<PAGE> 1
As filed with the Securities and Exchange Commission on August 9, 1995.
Registration No. 33-
---------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1993
PATTEN CORPORATION
------------------
(Exact name of registrant as specified in its charter)
04-2892070
----------
(I.R.S. employer identification no.)
Massachusetts
-------------
(State or other jurisdiction of incorporation or organization)
5295 Town Center Road, Boca Raton, FL 33486
-------------------------------------------
(Address of principal executive offices) (Zip Code)
1988 Outside Directors Stock Option Plan
1995 Stock Incentive Plan
-------------------------
(Full title of the plans)
Alan L. Murray, Treasurer and Chief Financial Officer
Patten Corporation
5295 Town Center Road
Boca Raton, FL 33486
--------------------
(Name and address of agent for service)
(407-361-2700)
--------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Proposed Proposed
Title of Amount maximum maximum Amount
securities to be to be offering price aggregate of registration
registered registered (1) per share (2) offering price (2) fee
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, 1,200,000
$.01 par value shares $3.70 $4,440,000 $1,531.03
=======================================================================================================
</TABLE>
(1) Plus such additional number of shares as may be required pursuant to the
plans in the event of a stock dividend, split-up of shares,
recapitalization or other similar change in the Common Stock.
(2) Estimated soley for the purpose of calculating the registration fee, in
accordance with Rule 457(h)(1), on the basis of the average of the high
and low prices of the Common Stock as reported on the New York Stock
Exchange on August 4, 1995.
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8, as amended, and relates to an aggregate of 1,200,000
shares of Common Stock, $.01 par value per share, of Patten Corporation (the
"Company") that have been reserved for issuance under the Company's 1988
Directors Stock Option Plan and 1995 Stock Incentive Plan.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Company's 1995 Annual Report to Stockholders filed with the
Securities and Exchange Commission (the "Commission") on June 16, 1995,
containing the Company's audited financial statements for its fiscal year ended
April 2, 1995; and
(b) The Company's current report on Form 8-K filed with the Commission on
July 27, 1995; and
(c) The description of the Company's Common Stock incorporated by
reference into the Company's Registration Statement on Form 8-A filed with the
Commission on December 27, 1985 from the Company's registration statement on
Form S-1 (SEC File No. 33-756) initially filed with the Commission on October
8, 1985.
In addition, all documents filed by the Company after the initial filing
date of this Registration Statement pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and prior to the filing of a post-effective amendment which indicates that all
shares registered hereunder have been sold or which re-registers all shares
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
documents.
II-1
<PAGE> 4
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable
Item 6. Indemnification of Officers and Directors
As permitted by Chapter 156B of the Massachusetts General Laws ("Chapter
156B"), the Company's Restated Articles of Organization, as amended (the
"Charter"), contain a provision which limits the personal liability of a
director to the Company or its stockholders for monetary damages for breach of
his fiduciary duty of care as a director. Under current law, liability is not
eliminated for (i) any breach of the director's duty of loyalty to the Company
or its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payment of
dividends or stock purchases or redemptions pursuant to Section 61 and Section
62 of Chapter 156B, or (iv) any transaction from which the director derived an
improper personal benefit. This provision does not eliminate a stockholder's
right to seek nonmonetary remedies, such as an injunction, rescission, or other
equitable remedy, to redress action taken by the directors. However, there may
be instances in which no effective equitable remedy is available.
The Company's Charter provides, in part, that the Company shall indemnify
any person who is or was a director or officer of the Company and each person
who is or was serving as a director or officer of another organization in which
the Company directly or indirectly owns shares or of which the company is
directly or indirectly a creditor, against all liabilities, cost and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
settlement or as fines and penalties and counsel fees and disbursements
reasonably incurred by him in connection with the defense or disposition of or
otherwise in connection with or resulting from any action, suit or other
proceeding, whether civil, criminal, administrative or investigative, before
any court or administrative or legislative or investigative body, in which he
may be or may have been involved as a party or otherwise or with which he may
be or have been threatened, while in office or thereafter, by reason of his
being or having been such a director or officer or by reason of any action
taken or not taken in such capacity, except with respect to any matter as to
which he shall have been finally adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that his
action was in the best interests of the corporation. Such indemnification is
not exclusive of other indemnification rights arising under any by-laws,
agreement, board of directors or stockholders' vote or otherwise.
Currently applicable Massachusetts law provides that officers and
directors may receive indemnification from their corporations for actual or
threatened lawsuits, except that indemnification may not be provided for any
person with respect to any matter to which such person has been adjudicated not
to have acted in good faith in the reasonable belief that such person's action
was in the best interest of the corporation or, to the extent that such matter
relates to service with respect to any employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan.
Massachusetts law further provides that a corporation may purchase
indemnification insurance, such insurance providing indemnification for the
officers and directors whether or not the corporation would have the power to
indemnify them against such liability under the provisions of the Massachusetts
law. The Company currently maintains such insurance.
II-3
<PAGE> 5
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1* Specimen stock certificate.
5.1 Opinion of Choate, Hall & Stewart as to the legality of the shares
being registered.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Choate, Hall & Stewart (included in Exhibit 5.1).
24.1 Power of Attorney (included in page II-7).
99.1 The Company's 1988 Outside Directors Stock Option Plan, as amended.
99.2 The Company's 1995 Stock Incentive Plan.
--------------------
* Incorporated by reference from the Company's registration statement on Form
S-1 (SEC File No. 33-756) initially filed with the Commission on October 8,
1985,
Item 9. Undertakings
(a) The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement 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;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(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 Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act 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.
II-4
<PAGE> 6
(1) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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 Company will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the Company
certifies that is has redeemable 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 Boca Raton, Florida on August 9, 1995.
Patten Corporation
(Registrant)
By: /s/ George F. Donovan
---------------------
George F. Donovan,
President and Chief
Executive Officer
II-6
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints George F. Donovan, Alan L. Murray and
William P. Gelnaw, Jr., jointly and severally, his true and lawful
attorneys-in-fact and agents with full powers of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be 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 and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on August 9, 1995 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
Name Capacity
---- --------
<S> <C>
/s/ George F. Donovan President, Chief Executive
---------------------------------------- Officer and Director (Principal
George F. Donovan Executive Officer)
/s/ Alan L. Murray Treasurer, and Chief Financial
---------------------------------------- Officer (Principal Financial and
Alan L. Murray Accounting Officer)
/s/ Joseph C. Abeles Director
----------------------------------------
Joseph C. Abeles
/s/ Ralph A. Foote Director
----------------------------------------
Ralph A. Foote
/s/ Frederick M. Myers Director
----------------------------------------
Frederick M. Myers
/s/ Stuart A. Shikiar Director
----------------------------------------
Stuart A. Shikiar
/s/ Bradford T. Whitmore Director
----------------------------------------
Bradford T. Whitmore
</TABLE>
II-7
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Page
-------------- ----
<S> <C>
4.1* Specimen stock certificate. ---
5.1 Opinion of Choate, Hall & Stewart as to the legality of the shares E1
being registered
23.1 Consent of Ernst & Young LLP E2
23.2 Consent of Choate, Hall & Stewart (included in Exhibit 5.1) ---
24.1 Power of Attorney (included in page II-7) ---
99.1 The Company's 1988 Outside Directors Stock Option Plan, as E3
amended
99.2 The Company's 1995 Stock Incentive Plan E6
</TABLE>
----------------------
*Incorporated by reference from the Company's registration statement on Form
S-1 (SEC File No. 33-756) initially filed with the Commission on October 8,
1985.
