that no amendment (i) increasing the maximum number of shares which may
be issued under the Plan, except as provided in Section 6, (ii) extending the
term of the Plan or any option, (iii) changing the requirements as to
eligibility for participation in the Plan, or (iv) otherwise requiring approval
of stockholders under Rule 16b-3, shall be adopted without the approval of
stockholders. Notwithstanding anything to the contrary herein, the provisions of
Section 3.a. shall not be amended more than once in every six month period,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
<PAGE>
9. Expiration and Termination of the Plan
Options shall be granted under the Plan as provided herein during the ten years
from the Effective Date, as long as the total number of shares purchased under
the Plan and subject to outstanding options under the Plan does not exceed
200,000 shares of the Common Stock of the Company, subject to adjustment as
provided in Section 6. The Plan may be abandoned or terminated at any time by
the Board, except with respect to any options then outstanding under the Plan.
<PAGE>
EXHIBIT B
TOWN & COUNTRY CORPORATION 1995 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Town & Country Corporation 1995 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees and other key persons of Town & Country Corporation (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Cause" as such term relates to the termination of any person means the
occurrence of one or more of the following: (i) such person is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, (ii) such person engages in a fraudulent act to
the material damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any Subsidiary, all as determined by the Board in good faith in its
sole discretion, (iii) any material act or omission by such person involving
malfeasance or negligence in the performance of such person's duties to the
Company or any Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
which has not been corrected by such person within 30 days after written notice
from the Company of any such act or omission, (iv) failure by such person to
comply in any material respect with the terms of his employment agreement, if
any, or any written policies or directives of the Board as determined by the
Board in good faith in its sole discretion, which has not been corrected by such
person within 30 days after written notice from the Company of such failure, or
(v) material breach by such person of his noncompetition agreement with the
Company, if any, as determined by the Board in good faith in its sole
discretion.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.
"Committee" means the Committee of the Board referred to in Section 2.
"Disability" means an individual's inability to perform his normal required
services for the Company and its Subsidiaries for a period of six consecutive
months by reason of the individual's mental or physical disability, as
determined by the Committee in good faith in its sole discretion.
<PAGE>
"Disinterested Person" means an Independent Director who qualifies as such under
Rule 16b-3(c)(2)(i) promulgated under the Act, or any successor definition under
said Rule.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by stockholders as
set forth in Section 16.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the related rules, regulations and interpretations.
"Fair Market Value" on any given date means the last reported sale price at
which Stock is traded on such date or, if no Stock is traded on such date, the
most recent date on which Stock was traded, as reflected on the principal stock
exchange or, if applicable, any other national stock exchange on which the Stock
is traded or admitted to trading.
"Incentive Stock Option" means any Stock Option designated and qualified as an
"incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an employee
of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 9.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Retirement" means the employee's termination of employment with the Company and
its Subsidiaries after attainment of age 65 or attainment of age 55 and
completion of 10 years of employment.
"Stock" means the Class A Common Stock, par value $.01 per share, of the
Company, subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company) in
any unbroken chain of corporations or other entities, beginning with the Company
if each of the corporations or entities (other than the last corporation or
entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 8.
<PAGE>
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(A) Committee. The Plan shall be administered by all of the Independent Director
members of the Compensation Committee of the Board, or any other committee of
not less than two Independent Directors performing similar functions as
appointed by the Board from time to time. Each member of the Committee shall be
a Disinterested Person and an "outside director" within the meaning of Section
162(m) of the Code and the regulations promulgated thereunder.
(B) Powers of Committee. The Committee shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, employees and key persons of the Company and its
Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and
Dividend Equivalent Rights, or any combination of the foregoing, granted to any
one or more participants;
(iii) to determine the number of shares of Stock to be covered by any Award.
(iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards;
(v) to accelerate at any time the exercisability or vesting of all or any
portion of any Award;
(vi) subject to the provisions of Section 5(A)(iii), to extend at any time the
period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the participant and whether
and to what extent the Company shall pay or credit amounts constituting interest
(at rates determined by the Committee) or dividends or deemed dividends on such
deferrals; and
(viii) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
<PAGE>
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(A) Stock Issuable. The maximum number of shares of Stock reserved and available
for issuance under the Plan shall be 2,000,000 shares. For purposes of this
limitation, the shares of Stock underlying any Awards which are forfeited,
cancelled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares of Stock may be issued up to such maximum number pursuant to
any type or types of Award; provided, however, that Stock Options or Stock
Appreciation Rights with respect to no more than 500,000 shares of Stock may be
granted to any one individual participant during any one calendar year period.
The shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. Upon the exercise
of a Stock Appreciation Right settled in shares of Stock, the right to purchase
an equal number of shares of Stock covered by a related Stock Option, if any,
shall be deemed to have been surrendered and will no longer be exercisable, and
said number of shares of Stock shall no longer be available under the Plan.
(B) Recapitalizations. If, through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of Stock are
increased or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards and Stock Appreciation Rights under the
Plan, and (iv) the price for each share subject to any then outstanding Stock
Options and Stock Appreciation Rights under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options and Stock Appreciation Rights) as to which such Stock Options and
Stock Appreciation Rights remain exercisable. The adjustment by the Committee
shall be final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the Committee in
its discretion may make a cash payment in lieu of fractional shares.
(C) Mergers. Upon consummation of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options and Stock Appreciation Rights: (i)
provide that such Stock Options shall be assumed or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options and Stock Appreciation Rights will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of a business combination under the terms of which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the business combination, make or provide for a
cash payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options and Stock Appreciation Rights in exchange for the termination of such
Stock Options and Stock Appreciation Rights.
<PAGE>
(D) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, and other
employees and key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the Committee,
in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after the ten year
anniversary of the Plan's adoption by the Board of Directors.
(A) Stock Options Granted to Employees and Key Persons. The Committee in its
discretion may grant Stock Options to eligible employees and key persons of the
Company or any Subsidiary. Stock Options granted to employees pursuant to this
Section 5(A) shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock covered by a
Stock Option granted pursuant to this Section 5(A) shall be determined by the
Committee at the time of grant but shall not be less than 100% of the Fair
Market Value on the date of grant in the case of Incentive Stock Options, or 85%
of the Fair Market Value on the date of grant, in the case of Non-Qualified
Stock Options. Notwithstanding the foregoing, with respect to Non-Qualified
Stock Options which are granted in lieu of cash bonus, the exercise price per
share shall not be less than 50% of the Fair Market Value on the date of grant.
If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110% of the
Fair Market Value on the grant date.
(ii) Grant of Discount Options in Lieu of Cash Bonus. Upon the request of an
eligible employee and with the consent of the Committee, such employee may elect
each calendar year to receive a Non-Qualified Stock Option in lieu of any cash
bonus to which he may become entitled during the following calendar year
pursuant to any other plan of the Company, but only if such employee makes an
irrevocable election to waive receipt of all or a portion of such cash bonus.
Such election shall be made on or before the date set by the Committee which
date shall be no later than 15 days (or such shorter period permitted by the
Committee) preceding January 1 of the calendar year for which the cash bonus
would otherwise be paid. A Non-Qualified Stock Option shall be granted to each
employee who made such an irrevocable election on the date the waived cash bonus
would otherwise be paid; provided, however, that with respect to an employee who
is subject to Section 16 of the Act, if such grant date is not at least six
months and one day from the date of the election, the grant shall be delayed
<PAGE>
until the date which is six months and one day from the date of the election (or
the next following business day, if such date is not a business day). The
exercise price per share shall be determined by the Committee but shall not be
less than 50% of the Fair Market Value of the Stock on the date the Stock Option
is granted. The number of shares of Stock subject to the Stock Option shall be
determined by dividing the amount of the waived cash bonus by the difference
between the Fair Market Value of the Stock on the date the Stock Option is
granted and the exercise price per Stock Option. The Stock Option shall be
granted for whole number of shares so determined; the value of any fractional
share shall be paid in cash. An employee may revoke his election under this
Section 5(A)(ii) on a prospective basis at any time; provided, however, that
with respect to an employee who is subject to Section 16 of the Act, such
revocation shall only be effective six months and one day following the date of
such revocation.
(iii) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(iv) Exercisability; Rights of a Stockholder. Stock Options shall become vested
and exercisable at such time or times, whether or not in installments, as shall
be determined by the Committee at or after the grant date; provided, however,
that Stock Options granted in lieu of cash bonus shall be exercisable in full as
of the grant date. The Committee may at any time accelerate the exercisability
of all or any portion of any Stock Option. An optionee shall have the rights of
a stockholder only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.
(v) Method of Exercise. Stock Options may be exercised in whole or in part, by
giving written notice of exercise to the Company, specifying the number of
shares to be purchased. Payment of the purchase price may be made by one or more
of the following methods:
(a) In cash, by certified or bank check or other instrument acceptable to the
Committee;
(b) In the form of shares of Stock that are not then subject to restrictions
under any Company plan and that have been held by the optionee for at least six
months, if permitted by the Committee in its discretion. Such surrendered shares
shall be valued at Fair Market Value on the exercise date; or
(c) By the optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements
as the Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of laws.
