<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PENRIL DATACOMM NETWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 34-1028216
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Quince Orchard Boulevard
Gaithersburg, Maryland 20878
(Address of Principal Executive Offices Including Zip Code)
1995 LONG-TERM INCENTIVE PLAN OF
PENRIL DATACOMM NETWORKS, INC.
(Full Title of the Plan)
Copy to:
Richard D. Rose Richard D. Margolis
Penril DataComm Networks, Inc. Benesch, Friedlander,
Coplan & Aronoff, P.L.L.
1300 Quince Orchard Boulevard 2300 BP America Building
Gaithersburg, Maryland 20878 200 Public Square
(301) 417-0552 Cleveland, Ohio 44114-2378
(216) 363-4500
(Name and Address Including Zip Code; and Telephone Number,
Including Area Code, of Agent for Service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [x]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount to be Price Offering Registration
to be Registered Registered(1) Per Share(2) Price Fee
----------------------------------- ---------- ---------- ------------
Common Stock, $.01
par value per share 1,000,000 shares variable 8,750,000 $3,017
----------------------------------- ---------- ---------- ------------
(1) This Registration Statement also includes an indeterminable number of
shares of Common Stock which may be issued under the anti-dilution provisions
of the plan.
(2) Estimated in accordance with Rule 457 under the Securities Act of 1933,
solely for the purpose of calculating the registration fee, on the basis of
(a) the average price at which existing options may be exercised or (b) the
average of the high and low prices of the Common Stock on May 7, 1996 as
reported on the NASDAQ National Market System with respect to all other
shares of Common Stock.
<PAGE>
PART I
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed below are incorporated by reference in this
Registration Statement; and all documents concurrently and subsequently
filed by Penril DataComm Networks, Inc. (the "Company") pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates all
securities offered have been sold or which de-registers all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of
such document.
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 1995, as amended, on Form 10-K/A filed with
the Securities and Exchange Commission (the "SEC") on
February 23, 1996 (File No. 1-7886).
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1995, as amended, on Form 10-Q/A filed
with the SEC on February 23, 1996 (File No. 1-7886).
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1996 (File No. 1-7886).
(5) The description of the Company's Common Stock contained in
its Registration Statement on Form 8-A, filed with the
Commission on November 27, 1972.
For purposes of this Registration Statement, any statement
contained in a document incorporated by or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded to the extent
that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Registration Statement.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
The legality of the Common Stock being registered pursuant to
this Registration Statement has been passed upon by Benesch, Friedlander,
Coplan & Aronoff P.L.L., outside legal counsel to the Company. Richard D.
Margolis, a partner in the law firm of Benesch, Friedlander, Coplan &
Aronoff P.L.L., is a director of the Company.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware (the "Delaware Law") empowers a Delaware corporation to indemnify
any persons who are, or are threatened to be made, parties to any
threatened, pending or completed legal action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by
or in the right of such corporation), by reason of the fact that such
person is or was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include
expenses (including attorneys fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding provided that such officer or director
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the
right of the corporation under the same conditions against expenses
(including attorney's fees) actually and reasonably incurred by such person
in connection with the defense or settlement of such action, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation in the performance of
his duty. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which such officer or director
actually and reasonably incurred.
The Amended and Restated Certificate of Incorporation of the
Company provides that each person who was or is made a party to or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer of the Company or is
or was serving at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, shall be indemnified and held harmless
by the Company to the fullest extent authorized by the Delaware Law against
all expense, liability and loss reasonably incurred by such person in
connection therewith. The Amended and Restated Certificate of
Incorporation provides that the right to indemnification is a contract
right.
The Company has purchased directors' and officers' liability
insurance in an amount of $2,000,000, covering certain liabilities incurred
by its officers and directors in connection with the performance of their
duties.
Item 7. Exemption from Registration Claimed
Not Applicable
Item 8. Exhibits.
See Exhibit Index.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gaithersburg, State
of Maryland, on this 31st day of May, 1996.
PENRIL DATACOMM NETWORKS, INC.
(Registrant)
By: \s\Henry D. Epstein
-------------------------------
Henry D. Epstein
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Henry D. Epstein and Richard D.
Rose, or either of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact, agent, or their
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons on behalf of the Company in the capacities and on the dates
indicated.
Dated: May 31, 1996 \s\Henry D. Epstein
-------------------------------
Henry D. Epstein
Chairman of the Board, President
and Chief Executive Officer
Dated: May 31, 1996 \s\Richard D. Rose
--------------------------------
Richard D. Rose
Senior Vice President and Chief
Financial Officer
Dated: May 31, 1996 \s\Norman G. Einspruch
--------------------------------
Norman G. Einspruch
Director
Dated: May 31, 1996 \s\Ronald A. Howard
--------------------------------
Ronald A. Howard
Director
Dated: May 31, 1996 \s\John P. Lowe, Jr.
--------------------------------
John P. Lowe, Jr.
Director
Dated: May 31, 1996 \s\Richard D. Margolis
--------------------------------
Richard D. Margolis
Director
Dated: May 31, 1996 \s\Michael H. Newlin
--------------------------------
Michael H. Newlin
Director
Dated: May 31, 1996 \s\Howard M. Schneider
--------------------------------
Howard M. Schneider
Director
<PAGE>
Exhibit Index
Exhibit No. Exhibit Description Page No.
4.1 Amended and Restated Certificate of
Incorporation of the Company (incorporated by
reference to Exhibit 3(a)(iii) to the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1989). *
4.2 Certificate of Amendment to the Certificate of
Incorporation of the Company (incorporated by
reference to the Company's Registration
Statement on Form S-3 filed April 29, 1991). *
4.3 By-laws of the Company (incorporated by
reference to Exhibit 3(a)(ii) to the Company's
Annual Report on Form 10-K for the fiscal year
ended July 31, 1987). *
4.4 1995 Long-Term Incentive Plan of Penril DataComm
Networks, Inc.
5.1 Opinion of Benesch, Friedlander, Coplan &
Aronoff P.L.L., outside counsel to the Company,
regarding legality.
23.1 Consent of Deloitte & Touche LLP, independent
public accountants.
23.2 Consent of Benesch, Friedlander, Coplan &
Aronoff P.L.L. (contained in its opinion filed
as Exhibit 5.1 to this Registration Statement). N/A
24.1 Powers of Attorney (included in Part II of this
Registration Statement). N/A
* Incorporated herein by reference as indicated.
<PAGE>
<PAGE>
Exhibit 5.1
May 31, 1996
Board of Directors
Penril DataComm Networks, Inc.
1300 Quince Orchard Boulevard
Gaithersburg, Maryland 20878
Gentlemen:
Penril DataComm Networks, Inc., a Delaware corporation (the
"Company"), intends to file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, a
Registration Statement on Form S-8 (the "Registration Statement")
with respect to 1,000,000 shares (the "Shares") of the Company's
common stock, $.01 par value per share (the "Common Stock"), to
be issued from time to time pursuant to the 1995 Long-Term
Incentive Plan of Penril DataComm Networks, Inc. (the "Incentive
Plan"). Capitalized terms not defined in this letter have the
meanings given to them in the Incentive Plan.
You have requested our opinion in connection with the
Company's filing of the Registration Statement. In this
connection, we have examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction as being
true copies, of all such records of the Company, all such
agreements, certificates of officers of the Company and others,
and such other documents, certificates and corporate or other
records as we have deemed necessary as a basis for the opinions
expressed in this letter, including, without limitation, the
Company's Amended and Restated Certificate of Incorporation, as
amended, and the Registration Statement.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals and
the conformity to authentic original documents of all documents
submitted to us as certified or photostatic copies.
We have investigated such questions of law for the purpose
of rendering the opinions in this letter as we have deemed
necessary. We express no opinion in this letter concerning any
law other than the General Corporation Law of the State of
Delaware.
This opinion is being rendered to you as of today. The
opinion expressed herein assumes that there is no change in the
facts and circumstances and law in effect on the date of this
opinion, particularly, as they relate to corporate authority and
the Company's good standing under Delaware law. We have assumed
the Company will remain in good standing as a Delaware
corporation at all times when shares of Common Stock are sold
pursuant to the Incentive Plan.
On the basis of and in reliance on the foregoing, we are of
the opinion that the Shares of the Common Stock to be issued
pursuant to the Incentive Plan, when and if issued in accordance
with the terms of the Incentive Plan, will be legally issued,
fully paid and nonassessable.
The opinion in this letter is rendered only to the Company
in connection with the filing of the Registration Statement. We
consent to the filing of this letter as an exhibit to the
Registration Statement. The opinion may not be relied upon by
the Company for any other purpose. This letter may not be
paraphrased, quoted or summarized, nor may it be duplicated or
reproduced in part.
Very truly yours,
BENESCH, FRIEDLANDER,
COPLAN & ARONOFF P.L.L.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Penril DataComm Networks, Inc. on Form S-8 of our reports dated
October 17, 1995 (February 9, 1996 as to Note 12), appearing in the Annual
Report on Form 10-K/A of Penril DataComm Networks, Inc. for the year ended
July 13, 1995.
\s\Deloitte & Touche, LLP
- ---------------------------
Deloitte & Touche, LLP
Washington, D.C.
May 31, 1996
<PAGE>
1995 LONG-TERM INCENTIVE PLAN
OF
PENRIL DATACOMM NETWORKS, INC.
1. Purpose of the Plan. This 1995 Long-Term Incentive Plan of
Penril DataComm Networks, Inc., adopted on this 13th day of December, 1995,
is intended to enable officers and key employees of the Company and its
Subsidiaries to acquire or increase their ownership of common stock of the
Company on reasonable terms. The opportunity so provided is intended to
foster in participants an incentive to put forth maximum effort for the
continued success and growth of the Company and its Subsidiaries, to aid in
retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals to the Company and its
Subsidiaries in the future.
2. Definitions. When used herein, the following terms shall have
the meanings set forth below:
2.1 "Award" means an Option or a Restricted Stock Award.
2.2 "Award Agreement" means a written agreement in such form as
may be, from time to time, hereafter approved by the Committee, which
shall be duly executed by the Company and the Employee and which shall
set forth the terms and conditions of an Award under the Plan.
2.3 "Board" means the Board of Directors of Penril DataComm
Networks, Inc.
2.4 "Change in Control" means a change in control of the Company
of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act (as in effect on the date the Plan is adopted by the Board),
whether or not the Company is then subject to such reporting
requirement; provided, that, without limitation, a Change in Control
shall be deemed to have occurred if:
(a) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the combined voting power of the
Company's then outstanding securities otherwise than through any
transaction or transactions arranged, or consummated with the
prior approval of, the Board; provided, however, that a Change in
Control shall not be deemed to occur under this clause (a) by
reason of the acquisition of securities by the Company or an
employee benefit plan (or any trust funding such a plan)
maintained by the Company, or by reason of the new issuance of
securities directly by the Company;
(b) during any period of two (2) consecutive years (not
including any period prior to the adoption of this Plan) there
shall cease to be a majority of the Board composed of Tenured
Directors; or
(c) (i) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than eighty percent (80%) of the combined voting power of
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(ii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the
Company's assets.
2.5 "Code" means the Internal Revenue Code of 1986, as in effect
at the time of reference, or any successor revenue code which may
hereafter be adopted in lieu thereof, and reference to any specific
provisions of the Code shall refer to the corresponding provisions of
the Code as it may hereafter be amended or replaced.
2.6 "Committee" means the Stock Option/Compensation Committee of
the Board or any other committee appointed by the Board which is
invested by the Board with responsibility for the administration of
the Plan and whose members meet the requirements for eligibility to
serve as set forth in Rule 16b-3 and in the Plan.
2.7 "Company" means Penril DataComm Networks, Inc.
2.8 "Employee Stockholder" means an Employee who, at the time an
Incentive Stock Option is granted owns, as defined in Section 424 of
the Code, stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of: (a) the Company; or
(b) if applicable, a Subsidiary or a Parent.
2.9 "Employees" means officers (including officers who are
members of the Board) and other key employees of the Company or any of
its Subsidiaries.
2.10 "ERISA" means the Employee Retirement Income Security Act of
1974, as in effect at the time of reference, or any successor law
which may hereafter be adopted in lieu thereof, and any reference to
any specific provisions of ERISA shall refer to the corresponding
provisions of ERISA as it may hereafter be amended or replaced.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as
in effect at the time of reference, or any successor law which may
hereafter be adopted in lieu thereof, and any reference to any
specific provisions of the Exchange Act shall refer to the
corresponding provisions of the Exchange Act as it may hereafter be
amended or replaced.
2.12 "Fair Market Value" means, with respect to the Shares, the
closing price of the Shares as reported on the NASDAQ National Market
System, on the last business day prior to the date on which the value
is to be determined, as reported in the Wall Street Journal or such
other source of quotations for, or report of trading of, the Shares as
the Committee may reasonably select from time to time.
2.13 "Incentive Stock Option" means an Option meeting the
requirements and containing the limitations and restrictions set forth
in Section 422 of the Code.
2.14 "Non-Qualified Stock Option" means an Option other than an
Incentive Stock Option.
2.15 "Option" means the right to purchase the number of Shares
specified by the Committee, at a price and for a term fixed by the
Committee, in accordance with the Plan, and subject to such other
limitations and restrictions as the Plan and the Committee may impose.
2.16 "Parent" means any corporation, other than the employer
corporation, in an unbroken chain of corporations ending with the
employer corporation if, at the time of the granting of the Option,
each of the corporations other than the employer corporation owns
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
2.17 "Plan" means the 1995 Long-Term Incentive Plan of Penril
DataComm Networks, Inc.
2.18 "Regulation T" means Part 220, chapter II, title 12 of the
Code of Federal Regulations, issued by the Board of Governors of the
Federal Reserve System pursuant to the Exchange Act, as amended from
time to time, or any successor regulation which may hereafter be
adopted in lieu thereof.
2.19 "Restricted Stock Award Agreement" means an Award Agreement
executed in connection with a Restricted Stock Award.
2.20 "Restricted Stock Award" means the right to receive Shares,
but subject to forfeiture and/or other restrictions set forth in the
related Restricted Stock Award Agreement and the Plan.
2.21 "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations of the Securities and Exchange Commission as in effect at
the time of reference, or any successor rules or regulations which may
hereafter be adopted in lieu thereof, and any reference to any
specific provisions of Rule 16b-3 shall refer to the corresponding
provisions of Rule 16b-3 as it may hereafter be amended or replaced.
2.22 "Shares" means shares of the Company's $.01 par value common
stock or, if by reason of the adjustment provisions contained herein,
any rights under an Award under the Plan pertain to any other
security, such other security.
2.23 "Subsidiary" or "Subsidiaries" means any corporation or
corporations other than the employer corporation in an unbroken chain
of corporations beginning with the employer corporation if each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
2.24 "Successor" means the legal representative of the estate of
a deceased Employee or the person or persons who shall acquire the
right to exercise or receive an Award by bequest or inheritance or by
reason of the death of the Employee.
2.25 "Tenured Directors" means individuals who at the beginning
of any period of two (2) consecutive years (not including any period
prior to the adoption of this Plan) and any new director(s) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved.
2.26 "Term" means the period during which a particular Award may
be exercised.
3. Stock Subject to the Plan. There will be reserved for use,
upon the issuance, vesting or exercise of Awards to be granted from time to
time under the Plan, an aggregate of One Million (1,000,000) Shares, which
Shares may be, in whole or in part, as the Board shall from time to time
determine, authorized but unissued Shares, or issued Shares which shall
have been reacquired by the Company. Any Shares subject to issuance upon
exercise of Options but which are not issued because of a surrender, lapse,
expiration, forfeiture or termination of any such Option prior to issuance
of the Shares shall once again be available for issuance in satisfaction of
Awards. Similarly, any Shares issued pursuant to a Restricted Stock Award
which are subsequently forfeited pursuant to the terms of the related
Restricted Stock Award Agreement shall once again be available for issuance
in satisfaction of Awards.
4. Administration of the Plan. The Board shall appoint the
Committee, which shall consist of not less than two (2) disinterested
directors as defined in Rule 16b-3. Subject to the provisions of the Plan,
the Committee shall have full authority, in its discretion, to determine
the Employees to whom Awards shall be granted, the number of Shares to be
covered by each of the Awards, and the terms of any such Award; to amend or
cancel Awards (subject to Section 19 of the Plan), to accelerate the
vesting of Awards; to require the cancellation or surrender of any
previously granted awards under this Plan or any other plans of the Company
as a condition to the granting of an Award; to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan;
and generally to interpret and determine any and all matters whatsoever
relating to the administration of the Plan and the granting of Awards
hereunder. The Board may from time to time appoint members to the
Committee in substitution for or in addition to members previously
appointed and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its chairman and shall hold
its meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum. Any action of the
Committee may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully as effective as if it had
been taken by a vote of a majority of the members at a meeting duly called
and held. The Committee shall make such rules and regulations for the
conduct of its business as it shall deem advisable and shall appoint a
Secretary who shall keep minutes of its meetings and records of all action
taken in writing without a meeting. No member of the Committee shall be
liable, in the absence of bad faith, for any act or omission with respect
to his or her service on the Committee.
5. Employees to Whom Awards May Be Granted. Awards may be granted
in each calendar year or portion thereof while the Plan is in effect to
such of the Employees as the Committee, in its discretion, shall determine.
In determining the Employees to whom Awards shall be granted and the number
of Shares to be issued or subject to purchase or issuance under such
Awards, the Committee shall take into account the recommendations of the
Company's management as to the duties of the respective Employees, their
present and potential contributions to the success of the Company and its
Subsidiaries, and such other factors as the Committee shall deem relevant
in connection with accomplishing the purposes of the Plan. No Award shall
be granted to any member of the Committee so long as his or her membership
on the Committee continues or to any member of the Board who is not also an
officer or key employee of the Company or any Subsidiary.
6. Stock Options.
6.1 Types of Options. Options granted under the Plan may be (i)
Incentive Stock Options, (ii) Non-Qualified Stock Options or (iii) a
combination of the foregoing. The Award Agreement shall designate
whether an Option is an Incentive Stock Option or a Non-Qualified
Stock Option and separate Award Agreements shall be issued for each
type of Option when a combination of an Incentive Stock Option and a
Non-Qualified Stock Option are granted on the same date to the same
Employee. Any Option which is designated as a Non-Qualified Stock
Option shall not be treated by the Company or the Employee to whom the
Option is granted as an Incentive Stock Option for federal income tax
purposes.
6.2 Option Price. The option price per Share of any Non-Qualified
Stock Option granted under the Plan shall be the Fair Market
Value of the Shares covered by the Option on the date the Option is
granted unless the Committee, in its sole discretion, determines to
set the option price at an amount less than or greater than the Fair
Market Value of the Shares on such date. The option price per Share
of any Incentive Stock Option granted under the Plan shall not be less
than the Fair Market Value of the Shares covered by the Option on the
date the Option is granted.
Notwithstanding anything herein to the contrary, the option price
per Share of any Incentive Stock Option granted to an Employee
Stockholder shall not be less than one hundred ten percent (110%) of
the Fair Market Value of the Shares covered by the Option on the date
the Option is granted.
6.3 Term of Options. Options granted hereunder shall be
exercisable for a Term of not more than ten (10) years from the date
of grant thereof, but shall be subject to earlier termination as
hereinafter provided. Each Award Agreement issued hereunder shall
specify the Term of the Option, which shall be determined by the
Committee in accordance with its discretionary authority hereunder.
Notwithstanding anything herein to the contrary, if an Incentive
Stock Option is granted to an Employee Stockholder, then such
Incentive Stock Option shall not be exercisable more than five (5)
years from the date of grant thereof, but shall be subject to earlier
termination as hereinafter provided.
6.4 Vesting of Options. Unless otherwise determined by the
Committee in its discretion and set forth in the related Award
Agreement, an Option may be exercised, prior to its expiration or
termination, within the following time limitations:
(a) After one (1) year from the date of grant, it may be
exercised as to not more than thirty percent (30%) of the Shares
originally subject to the Option.
(b) After two (2) years from the date of grant, it may be
exercised as to not more than an aggregate of sixty percent (60%)
of the Shares originally subject to the Option.
(c) After three (3) years from the date of grant, it may be
exercised as to any and all of the Shares subject to the Option.
7. Limit on Fair Market Value of Incentive Stock Options. No
Employee may be granted an Incentive Stock Option hereunder to the extent
that the aggregate fair market value (such fair market value being
determined as of the date of grant of the option in question) of the stock
with respect to which incentive stock options are first exercisable by such
Employee during any calendar year (under all such plans of the Employee's
employer corporation, its Parent, if any, and its Subsidiaries, if any)
exceeds One Hundred Thousand Dollars ($100,000). For purposes of the
preceding sentence, options shall be taken into account in the order in
which they were granted. Any Option granted under the Plan which is
intended to be an Incentive Stock Option, but which exceeds the limitation
set forth in this Section 7, shall be a Non-Qualified Stock Option.
8. Restricted Stock Awards. Restricted Stock Awards granted under
the Plan shall be subject to such terms and conditions as the Committee
may, in its discretion, determine and set forth in the related Restricted
Stock Award Agreements. Restricted Stock Awards shall be granted in
accordance with, and subject to, the provisions set forth below.
8.1 Issuance of Shares. Each Restricted Stock Award shall be
evidenced by a Restricted Stock Award Agreement which shall set forth
the number of Shares issuable under the Restricted Stock Award.
Subject to the restrictions in Section 8.3 of the Plan, and subject
further to such other restrictions or conditions established by the
Committee, in its discretion, and set forth in the related Restricted
Stock Award Agreement (such as requiring the Employee to pay an amount
equal to the aggregate par value of the Shares to be issued
thereunder), the number of Shares granted under a Restricted Stock
Award shall be issued in the recipient Employee's name on the date of
grant of such Restricted Stock Award or as soon as reasonably
practicable thereafter.
8.2 Rights of Recipient Employees. Shares received pursuant to
Restricted Stock Awards shall be duly issued or transferred to the
Employee, and a certificate or certificates for such Shares shall be
issued in the Employee's name. Subject to the restrictions in
Section 8.3 of the Plan, and subject further to such other
restrictions or conditions established by the Committee, in its
discretion, and set forth in the related Restricted Stock Award
Agreement, the Employee shall thereupon be a stockholder with respect
to all the Shares represented by such certificate or certificates and
shall have all the rights of a stockholder with respect to such
Shares, including the right to vote such Shares and to receive
dividends and other distributions paid with respect to such Shares.
In aid of the restrictions in Section 8.3 of the Plan and in the
related Restricted Stock Award Agreement, the certificate or
certificates for Shares awarded hereunder, together with a suitably
executed stock power signed by such recipient Employee, shall be held
by the Company in its control for the account of such Employee (i)
until the restrictions in Section 8.3 of the Plan and in the related
Restricted Stock Award Agreement lapse pursuant to the Plan or the
Restricted Stock Award Agreement, at which time a certificate for the
appropriate number of Shares (free of all restrictions imposed by the
Plan or the Restricted Stock Award Agreement) shall be delivered to
the Employee, or (ii) until such Shares are forfeited to the Company
and cancelled as provided by the Plan or the Restricted Stock Award
Agreement.
8.3 Restrictions. Except as otherwise determined by the
Committee in its sole discretion, each Share issued pursuant to a
Restricted Stock Award Agreement shall be subject, in addition to any
other restrictions set forth in the related Restricted Stock Award
Agreement, to the following restrictions until such restrictions have
lapsed pursuant to Section 8.4 of the Plan:
(a) Disposition. The Shares awarded to an Employee and
held by the Company pursuant to Section 8.2 of the Plan, and the
right to vote such Shares or receive dividends on such Shares,
may not be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of; provided, however, that such Shares may be
transferred upon the death of the Employee to the Employee's
Successor. Any transfer or purported transfer of such Shares in
violation of the restrictions outlined in this Section 8.3 shall
be null and void and shall result in the forfeiture of the Shares
transferred or purportedly transferred to the Company without
notice and without consideration.
(b) Forfeiture. The Shares awarded to an Employee and held
by the Company pursuant to Section 8.2 of the Plan shall be
forfeited to the Company without notice and without consideration
therefor immediately upon the termination of the Employee's
employment with the Company and all Subsidiaries of the Company
for any reason other than (i) death, (ii) disability or
(iii) retirement pursuant to the retirement plans of the Company
or on or after age sixty-five (65).
8.4 Lapse of Restrictions. Except as otherwise determined by
the Committee in its sole discretion, the restrictions set forth in
Section 8.3 of the Plan on Shares issued under a Restricted Stock
Award shall lapse on, and certificates for the Shares held for the
account of the Employee in accordance with Section 8.2 of the Plan
hereof shall be appropriately distributed to the Employee as soon as
reasonably practical after, the earliest of:
(a) the Employee's death;
(b) the termination of the Employee's employment by reason
of the Employee being "disabled" as defined in Section 22(e)(3)
of the Code; or
(c) the Employee's retirement pursuant to the retirement
plans of the Company or on or after the Employee's attainment of
age sixty-five (65).
9. Date of Grant. The date of grant of an Award granted hereunder
shall be the date on which the Committee acts in granting the Award.
10. Exercise of Rights Under Options.
10.1 Notice of Exercise. An Employee entitled to exercise an
Option shall do so by delivery of a written notice to that effect
specifying the number of Shares with respect to which the Option is
being exercised and any other relevant information the Committee may
require. The notice shall be accompanied by payment in full of the
purchase price of any Shares to be purchased, which payment may be
made in cash or, with the Committee's approval (which in the case of
Incentive Stock Options must be given at the time of grant), in Shares
valued at Fair Market Value at the time of exercise or a combination
thereof. No Shares shall be issued upon exercise of an Option until
full payment has been made therefor. All notices or requests provided
for herein shall be delivered to the Company's Secretary, or such
other person as the Committee may designate.
10.2 Cashless Exercise Procedures. The Company, in its sole
discretion, may establish procedures whereby an Employee, subject to
the requirements of Rule 16b-3, Regulation T, federal income tax laws,
and other federal, state and local tax and securities laws, can
exercise an Option or a portion thereof without making a direct
payment of the option price to the Company; provided, however, that
these cashless exercise procedures shall not apply to Incentive Stock
Options which are outstanding on the date the Company establishes such
procedures unless the application of such procedures to such Options
is permitted pursuant to the Code and the regulations thereunder
without affecting the Options' qualification under Code Section 422 as
Incentive Stock Options. If the Company so elects to establish a
cashless exercise program, the Company shall determine, in its sole
discretion, and from time to time, such administrative procedures and
policies as it deems appropriate and such procedures and policies
shall be binding on any Employee wishing to utilize the cashless
exercise program.
11. Award Terms and Conditions. Each Award or each agreement setting
forth an Award shall contain such other terms and conditions not
inconsistent herewith as shall be approved by the Committee.
12. Rights of Award Holder. The holder of an Award shall not have
any of the rights of a stockholder with respect to the Shares subject to
purchase or receipt under the Award, except that (a) an Award holder's
rights with respect to a Restricted Stock Award shall be as prescribed in
Section 8.2 and (b) stockholder rights with respect to any other Award
shall arise at the time and to the extent that one or more certificates for
such Shares shall be delivered to the holder upon the due exercise or grant
of the Award.
13. Nontransferability of Awards. An Award shall not be transferable
other than: (a) by will or the laws of descent and distribution, and an
Award subject to exercise may be exercised, during the lifetime of the
holder of the Award, only by the holder or in the event of death, the
holder's Successor, or in the event of disability, the holder's personal
representative, or (b) pursuant to a qualified domestic relations order, as
defined in the Code or ERISA or the rules thereunder; provided, however,
that an Incentive Stock Option may not be transferred pursuant to a
qualified domestic relations order unless such transfer is otherwise
permitted pursuant to the Code and the regulations thereunder without
affecting the Option's qualification under Code Section 422 as an Incentive
Stock Option.
14. Adjustments Upon Changes in Capitalization. In the event of
changes in all of the outstanding Shares by reason of stock dividends,
stock splits, reclassifications, recapitalizations, mergers,
consolidations, combinations, or exchanges of shares, separations,
reorganizations or liquidations, or similar events, or in the event of
extraordinary cash or non-cash dividends being declared with respect to the
Shares, or similar transactions or events, the number and class of Shares
available under the Plan in the aggregate, the number and class of Shares
subject to Awards theretofore granted, applicable purchase prices and all
other applicable provisions, shall, subject to the provisions of the Plan,
be equitably adjusted by the Committee (which adjustment may, but need not,
include payment to the holder of an Option, in cash or in shares, in an
amount equal to the difference between the price at which such Option may
be exercised and the then current fair market value of the Shares subject
to such Option as equitably determined by the Committee). The foregoing
adjustment and the manner of application of the foregoing provisions shall
be determined by the Committee, in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which
might otherwise become subject to an Award.
15. Change in Control. Notwithstanding anything to the contrary in
the Plan or any Award Agreement, in the case of a Change in Control of the
Company, each Award granted under the Plan shall, subject to the following
provisions, terminate ninety (90) days after the occurrence of such Change
in Control but, in the event of any such termination (a) an Option holder
shall have the right, commencing at least five (5) days prior to such
Change in Control and subject to any other limitation on the exercise of
such Option in effect on the date of exercise to immediately exercise any
Options in full, without regard to any vesting limitations, to the extent
they shall not have been theretofore exercised, and (b) all restrictions on
Restricted Stock Awards shall immediately lapse and certificates for the
affected Shares shall be appropriately distributed. Notwithstanding the
foregoing, clauses (a) and/or (b) shall not apply to the holder of an Award
to the extent that the application of such clause or clauses would cause
such Award, when aggregated with all other payments in the nature of
compensation due to the holder of the Award, to be treated as an "excess
parachute payment" within the meaning of Section 280G of the Code.
16. Forms of Awards. Nothing contained in the Plan nor any
resolution adopted or to be adopted by the Board or by the stockholders of
the Company shall constitute the granting of any Award. An Award shall be
granted hereunder only by action taken by the Committee in granting an
Award. Whenever the Committee shall designate an Employee for the receipt
of an Award, the Company's Secretary, or such other person as the Committee
may designate, shall forthwith send notice thereof to the Employee, in such
form as the Committee shall approve, stating the number of Shares subject
to the Award, its Term, and the other terms and conditions thereof. The
notice shall be accompanied by a written Award Agreement in such form as
may from time to time hereafter be approved by the Committee, which shall
have been duly executed by or on behalf of the Company. If the surrender
of previously issued Awards is made a condition of the grant, the notice
shall set forth the pertinent details of such condition. Execution by the
Employee to whom such Award is granted of said Award Agreement in
accordance with the provisions set forth in this Plan shall be a condition
precedent to the exercise or receipt of any Award.
17. Taxes.
17.1 Right to Withhold Required Taxes. The Company shall have
the right to require a person entitled to receive Shares pursuant to
the receipt, vesting or exercise of an Award under the Plan to pay the
Company the amount of any taxes which the Company is or will be
required to withhold with respect to such Shares before the
certificate for such Shares is delivered pursuant to the Award.
Furthermore, the Company may elect to deduct such taxes from any other
amounts then payable in cash or in shares or from any other amounts
payable any time thereafter to the Employee. The Company shall also
have the right to deduct from any cash payment payable to a person
pursuant to an Award the amount of any taxes which the Company is
required by law to withhold with respect to such cash payment. If the
Employee disposes of Shares acquired pursuant to an Incentive Stock
Option in any transaction considered to be a disqualifying disposition
under Sections 421 and 422 of the Code, the Employee shall notify the
Company of such transfer and the Company shall have the right to
deduct any taxes required by law to be withheld from any amounts
otherwise payable then or at any time thereafter to the Employee.
17.2 Employee Election to Withhold Shares. Subject to specific
Committee approval (which in the case of Incentive Stock Options must
be given at the time of grant), an Employee may elect to satisfy the
tax liability with respect to the exercise of an Option by having the
Company withhold Shares otherwise issuable upon exercise of the
Option; provided, however, that if an Employee is subject to Section
16(b) of the Exchange Act at the time the Option is exercised, such
election must satisfy the requirements of Rule 16b-3.
18. Termination of the Plan. The Plan shall terminate ten (10) years
from the date hereof, and an Award shall not be granted under the Plan
after that date although the terms of any Awards may be amended at any date
prior to the end of its Term in accordance with the Plan. Any Awards
outstanding at the time of termination of the Plan shall continue in full
force and effect according to the terms and conditions of the Award and
this Plan.
19. Amendment of the Plan. The Plan may be amended at any time and
from time to time by the Board, but no amendment without the approval of
the stockholders of the Company shall be made if stockholder approval under
Section 422 of the Code or Rule 16b-3 would be required. Notwithstanding
the discretionary authority granted to the Committee in Section 4 of the
Plan, no amendment of the Plan or any Award granted under the Plan shall
impair any of the rights of any holder, without the holder's consent, under
any Award theretofore granted under the Plan.
20. Delivery of Shares on Exercise or Grant. Delivery of
certificates for Shares pursuant to the grant or exercise of an Award may
be postponed by the Company for such period as may be required for it with
reasonable diligence to comply with any applicable requirements of any
federal, state or local law or regulation or any administrative or
quasi-administrative requirement applicable to the sale, issuance,
distribution or delivery of such Shares. The Committee may, in its sole
discretion, require an Employee to furnish the Company with appropriate
representations and a written investment letter prior to the exercise of
an Award or the delivery of any Shares pursuant to an Award.
21. Fees and Costs. The Company shall pay all original issue taxes
on the issuance or exercise of any Award granted under the Plan and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
22. Effectiveness of the Plan. The Plan shall become effective when
approved by the Board. The Plan shall thereafter be submitted to the
Company's stockholders for approval and unless the Plan is approved by the
Company's stockholders at a meeting duly held in accordance with Delaware
law within twelve (12) months after being approved by the Board, the Plan
and all Awards made under it shall be void and of no force and effect. In
aid of this provision any Awards granted prior to the approval of the Plan
by the Company's stockholders shall be conditioned upon receipt of such
approval.
23. Other Provisions. As used in the Plan, and in Awards and other
documents prepared in implementation of the Plan, references to the
masculine pronoun shall be deemed to refer to the feminine or neuter, and
references in the singular or the plural shall refer to the plural or the
singular, as the identity of the person or persons or entity or entities
being referred to may require. The captions used in the Plan and in such
Awards and other documents prepared in implementation of the Plan are for
convenience only and shall not affect the meaning of any provision hereof
or thereof.
24. Delaware Law to Govern. This Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