II-8
<PAGE> 1
EXHIBIT 5.1
August 7, 1995
Patten Corporation
5295 Town Center Road, Suite 400
Boca Raton, FL 33486
Gentlemen:
This opinion is delivered to you in connection with the registration
statement on Form S-8 (the "Registration Statement") to be filed on August 9,
1995 by Patten Corporation (the "Company") under the Securities Act of 1933, as
amended, for registration under said Act of 1,200,000 shares of common stock,
$.01 par value per share (the "Common Stock"), of the Company.
We are familiar with the Company's Restated Articles of Organization and
its Restated By-Laws, as amended, as well as the Registration Statement. We
are also familiar with the Company's 1995 Stock Incentive Plan (the "Incentive
Plan"). We have also examined such other documents, records and certificates
and made such further investigation as we have deemed necessary for the
purposes of this opinion. We have assumed that the capitalization of the
Company will not change from that currently in effect and that the Company's
Restated Articles of Organization and Restated By-Laws will not be further
amended.
Based upon and subject to the foregoing, we are of the opinion that the
shares of Common Stock to be sold by the Company under the Incentive Plan and
the Directors Plan, as in effect on the date hereof, when issued against
receipt of the agreed purchase price therefor in accordance with the terms of
such Plans, will be legally issued, fully paid and nonassessable.
We understand that this opinion is to be used in connection with the
Registration Statement and consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
CHOATE, HALL & STEWART
E1
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
pertaining to the Stock Option Plans of Patten Corporation to our report dated
April 26, 1995 with respect to the consolidated financial statements of Patten
Corporation incorporated by reference in its Annual Report (Form 10-K) for the
year ended April 2, 1995 filed with the Securities and Exchange Commission.
Ernst & Young LLP
West Palm Beach, Florida
August 2, 1995
E2
<PAGE> 1
EXHIBIT 99.1
AMENDED 1988 OUTSIDE DIRECTORS STOCK OPTION PLAN
OF PATTEN CORPORATION
1. ADMINISTRATION OF PLAN.
This Plan is intended to provide for the grant of stock options to
non-employee directors of Patten Corporation (the "Company"). All options
granted under the Plan shall be non-qualified stock options not entitled to
special tax treatment under Section 422 of the Internal Revenue Code of 1986,
as amended from time to time (the "Code"). This Plan shall be administered by
the Board of Directors of the Company. The Board of Directors shall have the
right, at its discretion, to delegate any and all of its powers hereunder to a
Committee appointed by the Board of Directors from among the non-employee
directors of the Company (the "Outside Directors"). In the event that the
Board of Directors appoints a Committee to administer the Plan, in whole or in
part, said Committee's determinations with respect thereto shall not be subject
to approval by the Board of Directors, and to the extent of such delegation,
references in this Plan to the Board of Directors shall be deemed to refer to
the Committee.
2. SHARES COVERED BY PLAN.
Options may be granted under the Plan while the Plan is in effect for the
purchase of not in excess of 540,704 shares of Common Stock, $.01 par value per
share ("Common Stock"), of the Company. Shares covered by unexercised options
which are no longer excercisable for any reason shall be available for issuance
under options granted hereunder for purposes of computing the foregoing
limitation unless the Plan has been terminated. Shares delivered on exercise
of options may be made available from authorized and unissued stock or from
stock held in Treasury of the Company.
3. ELIGIBILITY.
All outside Directors shall be eligible to participate in the Plan.
Notwithstanding the foregoing, all options to Outside Directors granted under
the Plan shall be subject to satisfaction of one or more of the following
conditions:
(1) the Company shall have received an opinion of counsel to the effect
that the administration of the Plan and all other plans of the
Company by Outside Directors who participate in the Plan will not
cause the acquisition, expiration, cancellation or surrender of stock
options pursuant to the Plan or any other plan of the Company to be
treated as a "purchase" or "sale" within the meaning of Section 16(b)
of the Securities Exchange Act of 1934.
E3
<PAGE> 2
4. ALLOTMENT OF OPTIONS AND NUMBER OF SHARES.
Subject to the limits set forth in Section 2, each Outside Director
serving in such position shall be automatically granted a stock option covering
15,000 shares of Common Stock on the first business day after the first trading
day after the annual meeting of the Company's stockholders or any special
meeting in lieu of the annual meeting of stockholders.
In the event that the total number of shares available for granting shall
not be sufficient to grant each Outside Director 15,000 shares of the Common
Stock on a particular grant date, the available shares shall be allocated
proportionately among the Outside Directors then in office.
5. OPTION AGREEMENTS.
Each Outside Director to whom an option is granted shall enter into a
written agreement (the "Option Agreement") with the Company setting forth the
terms and conditions of the option granted to him, which Option Agreement shall
be in the form attached hereto. The terms of the Option Agreement are
incorporated herein by reference.
6. OPTION PRICE.
The option price per share under each option granted under the Plan shall
be equal to the closing sale price of the Common Stock as reported on the
principal stock exchange on which such stock is then listed or, if not then
listed on a stock exchange, as reported on the NASDAQ system, on the last
trading day preceding the date on which the stock option is granted.
7. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN.
In the event there is any change in the shares of Common Stock of the
Company through the declaration of stock dividends or through recapitalizations
resulting in stock split-ups or combinations or exchanges of shares or
otherwise, the number of shares available for option, the exercise price of
outstanding options and the number of shares subject to any option shall be
equitably adjusted, with fractional parts of shares being discharged.
8. USE OF PROCEEDS.
The proceeds received by the Company from the sale of stock pursuant to
the Plan shall be used for general corporate purposes.
E4
<PAGE> 3
9. AMENDMENT AND DISCONTINUANCE.
The Board of Directors may from time to time alter or suspend and at any
time discontinue the Plan. However, no action of the Board of Directors may,
without the approval of the stockholders, increase the maximum number of shares
to be offered for sale under options in the aggregate (other than according to
the terms of Section 7 above) modify the provisions of Section 3 hereof
regarding eligibility, reduce the purchase price at which shares may be offered
pursuant to options (other than according to terms of Section 7) or extend the
expiration date of the Plan; nor may any action of the Board of Directors or
the stockholders alter or impair an optionee's rights under any outstanding
option previously granted under the Plan, without the consent of the holder of
the option, and provided further, that no amendment shall be made more than
once every six months to Sections 1 or 3 of the Plan designating officers and
directors eligible under the Plan, to Section 2 of the Plan stating the total
number of shares to be granted to officers and directors, to Section 4 of the
Plan specifying the number of shares covered by each option and the timing of
awards, to Section 6 of the Plan specifying the option price or to Section 1 of
the Option Agreement (referred to in Section 5 of the Plan) specifying the
number of shares covered by each option, other than to comport with changes in
the Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules under either of such laws.
10. EFFECTIVE DATE AND TERMINATION DATE.
The plan and any amendment thereto requiring stockholder approval shall
become effective upon the date of its adoption by the Board of Directors,
subject, however, to approval by the stockholders of the Company within twelve
months of such date. The Plan shall remain in effect until terminated by the
Board of Directors, but not later than ten years after the date the Plan is
initially adopted by the Board of Directors.
E5
<PAGE> 1
PATTEN CORPORATION
1995 STOCK INCENTIVE PLAN
------------------
1. PURPOSE. The purpose of the Patten Corporation 1995 Stock
Incentive Plan (the "Plan") is to advance the interests of Patten Corporation
(the "Company") and its present and future Affiliates by strengthening the
ability of the Company and its Affiliates to attract, retain and motivate
employees of, consultants to, and independent contractors of the Company and
its Affiliates by providing incentives, opportunities and favorable terms for
them to acquire stock of the Company and to receive other Awards.
The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board shall have the right, at its discretion, to
delegate any and all of its powers under the Plan to the Compensation Committee
of the Board, or such other committees or persons designated by the Board (such
Compensation Committee or other committee or persons designated by the Board is
hereinafter referred to as the "Committee"), as provided in and subject to
Section 14. In the event that the Board appoints a Committee to administer the
Plan, in whole or in part, the Committee's determinations with respect thereto
shall not be subject to approval by the Board. References in the Plan to the
Committee shall be deemed to refer to the Board to the extent the Board has not
delegated administration of the Plan to the Committee, and any references to
the Board shall be deemed references to the Committee if the Board has
delegated its powers.
2. PARTICIPATION. The Committee shall have exclusive power
(except as may be delegated by the Committee as permitted herein) to select the
employees and other individuals performing services for the Company and its
Affiliates who shall be eligible individuals who may participate in the Plan
and be granted Awards under the Plan. Eligible individuals may be selected
individually or by groups or categories, as determined by the Committee in its
discretion. As used herein the term "Participant" means each eligible
individual to whom an Award has been made under any provision of the Plan.
3. AWARDS UNDER THE PLAN.
3.1 Types of Awards. Awards under the Plan ("Awards")
may include, but need not be limited to, one or more of the following types,
either alone or in any combination thereof: (i) Stock Options; (ii) Restricted
Stock; (iii) Unrestricted Stock; (iv) Performance Shares; (v) Loans; (vi)
Supplemental Cash Grants; and (viii) any other type of Award deemed by the
Committee in its discretion to be consistent with the purposes of the Plan.
Stock Options, which include "Nonqualified Stock Options" and "Incentive Stock
Options" or combinations thereof, are rights to purchase shares of the common
stock of the Company ("Shares" or "Stock"). Nonqualified Stock Options and
Incentive Stock Options are subject to the terms, conditions and restrictions
specified in Section 4. Restricted Stock is Shares which are issued subject to
terms, conditions and restrictions specified in Section 5. Unrestricted Stock
is Shares issued without restrictions as described in Section 5. Performance
Shares are contingent awards, subject to terms, conditions and restrictions
described in Section 6, under which the Participant may become entitled to
receive cash, Shares, Other Securities, or other forms of payment, or any
combination thereof, as determined by the Committee. Loans and Supplemental
Cash Grants are other Awards which may be made subject to the terms described
in Section 7.
E6
<PAGE> 2
3.2 Maximum Number of Shares That May be Issued. There
may be issued under the Plan (as Restricted Stock or Unrestricted Stock, in
payment of Performance Shares, pursuant to the exercise of Stock Options, or in
payment of or pursuant to the exercise of other Awards) up to an aggregate of
1,000,000 Shares, subject to adjustment as provided in Section 12. Shares
issued pursuant to the Plan may be either authorized but unissued Shares,
treasury Shares, reacquired Shares, or any combination thereof. If any Shares
issued as Restricted Stock or otherwise subject to repurchase or forfeiture
rights are reacquired by the Company pursuant to such rights, or if any Stock
Option or other Award (other than Stock Options or other Awards issued in
respect of such Assumed Options) is canceled, terminates or expires
unexercised, or if any Award payable in Stock or cash (other than Stock Options
or other Awards issued in respect of such Assumed Options) is satisfied in cash
rather than Stock, any Shares that would otherwise have been issuable pursuant
thereto will be available for issuance under new Awards.
3.3 Rights With Respect to Shares and Other Securities.
(a) Unless otherwise determined by the Committee in its
discretion, a Participant to whom an Award of Restricted Stock has been made
(and any person succeeding to such a Participant's rights pursuant to the Plan)
shall have, after issuance of a certificate for the number of Shares awarded
and prior to the expiration of the Restricted Period (as defined in Section 5)
or the earlier repurchase of such Shares as herein provided, ownership of such
Shares, including the right to vote the same and to receive dividends or other
distributions made or paid with respect to such Shares (provided that such
Shares, and any new, additional or different Shares, or Other Securities, or
other forms of consideration which the Participant may be entitled to receive
with respect to such Shares as a result of a stock split, stock dividend or any
other change in the capital structure of the Company, shall be subject to the
restrictions hereinafter described as determined by the Commitee in its
discretion), subject, however, to the options, restrictions and limitations
imposed thereon pursuant to the Plan. Notwithstanding the foregoing, a
Participant with whom any agreement is made to issue Shares in the future,
shall have no rights as a shareholder with respect to Shares related to such
agreement until issuance of a certificate to him.
(b) Unless otherwise determined by the Committee in its
discretion, a Participant to whom a grant of Stock Options, Performance Shares
or any other Award is made (and any person succeeding to such a Participant's
rights pursuant to the Plan) shall have no rights as a shareholder with respect
to any Shares or as a holder with respect to Other Securities, if any, issuable
pursuant to any such Award until the date of the issuance of a stock
certificate to him for such Shares or other instrument of ownership, if any.
Except as provided in Section 12, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such stock certificate or other instrument of ownership, if any, is issued.
3.4 Definitions of Certain Terms. Whenever the "Fair
Market Value" of Shares or Other Securities or any other property must be
determined pursuant to any provisions of the Plan, "Fair Market Value" shall be
the amount determined by the Committee as follows:
(i) if the Stock or Other Securities or other property
are then traded on a securities exchange, the closing sale price on
the principal market on which the Stock or Other Securities or other
property are traded on the date in question (or if such price is not
available on such date, on the business day closest to such date for
which such price is available); or
(ii) if the Stock or Other Securities or other property
are then traded in the over-the-counter market, the mean between the
closing bid and asked price of the Stock or Other Securities or other
property on the date in question (or if such prices are not available
on such date, on the business day closest to such date for which such
prices are available), as such price is reported in a publication of
general circulation selected by the Committee; or
(iii) if the Stock or Other Securities or other property
are not then actively traded on an exchange or in the over-the-counter
market, the amount determined in good faith by the Committee.
E7
<PAGE> 3
As used herein, a "subsidiary corporation" is any corporation of which
the Company is the owner of at least 50% of the total combined voting power of
all classes of stock of such corporation. "Affiliate" means any entity in
which the Company or any subsidiary corporation has a substantial direct or
indirect equity interest.
An "eligible individual" shall be deemed to refer to any person
eligible to receive an Award under the Plan and shall include (1) employees and
(2) individuals performing services as non-employee independent contractors.
"Section 162(m) employee" means a Participant who, as of the date of
vesting and/or payout of an Award, is one of the group of "covered employees,"
as defined in regulations promulgated under Section 162(m) of the Code.
For purposes of this Plan, a Participant shall be deemed to have
terminated his employment or performance of services for the Company and its
Affiliates by reason of "Disability" if he is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months, or the Participant has incurred total and permanent
disability as determined under the provisions of a Company long-term disability
program which is applicable to the Participant.
"Cause" means a felony conviction of a Participant or the failure of a
Participant to contest prosecution for a felony, or a Participant's misconduct
or dishonesty, any of which is directly and materially harmful to the business
or reputation of the Company or any Affiliate.
"Retirement" means the Participant's retirement from active employment
with the Company or an Affiliate (or ceasing to provide services as an
independent contractor) within or after the calendar year the Participant
attains age sixty (60).
4. STOCK OPTIONS. The Committee may grant Stock Options either
alone, or in conjunction with Performance Shares or other Awards, either at the
time of grant or by amendment thereafter, provided that an Incentive Stock
Option may be granted only to an employee of the Company or its parent or
subsidiary corporation. Incentive Stock Options are Stock Options which are
intended to meet the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"). Each Stock Option granted under the Plan
shall be evidenced by an instrument ("Option Agreement") in such form as the
Committee shall prescribe from time to time in accordance with the Plan which
shall comply with the terms and conditions specified in this Section 4 and with
such other terms and conditions, including, but not limited to, restrictions
upon the Stock Option or the Shares issuable upon exercise thereof, as the
Committee, in its discretion, shall establish.
4.1 Option Price. The option price may be less than,
equal to, or greater than, the Fair Market Value of the Shares subject to the
option at the time the Stock Option is granted, as determined by the Committee,
but in no event will the option price be less than 50% of the Fair Market Value
of the underlying Shares at the time the Stock Option is granted; provided,
however, that in the case of an Incentive Stock Option, the option price shall
not be less than the Fair Market Value of the Shares at the time the Incentive
Stock Option is granted, or if granted to an employee who owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or of its parent or subsidiary corporation (a "10% Employee"),
such option price shall not be less than 110% of such Fair Market Value at the
time the Incentive Stock Option is granted; and provided, further, that in the
case of any Stock Option intended to satisfy the "performance-based" exemption
under Section 162(m) of the Code, the option price shall not be less than the
Fair Market Value of the Share at the time the Stock Option is granted.
However, in no event will the option price be less than the par value of such
Shares.
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4.2 Number of Option Shares. The Committee shall
determine the number of Shares to be subject to each Stock Option; provided,
however, that if the Committee determines that a Stock Option should satisfy
the "performance-based" exemption under Section 162(m) of the Code, the maximum
number of Shares subject to Stock Options which may be granted to any single
Participant during any calendar year is one hundred fifty thousand (150,000).
The number of Shares subject to an outstanding Stock Option may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Shares under the Stock Option are used to calculate the cash,
Shares, Other Securities, or other forms of payment, or any combination
thereof, to the extent that any other Award granted in conjunction with such
Stock Option is paid.
4.3 Nontransferability of Stock Options. A Stock Option
may not be sold, assigned, transferred, pledged, or otherwise disposed of by
the optionee, except by will or the laws of descent and distribution, and shall
be exercisable during the optionee's lifetime only by the optionee.
4.4 Exercisability of Stock Options. A Stock Option
shall not be exercisable, as follows:
(a) in the case of any Incentive Stock Option granted to
a 10% Employee, after the expiration of five (5) years from the date
it is granted, and in the case of any other Incentive Stock Option or
any Nonqualified Stock Option, after the expiration of ten (10) years
from the date it is granted; any Stock Option may be exercised during
such period only at such time or times and in such installments as the
Committee may establish in the Option Agreement;
(b) unless payment in full is made for the Share at the
time of exercise and such payment shall be made in such form
(including, but not limited to, cash, check, or, if permitted by the
Committee in the Option Agreement, by delivery to the Company of
Shares, or a promissory note, or an irrevocable undertaking by a
broker to deliver to the Company sufficient funds to pay the exercise
price, or the surrender of another outstanding Award under the Plan,
or any combination thereof) as the Committee may determine in its
discretion;
(c) unless the person exercising the Stock Option has
been, at all times during the period beginning with the date of the
grant of the Stock Option and ending on the date of such exercise,
employed by, otherwise performing services for the Company or an
Affiliate, or a corporation substituting or assuming the Stock Option
in a transaction to which Section 424(a) of the Code is applicable,
except that:
(i) unless otherwise provided in the Option
Agreement, if the optionee ceases to perform services for the
Company or an Affiliate because of Retirement or Disability,
any unvested Stock Option or portion thereof shall fully vest,
and following such Retirement or Disability the Participant
may at any time within a period of three (3) years from the
date of such Retirement or Disability exercise the Stock
Option;
(ii) unless otherwise provided in the Option
Agreement, if the optionee ceases to perform services for the
Company or an Affiliate because of his death, any unvested
Stock Option or portion thereof shall fully vest, and his
estate, personal representative or Beneficiary to whom it has
been transferred pursuant to Section 13 may at any time within
a period of three (3) years from the date of the Participant's
death exercise the Stock Option;
(iii) if the optionee ceases to perform services
for the Company or an Affiliate for Cause, all Stock Options
shall immediately expire and cease to be vested or
exercisable, and the optionee shall have no further rights or
claims with respect thereto; and
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(iv) unless otherwise provided in the Option
Agreement, if the optionee ceases to perform services for the
Company or an Affiliate for any reason other than death,
Disability or Retirement, or for Cause, any Stock Option or
portion thereof which was not vested and exercisable shall
immediately terminate and the optionee shall have no further
rights or claims with respect thereto, and the Participant may
at any time within a period of thirty (30) days from the date
of such termination exercise the Stock Option to the extent
that the Stock Option was exercisable by him on the date he
ceased to perform services;
provided, however, that the Committee may provide specifically in the
Option Agreement for such other period of time during which an
optionee may exercise a Stock Option after termination of the
optionee's services, subject to the overriding limitation that no
Stock Option may be exercised to any extent by anyone after the date
of expiration of the Stock Option.
In the event that an Incentive Stock Option is exercised by an
optionee after the exercise period that applies for purposes of treatment as an
incentive stock option under Section 422 of the Code, such Stock Option shall
thereafter be treated as a Nonqualified Stock Option.
4.5. Restrictions on Incentive Stock Options. In the case
of an Incentive Stock Option, the amount of aggregate Fair Market Value of
Shares (determined at the time of grant of the Stock Option pursuant to Section
4.1) with respect to which incentive stock options are exercisable for the
first time by an employee during any calendar year (under all such plans of the
Company) shall not exceed $100,000. To the extent the limitation in the
preceding sentence would be exceeded with respect to any portion of a Stock
Option otherwise first becoming exercisable for any year in accordance with the
vesting schedule established for an optionee, the Committee may determine at
the time of grant that vesting with respect to such excess amount shall be
deferred until the first subsequent year that such excess amount (or any part
thereof) can become exercisable within the limitation of the preceding sentence
or, in the alternative, that such excess amount become vested as a Nonqualified
Stock Option.
4.6. Restrictions on Shares. Shares purchased by an
optionee upon exercise of a Stock Option may be subject to such transfer and
repurchase restrictions (including without limitation transfer and repurchase
restrictions like those which may be applicable to Restricted Stock under the
provisions of Section 5) as the Committee in its sole discretion shall
establish in the Option Agreement.
5. RESTRICTED STOCK AND UNRESTRICTED STOCK. Each Award of
Restricted Stock under the Plan shall be evidenced by an instrument
("Restricted Stock Agreement") in such form as the Committee shall prescribe
from time to time in accordance with the Plan which shall comply with the terms
and conditions specified in this Section 5, and with such other terms and
conditions as the Committee, in its discretion, shall establish.
5.1. Number of Shares of Restricted Stock. The Committee
shall determine the number of Shares to be issued to a Participant pursuant to
the Award of Restricted Stock, and the extent, if any, to which they shall be
issued in exchange for cash, other consideration, or both; provided, however,
that if the Committee determines that an Award of Restricted Stock should
satisfy the "performance-based" exemption under Section 162(m) of the Code, the
maximum number of Shares of Restricted Stock which may be granted to any single
Participant during any calendar is one hundred fifty thousand (150,000) and
provided further that Restricted Stock may not be issued for a price which is
less than the par value of the Shares.
5.2. Restriction on Transfer; Repurchase Option. Shares
issued to a Participant in accordance with the Award of Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise disposed of, except by
will or the laws of descent and distribution, or as otherwise determined by the
Committee in the Restricted Stock Agreement, for such period as the Committee
shall determine from the date on which the Award is granted (the "Restricted
Period").
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The Company will have the option to repurchase the Shares subject to
the Award at such price as the Committee shall have fixed in the Restricted
Stock Agreement which option will be exercisable:
(i) if the Participant's continuous employment or
performance of services for the Company and its Affiliates shall
terminate for any reason or except as otherwise provided in Section
5.3, prior to the expiration of the Restricted Period;
(ii) if, on or prior to the expiration of the Restricted
Period or the earlier lapse of such repurchase option, the Participant
has not paid to the Company an amount equal to any federal, state,
local or foreign income or other taxes which the Company determines is
required to be withheld in respect of such Shares; or
(iii) under such other circumstances as determined by the
Committee in its discretion.
Such repurchase option shall be exercisable on such terms, in such manner and
during such period as shall be determined by the Committee in the Restricted
Stock Agreement.
Each certificate for Shares issued pursuant to an Award of Restricted
Stock shall bear an appropriate legend referring to the foregoing repurchase
option and other restrictions; shall be deposited by the awardholder with the
Company, together with a stock power endorsed in blank; or shall be evidenced
in such other manner permitted by applicable law as determined by the Committee
in its discretion. Any attempt to dispose of any such Shares in contravention
of the foregoing repurchase option and other restrictions shall be null and
void and without effect.
If Shares issued pursuant to an Award of Restricted Stock shall be
repurchased pursuant to the repurchase option described above, the Participant,
or in the event of his death, his personal representative, shall forthwith
deliver to the Secretary or Clerk of the Company the certificates for the
Shares awarded to the Participant, accompanied by such instrument of transfer,
if any, as may reasonably be required by the Secretary of the Company. If the
repurchase option described above is not exercised by the Company, such option
and the restrictions imposed pursuant to the first paragraph of this Section
5.2 shall terminate and be of no further force and effect.
5.3. Termination of Services Under Certain Circumstances.
If a Participant who has been in continuous employment or performance of
services for the Company or an Affiliate since the date on which an Award of
Restricted Stock was granted to him shall, while in such employment,
performance of services, die, or terminate such employment, or performance of
services by reason of Disability or Retirement and any of such events shall
occur prior to the end of the Restricted Period of such Award, the Committee
may determine to cancel the repurchase option (and any and all other
restrictions) on any or all of the Shares subject to such Award; and the
repurchase option shall become exercisable at such time as to the remaining
Shares, if any.
5.4. Other Restrictions. The Committee shall impose such
other conditions and/or restrictions on Restricted Stock as it may deem
advisable including, without limitation, a requirement that Participants pay a
stipulated purchase price therefor, restrictions based upon the achievement of
specific performance goals (Company-wide, divisional and/or individual) and/or
restrictions under applicable federal or state securities laws.
Unless and until the Committee proposes for stockholder vote a change
in the general performance measures set forth below, the attainment of which
shall determine the number of Shares of Restricted Stock that become vested
under the Plan, the performance measure(s) to be used for purposes of grants to
Section 162(m) employees shall be selected from among the following
alternatives:
(a) Return on invested capital in relation to target objectives.
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(b) Share earnings/earnings growth in relation to target
objectives.
(c) Cash flow/cash flow growth in relation to target objectives.
In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Restricted Stock that shall not qualify for the "performance-based"
exemption under Section 162(m) of the Code, the Committee may make grants which
do not qualify for such exemption.
5.5. Notice of Election Under Section 83(b). A
Participant making an election under Section 83(b) of the Code with respect to
Restricted Stock must provide a copy thereof to the Company within ten (10)
days of the filing of such election with the Internal Revenue Service.
5.6. Unrestricted Stock. The Committee may, in its
discretion, approve the sale and transfer to a Participant of Shares free of
any transfer restriction or repurchase options ("Unrestricted Stock") for a
price which is not less than the par value of the Shares.
6. PERFORMANCE SHARES. The Award of Performance Shares
("Performance Share Grant") to a Participant will entitle him to receive a
specified amount determined by the Committee (the "Value"), if the terms and
conditions specified herein and in the Award are satisfied. Each Performance
Share Grant shall be subject to the terms and conditions specified in this
Section 6, and to such other terms and conditions, including but not limited
to, restrictions upon any cash, Shares, Other Securities, or other forms of
payment, or any combination thereof, issued in respect of the Performance Share
Grant, as the Committee, in its discretion, shall establish, and shall be
embodied in an instrument (a "Performance Share Agreement") in such form and
substance as is determined by the Committee.
6.1. Description of Performance Shares. The Committee
shall determine the Value or range of a Performance Share Grant to be awarded
to each Participant selected for such an Award and whether or not such a
Performance Share Grant is granted in conjunction with an Award of Stock
Options, Restricted Stock or other Award, or any combination thereof, under the
Plan (which may include, but need not be limited to, deferred Awards)
concurrently or subsequently granted to the Participant (the "Associated
Award"). If the Committee determines that a grant of Performance Shares should
satisfy the "performance-based" exemption under Section 162(m) of the Code, the
maximum payout to any Section 162(m) employee with respect to Performance
Shares granted in any one calendar year shall be five hundred thousand dollars
($500,000).
As determined by the Committee in the Performance Share Agreement, the
maximum value of each Performance Share Grant (the "Maximum Value") shall be:
(i) an amount fixed by the Board at the time the Award is made or amended
thereafter; (ii) an amount which varies from time to time based in whole or in
part on the then current value of a Share, Other Securities or property, or any
combination thereof; or (iii) an amount that is determinable from criteria
specified by the Committee.
Performance Share Grants may be issued in different classes or series
having different names, terms and conditions. In the case of a Performance
Share Grant awarded in conjunction with an Associated Award, the Performance
Share Grant may be reduced on an appropriate basis to the extent that the
Associated Award has been exercised, paid to or otherwise received by the
Participant, as determined by the Committee.
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6.2. Performance Objectives. The award period in respect
of any Performance Share Grant shall be a period determined by the Committee.
At the time each Award is made, the Committee shall establish performance
objectives to be attained within the award period as the means of determining
the Value of such a Performance Share Grant. The performance objectives shall
be based on such measure or measures of performance, which may include, but
need not be limited to, the performance of the Participant, the Company, one or
more of its subsidiaries or one or more of their divisions or units, or any
combination of the foregoing, as the Committee shall determine, and may be
applied on an absolute basis or be relative to industry or other indices, or
any combination thereof.
The Value of a Performance Share Grant shall be equal to its Maximum
Value only if the performance objectives are attained in full, but the
Committee shall specify the manner in which the Value of Performance Share
Grants shall be determined if the performance objectives are met in part. Such
performance measures, the Value or the Maximum Value, or any combination
thereof, may be adjusted in any manner by the Committee in its discretion at
any time and from time to time during or as soon as practicable after the award
period, if it determines that such performance measures, the Value or the
Maximum Value, or any combination thereof, are not appropriate under the
circumstances.
Notwithstanding the foregoing, unless and until the Committee proposes
for stockholder vote a change in the general performance measures set forth
below, the attainment of which shall serve as a basis for the determination of
the number and/or value of Performance Shares granted under the Plan, the
performance measure(s) to be used for purposes of grants to Section 162(m)
employees shall be selected from among the following alternatives:
(a) Return on invested capital in relation to target objectives.
(b) Share earnings/earnings growth in relation to target
objectives.
(c) Cash flow/cash flow growth in relation to target objectives.
In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Restricted Stock that shall not qualify for the "performance-based"
exemption under Section 162(m) of the Code, the Committee may make grants which
do not qualify for such exemption.
6.3. Effect of Termination of Services. The rights of a
Participant in Performance Shares awarded to him shall be provisional and may
be canceled or paid in whole or in part, all as determined by the Committee, if
the Participant's employment or performance of services for the Company and its
Affiliates shall terminate for any reason prior to the end of the award period.
6.4. Payment of Performance Shares. The Committee shall
determine whether the conditions of Section 6.1 or 6.2 have been met and, if
so, shall ascertain the Value of the Performance Share Grants. If the
Performance Share Grants have no Value, the Award and such Performance Share
Grants shall be deemed to have been canceled and the Associated Award, if any,
may be canceled or permitted to continue in effect in accordance with its
terms. If the Performance Share Grants have any Value and:
(i) were not awarded in conjunction with an Associated
Award, the Committee shall cause an amount equal to the Value of the
Performance Share Grants earned by the Participant to be paid to him
or his Beneficiary as provided below; or
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(ii) were awarded in conjunction with an Associated Award,
the Committee shall determine, in accordance with criteria specified
by the Board, (A) to cancel the Performance Share Grants, in which
event no amount in respect thereof shall be paid to the Participant or
his Beneficiary, and the Associated Award may be permitted to continue
in effect in accordance with its terms, (B) to pay the Value of the
Performance Share Grants to the Participant or his Beneficiary as
provided below, in which event the Associated Award may be canceled,
or (C) to pay to the Participant or his Beneficiary as provided below,
the Value of only a portion of the Performance Share Grants, in which
event all or a portion of the Associated Award may be permitted to
continue in effect in accordance with its terms or be canceled, as
determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the award period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Shares which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the award period or at such other time
or times as the Committee shall determine, and may be made in cash, Shares,
Other Securities, or other forms of payment, or any combination thereof, or in
such other manner, as determined by the Committee in its discretion.
Notwithstanding anything in this Section 6 to the contrary, the Committee may,
in its discretion, determine and pay out the Value of the Performance Shares at
any time during the award period.
7. LOANS; SUPPLEMENTAL CASH GRANTS; OTHER AWARDS.
7.1. Loans. The Company may make a loan to a Participant
("Loan"), either on the date of or after the grant of any Award to the
Participant. A Loan may be made either in connection with the purchase of
Stock under the Award or with the payment of any federal, state and local
income tax with respect to income recognized as a result of the Award. The
Committee will have full authority to decide whether to make a Loan and to
determine the amount, terms and conditions of the Loan, including the interest
rate, whether the Loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the Loan is to be repaid and
the conditions, if any, under which it may be forgiven. However, no Loan may
have a term (including extensions) exceeding ten (10) years in duration.
7.2. Supplemental Cash Grants. In connection with any
Award, the Committee may at the time such Award is made or at a later date,
provide for and grant a cash award to the Participant ("Supplemental Cash
Grant") not to exceed an amount equal to (i) the amount of any federal, state
and local income tax on ordinary income for which the Participant may be liable
with respect to the Award, determined by assuming taxation at the highest
marginal rate, plus (ii) an additional amount on a grossed-up basis intended to
make the Participant whole on an after-tax basis after discharging all the
Participant's income tax liabilities arising from all payments under this
Section 7.2. Any payments under this Section 7.2 will be made at the time the
Participant incurs federal income tax liability with respect to the Award.
7.3. Other Awards. In addition to the types of Awards
specifically described in the foregoing provisions of the Plan, the Committee
may in its discretion determine, describe and award or grant any other type of
Award which is consistent with the terms and purposes of the Plan. Such Awards
may include special Awards relating to a single eligible individual and Awards
made pursuant to special or recurring plans or programs covering groups of
eligible individuals.
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8. DEFERRAL OF COMPENSATION. The Committee shall determine
whether or not an Award shall be made in conjunction with deferral of the
Participant's salary, bonus or other compensation, or any combination thereof,
and whether or not such deferred amounts may be (i) forfeited to the Company or
to other Participants, or any combination thereof, under certain circumstances
(which may include, but need not be limited to, certain types of termination of
employment or performance of services for the Company and its Affiliates), (ii)
subject to increase or decrease in value based upon the attainment of or
failure to attain, respectively, certain performance measures, and/or (iii)
credited with investment equivalents (which may include, but need not be
limited to, interest, dividends or other rates of return) until the date or
dates of payment of the Award, if any.
9. DEFERRED PAYMENT OF AWARDS. The Committee may specify that
the payment of all or any portion of cash, Shares, Other Securities, or any
other form of payment, or any combination thereof, under an Award shall be
deferred until a later date. Deferrals shall be for such periods or until the
occurrence of such events, and upon such terms, as the Committee shall
determine in its discretion. Deferred payments of Awards may be made by
undertaking to make payment in the future based upon the performance of certain
investment equivalents (which may include, but need not be limited to,
government securities, Shares, Other Securities, other property, or any
combination thereof), together with such additional amounts of investment
equivalents as may be determined by the Committee in its discretion.
10. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THE PLAN. The terms
of any outstanding Award under the Plan as provided in any instrument may be
amended from time to time by the Committee in its discretion in any manner that
it deems appropriate (including, but not limited to, acceleration of the date
of exercise of any Award and/or payments thereunder); provided that no such
amendment shall adversely affect in a material manner any right of a
Participant under the Award without his written consent, unless the Committee
determines in its discretion that there have occurred or are about to occur
significant changes in the economic, legislative, regulatory, tax, accounting
or cost/benefit conditions which are determined by the Committee in its
discretion to have or to be expected to have a substantial effect on the
performance of the Company, or any subsidiary, Affiliate, division or
department thereof, on the Plan, or on any Award under the Plan. The Committee
may, in its discretion, permit holders of Awards under the Plan to surrender
outstanding Awards in order to exercise or realize the rights under other
Awards, or in exchange for the grant of new Awards, or require holders of
Awards to surrender outstanding Awards as a condition precedent to the grant of
new Awards under the Plan.
11. TERMINATION OF SERVICES BY A PARTICIPANT. For all purposes
under the Plan, the Committee shall determine whether a Participant has
terminated employment by or the performance of services for the Company and its
Affiliates; provided, however, that transfers between the Company and an
Affiliate or between Affiliates, and approved leaves of absence shall not be
deemed such a termination.
12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Awards shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business or any merger or consolidation of the Company or any
issue of capital stock, bonds, debentures, or Other Securities ahead of or
affecting the Shares or the rights thereof, or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
The number of Shares covered by any outstanding Award and the price
per share thereof shall be appropriately adjusted for any increase or decrease
in the number of issued Shares resulting from the subdivision or consolidation
of Shares or any other similar capital adjustment, the payment of a stock
dividend or any other increase in such Shares effected without receipt of
consideration by the Company or any other decrease therein effected without a
distribution of cash or property in connection therewith, or any other
extraordinary or unusual event similarly affecting the Shares. Any such
adjustment shall be made by the Committee, in its discretion, and such
adjustment shall be final, conclusive and binding for all purposes of the Plan.
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In the event the Company merges or consolidates with one or more
corporations and the Company is the surviving corporation, thereafter upon any
exercise of an Award, the holder thereof shall be entitled to purchase or
receive in lieu of the number of Shares as to which the Award relates, the
number and class of shares of stock or securities to which the holder would
have been entitled pursuant to the terms of the agreement of merger or
consolidation if immediately prior to such merger or consolidation, the holder
had been the holder of record of Shares as to which the Award related.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated or sells or otherwise disposes of substantially all
of its assets to another corporation while unexercised Stock Options or other
Awards remain outstanding under the Plan:
(i) subject to the provisions of clauses (iii), (iv) and
(v) below, after the effective date of such merger, consolidation or
sale, as the case may be, each holder of an outstanding Stock Option
or other Award shall be entitled, upon exercise of such Stock Option
or other Award, to receive in lieu of Shares of the Company, shares of
such stock or other securities as the holders of Shares received
pursuant to the terms of the merger, consolidation or sale; or
(ii) the Committee may waive any discretionary limitations
imposed with respect to the exercise of the Stock Option or other
Award so that all Stock Options or other Awards from and after a date
prior to the effective date of such merger, consolidation, liquidation
or sale, as the case may be, specified by the Committee, shall become
fully vested or be exercisable in full; or
(iii) any or all outstanding Stock Options or other Awards
may be canceled by the Committee as of the effective date of any such
merger, consolidation, liquidation or sale, provided that notice of
such cancellation shall be given to each holder of a Stock Option or
other Award, and each such holder thereof shall have the right to
exercise such Stock Option or other Award in full (without regard to
any discretionary limitations imposed with respect to the Stock Option
or other Award) during a 30-day period preceding the effective date of
such merger, consolidation, liquidation or sale; or
(iv) any or all outstanding Stock Options or other Awards
may be canceled by the Committee as of the date of any such merger,
consolidation, liquidation or sale, provided that notice of such
cancellation shall be given to each holder of a Stock Option or other
Award, and each such holder thereof shall have the right to exercise
such Stock Option or other Award but only to the extent exercisable in
accordance with any discretionary limitations imposed with respect to
the Stock Option or other Award prior to the effective date of such
merger, consolidation, liquidation or sale; or
(v) the Committee may provide for the cancellation of any
or all outstanding Stock Options or other Awards and for the payment
to the holders thereof of some part or all of the amount by which the
value thereof exceeds the payment, if any, which the holder would have
been required to make to exercise such Stock Option or other Award.
Except as hereinbefore expressly provided, the issuance by the Company
of shares of capital stock of any class or securities convertible into shares
of capital stock of any class for cash or property or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, class
or price of Shares then subject to outstanding Stock Options or other Awards.
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13. DESIGNATION OF BENEFICIARY BY PARTICIPANT. Subject to
compliance with applicable securities laws and to the other provisions of this
Plan (including without limitation Section 4.3), a Participant may name a
Beneficiary to receive any benefit or payment to which he may be entitled in
respect of any Award under the Plan in the event of his death, on a written
form to be provided by and filed with the Company, and in a manner determined
by the Committee. A Participant may change his Beneficiary from time to time
in the same manner, unless such Participant has made an irrevocable
designation. Any designation of Beneficiary under the Plan (to the extent it
is valid and enforceable under applicable law) shall be controlling over any
other disposition, testamentary or otherwise, as determined by the Committee in
its discretion. If no designated Beneficiary survives the Participant or is
otherwise in existence on the date on which any amount becomes payable to such
Participant's Beneficiary, such payment will be made to the legal
representatives of the Participant's estate, and the term "Beneficiary" as used
in the Plan shall be deemed to include such person or persons.
14. ADMINISTRATION. The Plan shall be administered by the
Compensation Committee of the Board, or by any other Committee appointed by the
Board consisting of not less than two (2) non-employee Directors (such
Compensation Committee or other Committee appointed by the Board is herein
referred to as the "Committee"). The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the
Board. The Committee shall be comprised solely of Directors who are eligible
to administer the Plan pursuant to Rule 16b-3(c)(2) under the Exchange Act and
Prop. Treas. Reg. 1.162-27(e)(3). However, if for any reason the Committee
does not qualify to administer the Plan, as contemplated by Rule 16b-3(c)(2)
under the Exchange Act or Prop. Treas. Reg. 1.162-27(e)(3), the Board may
appoint a new Committee so as to comply with Rule 16b-3(c)(2) and Prop. Treas.
Reg. 1.162-27(e)(3).
The Board or the Committee may delegate the administration of the Plan
in whole or in part, on such terms and conditions, and to such person or
persons as it may determine in its discretion, as it relates to Awards to
persons not subject to Section 16 of the Exchange Act (or any successor
provisions) and to persons who are not Section 162(m) employees.
The Committee shall have full power, except as limited by law, the
Articles of Organization and/or By-Laws of the Company, subject to such other
restricting limitations or directions as may be imposed by the Board from time
to time, to exercise all of the powers vested in it by the terms of the Plan
set forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the employees and other individuals to
be granted Awards under the Plan, to determine the type, size and terms of the
Award to be made to each individual selected, to modify the terms of any Award
that has been granted, to determine the time when Awards will be granted, to
establish performance objectives, and to prescribe the form of the instruments
embodying Awards made under the Plan. The Committee is authorized to interpret
the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations which it deems necessary or desirable for the administration of
the Plan.
The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award in the manner and to
the extent the Committee deems necessary or desirable to carry it into effect.
Any decision of the Committee (or its delegate as permitted herein) in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned.
No member of the Board or the Committee and no officer of the Company
shall be liable for anything done or omitted to be done by him, by any other
member of the Board or the Committee or by any officer of the Company in
connection with the performance of duties under the Plan, except for his own
willful misconduct or as expressly provided by statute.
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15. MISCELLANEOUS PROVISIONS.
15.1. No Rights to Awards or Employment. No employee or
other person shall have any claim or right to be granted an Award under the
Plan. Determinations made by the Committee under the Plan need not be uniform
and may be made selectively among eligible individuals under the Plan, whether
or not such eligible individuals are similarly situated. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee or other
person any right to continue to be employed by or perform services for the
Company or any Affiliate, and the right to terminate the employment of or
performance of services by any Participant at any time and for any reason is
specifically reserved.
15.2. Delivery of Written Instruments. No Participant or
other person shall have any right with respect to the Plan, the Shares reserved
for issuance under the Plan or in any Award, contingent or otherwise, until
written evidence of the Award shall have been delivered to the recipient and
all the terms, conditions and provisions of the Plan and the Award applicable
to such recipient (and each person claiming under or through him) have been
met.
15.3. Assignment Prohibition. Notwithstanding anything
contained in this Plan to the contrary, except as may be approved by the
Committee where such approval shall not adversely affect compliance of the Plan
with Rule 16b-3, a Participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
Participant's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, that any Stock Option or similar right offered pursuant to the Plan
shall not be transferable other than by will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime only by
him.
15.4. Compliance With Applicable Laws. No Shares, Other
Securities, or other forms of payment shall be issued hereunder with respect to
any Award unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable federal, state, local and foreign legal,
securities exchange and other applicable requirements.
15.5. Rule 16b-3 and Section 162(m). It is the intent of
the Company that the Plan comply in all respects with Rule 16b-3, that any
ambiguities or inconsistencies in construction of the Plan be interpreted to
give effect to such intention and that if any provision of the Plan is found
not to be in compliance with Rule 16b-3, such provision shall be deemed null
and void to the extent required to permit the Plan to comply with Rule 16b-3.
It is the intent of the Company that Awards to Section 162(m) employees may
satisfy for "performance-based" compensation under Section 162(m) of the Code
to the extent that the Committee shall make Awards which the Committee intends
to satisfy such exemption; any ambiguities or inconsistencies in the Plan shall
be interpreted to give effect to such intention.
15.6. Tax Withholding. The Company and its Affiliates
shall have the right to deduct from any payment made under the Plan any
federal, state, local or foreign income or other taxes required by law to be
withheld with respect to such payment. It shall be a condition to the
obligation of the Company to issue Shares, Other Securities, or other forms of
payment, or any combination thereof, upon exercise, settlement or payment of
any Award under the Plan, that the Participant (or any Beneficiary or person
entitled to act) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount
requested is not paid, the Company may refuse to issue Shares, Other
Securities, or other forms of payment, or any combination thereof.
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<PAGE> 14
Notwithstanding anything in the Plan to the contrary the Committee
may, in its discretion, permit an eligible Participant (or any Beneficiary or
person entitled to act) to elect to pay a portion or all of the amount
requested by the Company for such taxes with respect to such Award, at such
time and in such manner as the Committee shall deem to be appropriate
including, but not limited to, by authorizing the Company to withhold, or
agreeing to surrender to the Company on or about the date such tax liability is
determinable, Shares, Other Securities, or other forms of payment, or any
combination thereof, owned by such person or a portion of such forms of payment
that would otherwise be distributed, or have been distributed, as the case may
be, pursuant to such Award to such person, having a Fair Market Value equal to
the amount of such taxes.
15.7. Plan Not Funded. The Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of any Award under
the Plan, and rights to the payment of Awards shall be no greater than the
rights of the Company's general creditors.
15.8. Consent of Participant. By accepting any Award or
other benefit under the Plan, each Participant and each person claiming under
or through him shall be conclusively deemed to have indicated his acceptance
and ratification of, and consent to, any action taken under the Plan by the
Company, the Committee, or the delegates of the Committee.
15.9. Rules of Construction. The masculine pronoun
includes the feminine and the singular includes the plural wherever
appropriate. The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to
the Plan and to Awards granted under the Plan, shall be governed by the
substantive laws but not the choice of law rules, of The Commonwealth of
Massachusetts.
16. PLAN AMENDMENT OR SUSPENSION. The Plan may be amended or
suspended in whole or in part at any time and from time to time by the board,
provided that no amendment shall be effective unless and until the same is
approved by shareholders of the Company where the failure to obtain such
approval would adversely affect the compliance of the Plan with Rule 16b-3 or
the amendment would (i) increase the total number of Shares reserved for
issuance under the Plan, (ii) decrease the option price of any Nonqualified
Stock Option to less than 50% of Fair Market Value on the date of granting the
option, (iii) change the class of persons who may be eligible individuals, or
(iv) extend the termination date of the Plan beyond the date determined in
accordance with Section 17. No amendment of the Plan shall adversely affect in
a material manner any right of any Participant with respect to any Award
theretofore granted without such Participant's written consent, except as
permitted under Section 10.
17. PLAN TERMINATION. This Plan shall terminate upon the earlier
of the following dates or events to occur:
(a) upon the adoption of a resolution of the Board
terminating the Plan; or
(b) ten (10) years from the date the Plan is initially
approved and adopted by the shareholders of the Company in accordance
with Section 18. No Award of an Incentive Stock Option may be granted
under the Plan more than ten (10) years after the date of adoption of
this Plan by the Board.
No termination of the Plan shall materially alter or impair any of the
rights or obligations of any person, without his consent, under any Award
theretofore granted under the Plan, except that subsequent to termination of
the Plan, the Board may make amendments permitted under Section 10.
19. EFFECTIVE DATE AND SHAREHOLDER ADOPTION. The Plan shall
become effective upon the date of its adoption by the Board, subject, however,
to its approval by the shareholders of the Company within 12 months of such
date.
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