(vi) Termination by Reason of Death. Any Stock Option held by an optionee whose
employment by (or other business relationship with) the Company and its
Subsidiaries is terminated by reason of death shall become fully exercisable and
may thereafter be exercised by the legal representative or legatee of the
optionee, for a period of 12 months (or such longer period as the Committee
shall specify at any time) from the date of death, or until the expiration of
the stated term of the Option, if earlier.
<PAGE>
(vii) Termination by Reason of Disability.
(a) Any Stock Option held by an optionee whose employment by (or other business
relationship with) the Company and its Subsidiaries is terminated by reason of
Disability shall become fully exercisable and may thereafter be exercised, for a
period of 12 months (or such longer period as the Committee shall specify at any
time) from the date of such termination of employment (or business
relationship), or until the expiration of the stated term of the Option, if
earlier.
(b) The Committee shall have sole authority and discretion to determine whether
a participant's employment (or business relationship) has been terminated by
reason of Disability.
(c) Except as otherwise provided by the Committee at any time, the death of an
optionee during the period provided in this Section 5(A)(vii) for the exercise
of a Stock Option shall extend such period for 12 months from the date of death,
subject to termination on the expiration of the stated term of the Option, if
earlier.
(viii) Termination by Reason of Retirement.
(a) Any Stock Option held by an optionee whose employment by (or other business
relationship with) the Company and its Subsidiaries is terminated by reason of
Retirement may thereafter be exercised, to the extent it was exercisable at the
time of such termination, for a period of 12 months (or such other period as the
Committee shall specify at any time) from the date of such termination of
employment (or business relationship), or until the expiration of the stated
term of the Option, if earlier.
(b) Except as otherwise provided by the Committee at any time, the death of an
optionee during a period provided in this Section 5(A)(viii) for the exercise of
a Stock Option shall extend such period for 12 months from the date of death,
subject to termination on the expiration of the stated term of the Option, if
earlier.
(ix) Termination for Cause. If any optionee's employment by (or other business
relationship with) the Company and its Subsidiaries is terminated for Cause, any
Stock Option held by such optionee, including any Stock Option that is
immediately exercisable at the time of such termination, shall immediately
terminate and be of no further force and effect; provided, however, that the
Committee may, in its sole discretion, provide that such Stock Option can be
exercised for a period of up to 30 days from the date of termination of
employment (or business relationship) or until the expiration of the stated term
of the Option, if earlier.
(x) Other Termination. Unless otherwise determined by the Committee, if an
optionee's employment by (or other business relationship with) the Company and
its Subsidiaries terminates for any reason other than death, Disability,
Retirement, or for Cause, any Stock Option held by such optionee may thereafter
be exercised, to the extent it was exercisable on the date of termination of
employment (or business relationship), for three months (or such longer period
as the Committee shall specify at any time) from the date of termination of
employment (or business relationship) or until the expiration of the stated term
of the Option, if earlier.
(xi) Annual Limit on Incentive Stock Options. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the shares of Stock
with respect to which Incentive Stock Options granted under this Plan and any
other plan of the Company or its parent and subsidiary corporations become
exercisable for the first time by an optionee during any calendar year shall not
exceed $100,000. To the extent that any Stock Option exceeds this limit, it
shall constitute a Non-Qualified Stock Option.
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(B) Reload Options. At the discretion of the Committee, Options granted under
Section 5(A) may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(A)(v)(b) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.
(C) Non-transferability of Options. No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee. Notwithstanding the foregoing, the Committee may provide in an
option agreement that the optionee may transfer, without consideration for the
transfer, his Stock Options to members of his immediate family, to trusts for
the benefit of such family members and to partnerships in which such family
members are the only partners.
(D) Form of Settlement. Shares of Stock issued upon exercise of a Stock Option
shall be free of all restrictions under the Plan, except as otherwise provided
in the Plan.
SECTION 6. STOCK APPRECIATION RIGHTS.
(A) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an Award
entitling the recipient to receive an amount in cash or shares of Stock or a
combination thereof having a value equal to the excess of the Fair Market Value
of the Stock on the date of exercise over the exercise price per Stock
Appreciation Right set by the Committee at the time of grant, which price shall
not be less than 85% of the Fair Market Value of the Stock on the date of grant
(or over the option exercise price per share, if the Stock Appreciation Right
was granted in tandem with a Stock Option) multiplied by the number of shares of
Stock with respect to which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of payment.
(B) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation Rights
may be granted to any eligible employee or key person of the Company or any
Subsidiary by the Committee in tandem with, or independently of, any Stock
Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem with
a Stock Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Option.
(C) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights
shall be subject to such terms and conditions as shall be determined from time
to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable portion of any
related Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with an Option shall be
transferable only when and to the extent that the underlying Option would be
transferable. Stock Appreciation Rights not granted in tandem with an Option
shall not be transferable otherwise than by will or the laws of descent or
distribution. All Stock Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative.
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(iv) No Stock Appreciation Right may be exercised for a period of six months
after the date of grant.
(D) Rules Relating to Exercise. In the case of a participant subject to the
restrictions of Section 16(b) of the Act, no Stock Appreciation Right (as
referred to in Rule 16b-3(e) or any successor rule under the Act) shall be
exercised except in compliance with any applicable requirements of Rule 16b-3 or
any successor rule. If a full or partial settlement in cash would result, (i)
such a participant may not exercise a Stock Appreciation Right or any related
Stock Option during the first six months of the term of the Stock Appreciation
Right or Option to be exercised; and (ii) such a participant may exercise a
Stock Appreciation Right only either: (A) during the period beginning on the
third business day following the date of release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date, unless a different period is specified by Rule
16b-3(e) or any successor rule under the Act; (B) pursuant to an irrevocable
election to exercise made at least six months in advance of the effective date
of the election, which election shall be subject to the consent or disapproval
of the Committee; or (C) pursuant to an election to exercise incident to death,
Retirement, Disability or termination of employment. Notwithstanding the
foregoing, Section 6(D)(ii)(a) shall not be applicable until the Company has
been subject to the reporting requirements of Section 13(a) of the Act for at
least a year prior to the exercise and has filed all reports and statements
required to be filed pursuant to that Section for a year.
SECTION 7. RESTRICTED STOCK AWARDS
(A) Nature of Restricted Stock Awards. The Committee may grant Restricted Stock
Awards to any employee or key person of the Company or any Subsidiary. A
Restricted Stock Award is an Award entitling the recipient to acquire, at no
cost or for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(B) Rights as a Stockholder. Upon execution of a written instrument setting
forth the Restricted Stock Award and paying any applicable purchase price, a
participant shall have the rights of a stockholder with respect to the voting of
the Restricted Stock, subject to such conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Committee shall
otherwise determine, certificates evidencing the Restricted Stock shall remain
in the possession of the Company until such Restricted Stock is vested as
provided in Section 7(D) below.
(C) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award. In
the case of Restricted Stock granted to an employee, if the participant's
employment with the Company and its Subsidiaries terminates for any reason other
than death or Disability, the Company shall have the right, at the discretion of
the Committee, to repurchase restricted Stock with respect to which conditions
have not lapsed at their purchase price, or to require forfeiture of such shares
to the Company if acquired at no cost, from the participant or the participant's
legal representative. The Company must exercise such right of repurchase or
forfeiture not later than the 90th day following such termination of employment
(unless otherwise specified in the written instrument evidencing the Restricted
Stock Award). Restricted Stock granted to a key person who is not an employee
shall be subject to such forfeiture and repurchase provisions as the Committee
shall specify.
<PAGE>
(D) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." A participant whose employment is terminated for
reason of death or Disability shall become fully vested on his termination date
in any Restricted Stock he received as an employee to the extent such vesting is
otherwise contingent only on continued service with the Company. Where vesting
is contingent on attainment of pre-established performance goals, the vesting of
Restricted Stock in the case of death or Disability shall remain dependent on
the attainment of such goals and shall be determined as of such date or dates
specified by the Committee.
(E) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.
SECTION 8. UNRESTRICTED STOCK AWARDS
(A) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee) an
Unrestricted Stock Award to any employee or key person of the Company or any
Subsidiary, pursuant to which such employee or key person may receive shares of
Stock free of any restrictions ("Unrestricted Stock") under the Plan.
Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such employee or key person.
(B) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon the
request of an employee or a key person and with the consent of the Committee,
each employee or key person may, pursuant to an irrevocable written election
delivered to the Company no later than the date or dates specified by the
Committee, receive a portion of the cash compensation otherwise due to such
employee or key person in the form of shares of Unrestricted Stock (valued at
Fair Market Value on the date or dates the cash compensation would otherwise be
paid). With respect to any employee who is subject to Section 16 of the Act,
such irrevocable election shall become effective no earlier than six months and
one day following the date of such election and the revocation of such election
shall be effective six months and one day following the date of the revocation.
SECTION 9. PERFORMANCE SHARE AWARDS
(A) Nature of Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees or
key persons of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the Company. The Committee in its sole
discretion shall determine whether and to whom Performance Share Awards shall be
made, the performance goals applicable under each such Award, the periods during
which performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Shares; provided, however, that the
Committee may rely on the performance goals and other standards applicable to
other performance unit plans of the Company in setting the standards for
Performance Share Awards under the Plan.
(B) Restrictions on Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
<PAGE>
(C) Rights as a Shareholder. A participant receiving a Performance Share Award
shall have the rights of a shareholder only as to shares actually received by
the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).
(D) Termination. Except as may otherwise be provided by the Committee at any
time prior to termination of employment (or other business relationship), a
participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment by (or business
relationship with) the Company and its Subsidiaries for any reason.
(E) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 13, amend any or all of the goals, restrictions or conditions
imposed under any Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
(A) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or key person,
as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant.
Dividend equivalents credited to the holder of a Dividend Equivalent Right may
be paid currently or may be deemed to be reinvested in additional shares of
Stock, which may thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date of reinvestment or such other price as
may then apply under a dividend reinvestment plan sponsored by the Company, if
any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a
combination thereof, in a single installment or installments. A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.
(B) Interest Equivalents. Any Award under this Plan that is settled in whole or
in part in cash on a deferred basis may provide in the grant for interest
equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
<PAGE>
SECTION 11. TAX WITHHOLDING
(A) Payment by Participant. Each participant shall, no later than the date as of
which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the participant for Federal
income tax purposes, pay to the Company, or make arrangements satisfactory to
the Committee regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the participant.
(B) Payment in Stock. A participant may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the participant with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due. With respect to any participant who is subject to
Section 16 of the Act, the following additional restrictions shall apply:
(i) the election to satisfy tax withholding obligations relating to an Award in
the manner permitted by this Section 11(B) shall be made either (1) during the
period beginning on the third business day following the date of release of
quarterly or annual summary statements of sales and earnings of the Company and
ending on the twelfth business day following such date, or (2) at least six
months prior to the date as of which the receipt of such an Award first becomes
a taxable event for Federal income tax purposes;
(ii) such election shall be irrevocable;
(iii) such election shall be subject to the consent or disapproval of the
Committee; and
(iv) the Stock withheld to satisfy tax withholding must pertain to an Award
which has been held by the participant for at least six months from the date of
grant of the Award.
Notwithstanding the foregoing, the first sentence of Section 11(B)(i) shall not
be applicable until the Company has been subject to the reporting requirements
of Section 13(a) of the Act for at least a year prior to the election and has
filed all reports and statements required to be filed pursuant to that Section
for that year.
<PAGE>
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination
of employment:
(A) a transfer to the employment of the Company from a Subsidiary or from the
Company to a Subsidiary, or from one Subsidiary to another; or
(B) an approved leave of absence for military service or sickness, or for any
other purpose approved by the Company, if the employee's right to re-employment
is guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Committee otherwise so provides
in writing.
SECTION 13. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Committee may,
at any time, amend or cancel any outstanding Award (or provide substitute Awards
at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan) for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Committee to be
required by the Act to ensure that Awards granted under the Plan are exempt
under Rule 16b-3 promulgated under the Act, or that Incentive Stock Options
granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the Company's stockholders.
SECTION 14. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine in connection
with any Award or Awards. In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the Company's obligations
to deliver Stock or make payments with respect to Awards hereunder, provided
that the existence of such trusts or other arrangements is consistent with the
foregoing sentence.
<PAGE>
SECTION 15. GENERAL PROVISIONS
(A) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. No shares of Stock shall be issued
pursuant to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The Committee may
require the placing of such stop-orders and restrictive legends on certificates
for Stock and Awards as it deems appropriate.
(B) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(C) Other Compensation Arrangements; No Employment Rights. Nothing contained in
this Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of this Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 16. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority of
the shares of Stock of the Company present or represented and entitled to vote
at a meeting of stockholders. Subject to such approval by the stockholders and
to the requirement that no Stock may be issued hereunder prior to such approval,
Stock Options and other Awards may be granted hereunder on and after adoption of
this Plan by the Board.
SECTION 17. GOVERNING LAW
This Plan shall be governed by Massachusetts law except to the extent such law
is preempted by federal law.
DATE APPROVED BY BOARD OF DIRECTORS:
DATE APPROVED BY SHAREHOLDERS:
