<PAGE>
As filed with the Securities and Exchange Commission on January 21, 1997
Registration No. 33-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
TRANSNATIONAL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2328806
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
POST OFFICE BOX 198
U.S. ROUTE 1
CHADDS FORD, PA 19317
(Address of Principal Executive Offices) (Zip Code)
TRANSNATIONAL INDUSTRIES, INC. 1995 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(Full Title of the Plan)
CHARLES H. HOLMES, JR.
CHIEF EXECUTIVE OFFICER AND PRESIDENT
TRANSNATIONAL INDUSTRIES, INC.
POST OFFICE BOX 198
U.S. ROUTE 1
CHADDS FORD, PA 19317
(610) 459-5200
(Name, address and telephone number, including area code, of agent for service)
--------------------------------
Copies to:
DAVID I. ALBIN, ESQ.
FINN DIXON & HERLING
ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901
(203) 325-5000
================================================================================
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount Offering Aggregate Registration
to be Registered to be Registered Price Per Share Offering Price Fee
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.20 par value.... 50,000 shares $2.16(1) $108,000.00(1) $32.73(1)
===============================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(h) and Rule 457(c) solely for the
purpose of calculating the registration fee on the basis of the weighted
average of (i) $2.31 per share for 10,500 options granted to date
under the plan; and (ii) $2.13 per share for the remaining 39,500
shares, which is the average of the closing bid and asked prices of the
Common Stock of the Registrant on January 16, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission:
(a) The Company's Annual Report on Form 10-KSB for the fiscal
year ended January 31, 1996, filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(b) The Company's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended April 30, 1996, July 31, 1996 and October 31, 1996,
filed pursuant to Section 13(a) or 15(d) of the Exchange Act; and
(c) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A, filed pursuant to
Section 12(b) of the Exchange Act on August 8, 1986 and declared
effective on August 19, 1986.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act on or after the
date of this Registration Statement and prior to the filing of a post-
effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be
deemed to be incorporated by reference in this Registration Statement and
to be part hereof from the date of filing of such reports or documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), Article Ninth of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") eliminates the liability
of the Company's directors to the Company or its stockholders, except for
liabilities related to breach of duty of loyalty, actions or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, and certain other liabilities. Section 145 of the DGCL
provides for indemnification by the
- 2 -
<PAGE>
Company of its directors and officers. In addition, Article X, Section 1
of the Company's By-Laws requires the Company to indemnify any current or
former director or officer to the fullest extent permitted by the DGCL.
The Company maintains insurance for the benefit of its directors and
officers and the directors and officers of its subsidiaries insuring such
persons against liabilities, including liabilities under the securities
laws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number
------
4.1* Transnational Industries, Inc. 1995 Stock Option and
Performance Incentive Plan.
4.2* Form of Nontransferable Incentive Stock Option Agreement
under the Transnational Industries, Inc. 1995 Stock Option
and Performance Incentive Plan.
5.1* Opinion of Finn Dixon & Herling as to legality of
securities being registered.
23.1* Consent of Stockton Bates & Company, P.C.
23.2 Consent of Finn Dixon & Herling (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on the signature pages).
_________________________
*Filed herewith
- 3 -
<PAGE>
ITEM 9. UNDERTAKINGS.
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 to include
any additional or changed material information on the plan of distribution;
(2) That, for the purposes 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.
- 4 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Town of Chadds Ford, State of
Pennsylvania, on this 8th day of January, 1997.
TRANSNATIONAL INDUSTRIES, INC.
By: /s/Charles H. Holmes, Jr.
------------------------------------
Charles H. Holmes, Jr.,
Chief Executive Officer and President
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Charles H. Holmes, Jr. and
Paul L. Dailey, jointly and severally, his or her attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities,
to sign any amendments to this Registration Statement, and to file the
same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------- ----------------------------------- ------------
<S> <C> <C>
/s/Charles H. Holmes, Jr. Chief Executive Officer and December 31,
- --------------------------- President; Director (Principal 1996
Charles H. Holmes, Jr. Executive Officer)
/s/Paul L. Dailey Chief Financial Officer and Secretary December 31,
- --------------------------- (Principal Financial and Accounting 1996
Paul L. Dailey Officer)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/Michael S. Gostomski Director December 31,
- --------------------------- 1996
Michael S. Gostomski
/s/Charles F. Huber Director December 31,
- --------------------------- 1996
Charles F. Huber
/s/William D. Witter Director December 31,
- --------------------------- 1996
William D. Witter
/s/Calvin A. Thompson Director December 31,
- --------------------------- 1996
Calvin A. Thompson
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
INDEX NO.
- ----- -----
<S> <C> <C>
4.1* Transnational Industries, Inc. 1995 Stock Option and Performance +
Incentive Plan.
4.2* Form of Nontransferable Incentive Stock Option Agreement under the +
Transnational Industries, Inc. 1995 Stock Option and Performance
Incentive Plan.
5.1* Opinion of Finn Dixon & Herling as to legality of securities being +
registered.
23.1* Consent of Stockton Bates & Company, P.C. +
23.2 Consent of Finn Dixon & Herling (contained in Exhibit 5.1 hereto).
24.1 Power of Attorney (included on the signature pages).
</TABLE>
_________________________
*Filed herewith.
+Filed separately electronically.
____________________
<PAGE>
Exhibit 4.1
TRANSNATIONAL INDUSTRIES, INC.
1995 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Transnational Industries, Inc., a
--------------------------------
Delaware corporation (the "Corporation"), hereby establishes a stock incentive
plan to be known as the "Transnational Industries, Inc. 1995 Stock Option and
Performance Incentive Plan" (the "Plan"). The Plan shall become effective as of
June 1, 1995, subject to the approval of the Corporation's stockholders at the
1995 Annual Meeting of Stockholders. In the event that such stockholder
approval is not obtained, any awards made hereunder shall be cancelled and all
rights of employees with respect to such awards shall thereupon cease. Upon
approval by the Board of Directors of the Corporation (the "Board") and the
Board's Management Compensation and Stock Option Committee (the "Committee"),
awards may be made as provided herein.
1.2 Purpose. The purpose of the Plan is to encourage and enable all
-------
employees (subject to such requirements as may be prescribed by the Committee)
of the Corporation and its subsidiaries to acquire a proprietary interest in the
Corporation through the ownership of the Corporation's common stock, par value
$.20 per share ("Common Stock"), and other rights with respect to the Common
Stock. Such ownership will provide such employees with a more direct stake in
the future welfare of the Corporation and encourage them to remain with the
Corporation and its subsidiaries. It is also expected that the Plan will
encourage qualified persons to seek and accept employment with the Corporation
and its subsidiaries.
ARTICLE 2.
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any one or
--------------
all of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) non-qualified stock options ("Non-
qualified Stock Options") (unless otherwise indicated, references in the Plan to
"Options" shall include both Incentive Stock Options and Non-qualified Stock
Options); (iii) stock appreciation rights ("Stock Appreciation Rights"), as
described in Article 6 hereof, which may be awarded either in tandem with
Options ("Tandem Stock Appreciation Rights") or on a stand-alone basis
("Nontandem Stock Appreciation Rights"); (iv) shares of Common Stock which are
restricted as provided in Article 9 hereof ("Restricted Shares"); (v) units
representing shares of Common Stock, as described in Article 10 hereof
("Performance Shares"); (vi) units which do not represent shares of Common Stock
but which may be paid in the form of Common Stock, as described in Article 11
hereof ("Performance Units"); (vii) shares of Common Stock that are not subject
to any conditions to vesting ("Unrestricted Shares"); and (viii) tax offset
payments ("Tax Offset Payments"), as described in Article 13 hereof.
- 1 -
<PAGE>
2.2 Maximum Shares Available. The maximum aggregate number of shares of
------------------------
Common Stock available for award under the Plan is 50,000 subject to adjustment
pursuant to Article 14 hereof. In addition, Tax Offset Payments made with
Unrestricted Shares, which may be awarded under the Plan, will not exceed the
number of shares available for issuance under the Plan. Shares of Common Stock
issued pursuant to the Plan may be either authorized but unissued shares or
issued shares reacquired by the Corporation. In the event that prior to the end
of the period during which Options may be granted under the Plan, any Option or
any Nontandem Stock Appreciation Rights under the Plan expires unexercised or is
terminated, surrendered or cancelled (other than in connection with the exercise
of Stock Appreciation Rights) without being exercised in whole or in part for
any reason, or any Restricted Shares, Performance Shares or Performance Units
are forfeited, or if such awards are settled in cash in lieu of shares of Common
Stock, then such shares or units shall be available for subsequent awards under
the Plan, upon such terms as the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent award, the
----------------------
Committee shall have the right, at its discretion, to require employees to
return to the Corporation awards previously granted under the Plan. Subject to
the provisions of the Plan, such new award shall be upon such terms and
conditions as are specified by the Committee at the time the new award is
granted.
ARTICLE 3.
ADMINISTRATION
3.1 Committee. Awards shall be determined, and the Plan shall be
---------
administered, by the Committee as appointed from time to time by the Board,
which Committee shall consist of not less than two (2) members of the Board.
Except as permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Act"), and by Section 162(m) of the Code (or Regulations
promulgated thereunder), no member of the Board may serve on the Committee if
such member: (i) is or has been granted or awarded stock, stock options, stock
appreciation rights or any other equity security or derivative security of the
Corporation or any of its affiliates pursuant to the Plan or any other plan of
the Corporation or its affiliates either while serving on the Committee or
during the one year period prior to being appointed to the Committee; (ii) is an
employee or former employee of the Corporation; or (iii) receives remuneration
from the Corporation, either directly or indirectly, in any capacity other than
as a director.
3.2 Powers of Committee. Subject to the express provisions of the Plan,
-------------------
the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Non-qualified
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights, (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments, and to determine
whether any such Tax Offset Payments are made in cash, Unrestricted Shares or a
combination thereof; and (viii) to determine the employees to whom, and the time
or times at which, Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units and Unrestricted Shares shall be granted.
3.3 Delegation. The Committee may delegate to one or more of its members
----------
or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation would cause the Plan to fail to
comply with
- 2 -
<PAGE>
the "disinterested administration" rules under Section 16 of the Act. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary
---------------
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Corporation, all employees who have received awards under the Plan and
all other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor any
--------------------------
person to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to the
Plan or awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Corporation with respect to any liability he or
she may incur with respect to any such action, interpretation or determination,
to the extent permitted by applicable law and to the extent provided in the
Corporation's Certificate of Incorporation and Bylaws, as amended from time to
time, or under any agreement between any such member and the Corporation.
ARTICLE 4.
ELIGIBILITY
Awards may be made to all employees of the Corporation or any of its
subsidiaries (subject to such requirements as may be prescribed by the
Committee); provided, however, that no employee may receive awards of or
-------- -------
relating to more than 15,000 shares of Common Stock in the aggregate in any
fiscal year of the Corporation. Awards may be made to a director of the
Corporation who is not also a member of the Committee, provided that the
director is also an employee. In determining the employees to whom awards shall
be granted and the number of shares to be covered by each award, the Committee
shall take into account the nature of the services rendered by such employees,
their present and potential contributions to the success of the Corporation and
its subsidiaries and such other factors as the Committee in its sole discretion
shall deem relevant.
As used herein, the term "subsidiary" shall mean any present or future
corporation, partnership or joint venture in which the Corporation owns,
directly or indirectly, 40% or more of the economic interests. Notwithstanding
the foregoing, only employees of the Corporation and any present or future
corporation which is or may be a "subsidiary corporation" of the Corporation (as
such term is defined in Section 424 (f) of the Code) shall be eligible to
receive Incentive Stock Options.
ARTICLE 5.
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under the Plan for the
----------------
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 Designation as Non-qualified Stock Option or Incentive Stock Option.
-------------------------------------------------------------------
In connection with any grant of Options, the Committee shall designate in the
written agreement required pursuant to Article
- 3 -
<PAGE>
16 hereof whether the Options granted shall be Incentive Stock Options or Non-
qualified Stock Options, or in the case both are granted, the number of shares
of each.
5.3 Option Price. The purchase price per share under each Incentive Stock
------------
Option shall be the Market Price (as hereinafter defined) of the Common Stock on
the date the Incentive Stock Option is granted. The purchase price per share
under each Non-qualified Stock Option shall be specified by the Committee, but
in no event shall it be less than 90% of the Market Price on the date the Non-
qualified Stock Option is granted. In no case, however, shall the purchase
price per share of either an Incentive Stock Option or Non-qualified Stock
Option be less than the par value of the Common Stock ($.20). Notwithstanding
the foregoing, to the extent required by the Code, the purchase price per share
under each Non-qualified Stock Option granted to an employee who is treated as a
"covered employee" (as defined in Section 162(m)(3) of the Code) on the date
such Non-Qualified Option is exercised shall not be less than 100% of the Market
Price of the Common Stock on the date of grant. In the case of an Incentive
Stock Option granted to an employee owning (actually or constructively under
Section 424(d) of the Code), more than 10% of the total combined voting power of
all classes of stock of the Corporation or of a subsidiary (a "10%
Stockholder"), the option price shall not be less than 110% of the Market Price
of the Common Stock on the date of grant.
The "Market Price" of the Common Stock on any day shall be determined as
follows: (i) if the Common Stock is listed on a national securities exchange or
quoted through the NASDAQ National Market System, the Market Price on any day
shall be the average of the high and low reported Consolidated Trading sales
prices, or if no such sale is made on such day, the average of the closing bid
and asked prices reported on the Consolidated Trading listing for such day; (ii)
if the Common Stock is quoted on the NASDAQ inter-dealer quotation system, the
Market Price on any day shall be the average of the representative bid and asked
prices at the close of business for such day; or (iii) if the Common Stock is
not listed on a national stock exchange or quoted on NASDAQ, the Market Price on
any day shall be the average of the high bid and low asked prices reported by
the National Quotation Bureau, Inc. for such day. In no event shall the Market
Price of a share of Common Stock subject to an Incentive Stock Option be less
than the fair market value as determined for purposes of Section 422(b)(4) of
the Code.
The Option price so determined shall also be applicable in connection with
the exercise of any Tandem Stock Appreciation Rights granted with respect to
such Option.
5.4 Limitation on Amount of Incentive Stock Options. In the case of
-----------------------------------------------
Incentive Stock Options, the aggregate Market Price (determined at the time the
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any optionee
during any calendar year (under all plans of the Corporation and any subsidiary)
shall not exceed $100,000.
5.5 Limitation on Time of Grant. No grant of an Incentive Stock Option
---------------------------
shall be made under the Plan more than ten (10) years after the date the Plan is
approved by stockholders of the Corporation.
5.6 Exercise and Payment. Options may be exercised in whole or in part.
--------------------
Common Stock purchased upon the exercise of Options shall be paid for in full at
the time of purchase. Such payment shall be made in cash or, in the discretion
of the Committee, through delivery of shares of Common Stock or a combination of
cash and Common Stock, in accordance with procedures to be established by the
Committee. Any shares so delivered shall be valued at their Market Price on the
date of exercise. Upon receipt of notice of exercise and payment in accordance
with procedures to be established by the Committee, the Corporation or its agent
shall deliver to the person exercising the Option (or his or her designee) a
certificate for such shares.
5.7 Term. The term of each Option granted hereunder shall be determined
----
by the Committee; provided, however, that, notwithstanding any other provision
-------- -------
of the Plan, in no event shall an
- 4 -
<PAGE>
Incentive Stock Option be exercisable after ten (10) years from the date it is
granted, or in the case of an Incentive Stock Option granted to a 10%
Stockholder, five (5) years from the date it is granted.
5.8 Rights as a Stockholder. A recipient of Options shall have no rights
-----------------------
as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date a stock certificate is issued to such recipient
representing such shares. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
5.9 General Restrictions. Each Option granted under the Plan shall be
--------------------
subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issue, transfer, or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
The Board or the Committee may, in connection with the granting of any
Option, require the individual to whom the Option is to be granted to enter into
an agreement with the Corporation stating that as a condition precedent to each
exercise of the Option, in whole or in part, such individual shall if then
required by the Corporation represent to the Corporation in writing that such
exercise is for investment only and not with a view to distribution, and also
setting forth such other terms and conditions as the Board or the Committee may
prescribe.
5.10 Cancellation of Stock Appreciation Rights. Upon exercise of all or a
-----------------------------------------
portion of an Option, the related Tandem Stock Appreciation Rights shall be
cancelled with respect to an equal number of shares of Common Stock.
ARTICLE 6.
STOCK APPRECIATION RIGHTS
6.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation Rights
-----------------------------------
may be awarded by the Committee in connection with any Option granted under the
Plan, either at the time the Option is granted or thereafter at any time prior
to the exercise, termination or expiration of the Option. Nontandem Stock
Appreciation Rights may also be granted by the Committee at any time. At the
time of grant of Nontandem Stock Appreciation Rights, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 6.4 below. The base price of any Nontandem Stock
Appreciation Rights shall be not less than 100% of the Market Price of a share
of Common Stock on the date of grant. Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the other provisions
of the Plan as the Committee shall determine.
6.2 Limitations on Exercise. Tandem Stock Appreciation Rights shall be
-----------------------
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be cancelled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of Tandem Stock Appreciation Rights shall not be
available for subsequent awards
- 5 -
<PAGE>
under the Plan. Nontandem Stock Appreciation Rights shall be exercisable during
such period as the Committee shall determine.
6.3 Surrender or Exchange of Tandem Stock Appreciation Rights. Tandem
---------------------------------------------------------
Stock Appreciation Rights shall entitle the recipient to surrender to the
Corporation unexercised the related Option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares of
Common Stock having an aggregate Market Price equal to (A) the excess of (i) the
Market Price of one (1) share of Common Stock as of the date the Tandem Stock
Appreciation Rights are exercised over (ii) the option price per share specified
in such Option, multiplied by (B) the number of shares of Common Stock subject
to the Option, or portion thereof, which is surrendered. Cash shall be
delivered in lieu of any fractional shares.
6.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of
-----------------------------------------------
Nontandem Stock Appreciation Rights shall entitle the recipient to receive from
the Corporation that number of shares of Common Stock having an aggregate Market
Price equal to (A) the excess of (i) the Market Price of one (1) share of Common
Stock as of the date on which the Nontandem Stock Appreciation Rights are
exercised over (ii) the base price of the shares covered by the Nontandem Stock
Appreciation Rights, multiplied by (B) the number of shares of Common Stock
covered by the Nontandem Stock Appreciation Rights, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional shares.
6.5 Settlement of Stock Appreciation Rights. As soon as is reasonably
---------------------------------------
practicable after the exercise of any Stock Appreciation Rights, the Corporation
shall (i) issue, in the name of the recipient, stock certificates representing
the total number of full shares of Common Stock to which the recipient is
entitled pursuant to Section 6.3 or 6.4 hereof and cash in an amount equal to
the Market Price, as of the date of exercise, of any resulting fractional
shares, and (ii) if the Committee causes the Corporation to elect to settle all
or part of its obligations arising out of the exercise of the Stock Appreciation
Rights in cash pursuant to Section 6.6 hereof, deliver to the recipient an
amount in cash equal to the Market Price, as of the date of exercise, of the
shares of Common Stock it would otherwise be obligated to deliver.
6.6 Cash Settlement. The Committee, in its discretion, may cause the
---------------
Corporation to settle all or any part of its obligation arising out of the
exercise of Stock Appreciation Rights by the payment of cash in lieu of all or
part of the shares of Common Stock it would otherwise be obligated to deliver in
an amount equal to the Market Price of such shares on the date of exercise.
ARTICLE 7.
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Rights may be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise), except as
provided by will or the applicable laws of descent and distribution, and no
Option or Stock Appreciation Rights shall be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of an Option or Stock Appreciation Rights not specifically
permitted herein shall be null and void and without effect. An Option or Stock
Appreciation Rights may be exercised by the recipient only during his or her
lifetime, or following his or her death pursuant to Section 8.4 hereof.
Notwithstanding anything to the contrary in the preceding paragraph, the
Committee may, in its sole discretion, cause the written agreement relating to
any Non-qualified Stock Options or Stock Appreciation Rights granted hereunder
to provide that the recipient of such Non-qualified Stock Options or Stock
Appreciation Rights may transfer any of such Non-qualified Stock Options or
Stock Appreciation Rights other than by will or the laws of descent and
distribution in any manner authorized under applicable law; provided, however,
-------- -------
that in
- 6 -
<PAGE>
no event may the Committee permit any transfers which would cause this Plan to
fail to satisfy the applicable requirements of Rule 16b-3 under the Act, or
would cause any recipient of awards hereunder to fail to be entitled to the
benefits Rule 16b-3 or other exemptive rules under Section 16 of the Act or be
subject to liability thereunder.
ARTICLE 8.
EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT,
DISABILITY, RETIREMENT, DEATH OR SPECIAL EVENT
8.1 General Rule. Except as expressly determined by the Committee in its
------------
sole discretion, no Option or Stock Appreciation Rights shall be exercisable
after 3 months following the recipient's termination of employment with the
Corporation or a subsidiary, unless such termination of employment occurs by
reason of (i) a Relocation Event (as defined in Section 8.2), (ii) Retirement
(as defined in Section 8.3), (iii) death, or (iv) a Special Event (as defined in
Section 8.5), provided that, in the case of a Special Event, the Committee shall
have modified such Option or Stock Appreciation Rights to remain exercisable as
provided in Section 8.5.
Options and Stock Appreciation Rights shall not be affected by any change
of employment so long as the recipient continues to be employed by either the
Corporation or a subsidiary. The Committee may, in its sole discretion, cause
any Option or Stock Appreciation Rights to be forfeited upon an employee's
termination of employment if the employee was terminated for one (or more) of
the following reasons: (i) the employee's conviction, or plea of guilty or nolo
----
contendere to the commission of a felony, (ii) the employee's commission of any
- ----------
fraud, misappropriation or misconduct which causes demonstrable injury to the
Corporation or a subsidiary, (iii) an act of dishonesty by the employee
resulting or intended to result, directly or indirectly, in gain or personal
enrichment at the expense of the Corporation or a subsidiary, (iv) any breach of
the employee's fiduciary duties to the Corporation as an employee or officer, or
(v) a serious violation by the employee of a Corporation policy. It shall be
within the sole discretion of the Committee to determine whether the employee's
termination was for one of the foregoing reasons, and the decision of the
Committee shall be final and conclusive.
8.2 Relocation Event. Options and Stock Appreciation Rights granted to an
----------------
employee shall remain outstanding after termination of such employee's
employment with the Corporation or a subsidiary, if such termination solely
occurs by reason of a "Relocation Event," which shall be deemed to occur if (i)
a husband and wife are both current employees of the Corporation, (ii) the
Corporation transfers one spouse to a new location, (iii) the Corporation is
unable to offer the other spouse a position that is substantially comparable to
his or her current position, and (iv) as a result, the other spouse's employment
with the Corporation is terminated and the other spouse, as recipient, holds
outstanding Options or Stock Appreciation Rights.
In case of a Relocation Event, the Options or Stock Appreciation Rights
held by a terminated employee shall be exercisable for a period equal to the
lesser of (i) the period such Options or Stock Appreciation Rights would be
exercisable absent the termination of such employee, and (ii) the period such
Options or Stock Appreciation Rights would be exercisable if granted to the
spouse continuing in the Corporation's employ on the date originally granted to
the terminated spouse.
8.3 Disability or Retirement. Except as expressly provided otherwise in
------------------------
the written agreement relating to any Option or Stock Appreciation Rights
granted under the Plan, in the event of the Disability or Retirement of a
recipient of Options or Stock Appreciation Rights, the Options or Stock
Appreciation Rights which are held by such recipient on the date of such
Disability or Retirement, whether or not otherwise exercisable on such date,
shall be exercisable at any time until the expiration date of the Options or
Stock Appreciation Rights; provided, however, that any Incentive Stock Option of
-------- -------
such recipient shall no longer be
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<PAGE>
treated as an Incentive Stock Option unless exercised within three (3) months of
the date of such Disability or Retirement (or within one (1) year in the case of
an employee who is "disabled" within the meaning of Section 22(e)(3) of the
Code).
"Disability" shall mean any termination of employment with the Corporation
or a subsidiary because of a long-term or total disability, as determined by the
Committee in its sole discretion. "Retirement" shall mean a termination of
employment with the Corporation or a subsidiary either (i) on a voluntary basis
by a recipient who is at least 60 years of age and has at least 15 years of
service with the Corporation or a subsidiary or (ii) otherwise with the written
consent of the Committee in its sole discretion. The decision of the Committee
shall be final and conclusive.
8.4 Death. In the event of the death of a recipient of Options or Stock
-----
Appreciation Rights while an employee of the Corporation or any subsidiary,
Options or Stock Appreciation Rights which are held by such employee at the date
of death, whether or not otherwise exercisable on the date of death, shall be
exercisable by the beneficiary designated by the employee for such purpose (the
"Designated Beneficiary") or if no Designated Beneficiary shall be appointed or
if the Designated Beneficiary shall predecease the employee, by the employee's
personal representatives, heirs or legatees at any time within three (3) years
from the date of death (subject to the limitation in Section 5.7 hereof), at
which time such Options or Stock Appreciation Rights shall terminate; provided,
--------
however, that any Incentive Stock Option of such recipient shall no longer be
- -------
treated as an Incentive Stock Option unless exercised within three (3) months of
the date of the recipient's death.
In the event of the death of a recipient of Options or Stock Appreciation
Rights following a termination of employment due to Retirement, Disability or a
Special Event (as defined in Section 8.5 hereof), if such death occurs before
the Options or Stock Appreciation Rights are exercised, the Options or Stock
Appreciation Rights which are held by such recipient on the date of termination
of employment shall be exercisable by such recipient's Designated Beneficiary,
or if no Designated Beneficiary shall be appointed or if the Designated
Beneficiary shall predecease such recipient, by such recipient's personal
representatives, heirs or legatees to the same extent such Options or Stock
Appreciation Rights were exercisable by the recipient following such termination
of employment.
8.5 Special Event. In the case of a Special Event, the Committee in its
-------------
sole discretion may elect to modify all or any lesser number of any Options or
Stock Appreciation Rights held by an employee terminated as a result of a
Special Event which are or are not exercisable on the date of termination, to
provide that any of such Options or Stock Appreciation Rights may continue to be
exercisable for the term and in the manner specified therein or for such other
term and subject to such other provisions and conditions (including, without
limitation, acceleration of the time or times at which any such Options or Stock
Appreciation Rights may be exercised) as the Committee shall specify. The
Committee shall have the sole discretion to determine the employees to whom and
in the manner in which any such modification shall be made. If the Committee
does not elect to modify an Option or Stock Appreciation Rights, then only
Options and Stock Appreciation Rights currently exercisable at the date of
termination shall be exercisable as provided in the first sentence of Section
8.1 hereof.
A "Special Event" shall mean (i) the sale or other disposition of a
subsidiary or division of the Corporation; (ii) the closing or discontinuation
of a specific operation of the Corporation or any subsidiary; (iii) the
elimination of job categories; or (iv) a limited program of terminations in
connection with a personnel reorganization or restructuring of the Corporation
or any subsidiary of the Corporation scheduled to be completed on a date
certain, provided, however, that only those employees who meet the terms and
conditions as established by the Board or the Committee in its discretion shall
be eligible to receive accelerated vesting of Options and Stock Appreciation
Rights.
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<PAGE>
8.6 Leave of Absence. In the case of an employee on an approved leave of
----------------
absence, the Options and Stock Appreciation Rights of such employee shall not be
affected unless such leave is longer than 13 weeks. The date of exercisability
of any Options or Stock Appreciation Rights of an employee which are
unexercisable at the beginning of an approved leave of absence lasting longer
than 13 weeks shall be postponed for a period equal to the length of such leave
of absence. Notwithstanding the foregoing, the Committee may, in its sole
discretion, waive in writing any such postponement of the date of exercisability
of any Options or Stock Appreciation Rights due to a leave of absence.
ARTICLE 9.
RESTRICTED SHARES
9.1 Grant of Restricted Shares. The Committee may from time to time cause
--------------------------
the Corporation to grant Restricted Shares under the Plan to employees, subject
to such restrictions, conditions and other terms as the Committee may determine.
9.2 Restrictions. At the time a grant of Restricted Shares is made, the
------------
Committee shall establish a period of time (the "Restricted Period") applicable
to such Restricted Shares. Each grant of Restricted Shares may be subject to a
different Restricted Period. The Committee may, in its sole discretion, at the
time a grant is made, prescribe restrictions in addition to or other than the
expiration of the Restricted Period, including the satisfaction of corporate or
individual performance objectives, which shall be applicable to all or any
portion of the Restricted Shares. The Committee may also, in its sole
discretion, shorten or terminate the Restricted Period or waive any other
restrictions applicable to all or a portion of such Restricted Shares. None of
the Restricted Shares may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Shares.
9.3 Restricted Stock Certificates. The Corporation shall issue, in the
-----------------------------
name of each employee to whom Restricted Shares have been granted, stock
certificates representing the total number of Restricted Shares granted to the
employee, as soon as reasonably practicable after the grant. The Corporation,
at the direction of the Committee, shall hold such certificates, properly
endorsed for transfer, for the employee's benefit until such time as the
Restricted Shares are forfeited to the Corporation, or the restrictions lapse.
9.4 Rights of Holders of Restricted Shares. Holders of Restricted Shares
--------------------------------------
shall not have the right to vote such shares or the right to receive any cash
dividends with respect to such shares. All distributions, if any, received by
an employee with respect to Restricted Shares as a result of any stock split,
stock distribution, a combination of shares, or other similar transaction shall
be subject to the restrictions of this Article 9.
9.5 Forfeiture. Any Restricted Shares granted to an employee pursuant to
----------
the Plan shall be forfeited if the employee terminates employment with the
Corporation or its subsidiaries prior to the expiration or termination of the
Restricted Period and the satisfaction of any other conditions applicable to
such Restricted Shares. Upon such forfeiture, the Restricted Shares that are
forfeited shall be retained in the treasury of the Corporation and available for
subsequent awards under the Plan, unless the Committee directs that such
Restricted Shares be cancelled upon forfeiture. If the employee's employment
terminates as a result of his or her Disability, Retirement or death, or a
Relocation Event or Special Event, Restricted Shares of such employee shall be
forfeited, unless the Committee, in its sole discretion, shall determine
otherwise.
9.6 Delivery of Restricted Shares. Upon the expiration or termination of
-----------------------------
the Restricted Period and the satisfaction of any other conditions prescribed by
the Committee, the restrictions applicable to the Restricted Shares shall lapse
and a stock certificate for the number of Restricted Shares with respect to
which the
- 9 -
<PAGE>
restrictions have lapsed shall be delivered, free of all such restrictions, to
the employee or the employee's beneficiary or estate, as the case may be.
ARTICLE 10.
PERFORMANCE SHARES
10.1 Award of Performance Shares. For each Performance Period (as defined
---------------------------
in Section 10.2), Performance Shares may be granted under the Plan to such
employees of the Corporation and its subsidiaries as the Committee shall
determine in its sole discretion. Each Performance Share shall be deemed to be
equivalent to one (1) share of Common Stock. Performance Shares granted to an
employee shall be credited to an account (a "Performance Share Account")
established and maintained for such employee.
10.2 Performance Period. "Performance Period" shall mean such period of
------------------
time as shall be determined by the Committee in its sole discretion. Different
Performance Periods may be established for different employees receiving
Performance Shares. Performance Periods may run consecutively or concurrently.
10.3 Right to Payment of Performance Shares. With respect to each award
--------------------------------------
of Performance Shares under the Plan, the Committee shall specify performance
objectives (the "Performance Objectives") which must be satisfied in order for
the employee to vest in the Performance Shares which have been awarded to him or
her for the Performance Period. If the Performance Objectives established for
an employee for the Performance Period are partially but not fully met, the
Committee may, nonetheless, in its sole discretion, determine that all or a
portion of the Performance Shares have vested. If the Performance Objectives
for a Performance Period are exceeded, the Committee may, in its sole
discretion, grant additional, fully vested Performance Shares to the employee.
The Committee may also determine, in its sole discretion, that Performance
Shares awarded to an employee shall become partially or fully vested upon the
employee's Disability, Retirement or death, or upon a Relocation Event or
Special Event, or upon the termination of the employee's employment prior to the
end of the Performance Period.
10.4 Payment for Performance Shares. As soon as practicable following the
------------------------------
end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 10.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the employee
pursuant to Section 10.3. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Corporation shall pay to the employee an amount with respect
to each vested Performance Share equal to the Market Price of a share of Common
Stock on such payment date or, if the Committee shall so specify at the time of
grant, an amount equal to (i) the Market Price of a share of Common Stock on the
payment date less (ii) the Market Price of a share of Common Stock on the date
of grant of the Performance Share. Payment shall be made entirely in cash,
entirely in Common Stock (including Restricted Shares) or in such combination of
cash and Common Stock as the Committee shall determine in its sole discretion.
10.5 Voting and Dividend Rights. Except as provided in Article 14 hereof,
--------------------------
no employee shall be entitled to any voting rights, to receive any cash
dividends, or to have his or her Performance Share Account credited or increased
as a result of any cash dividends or other distribution with respect to Common
Stock. Notwithstanding the foregoing, within sixty (60) days from the date of
payment of a cash dividend by the Corporation on its shares of Common Stock, the
Committee, in its sole discretion, may credit an employee's Performance Share
Account with additional Performance Shares having an aggregate Market Price
equal to the
- 10 -
<PAGE>
cash dividend per share paid on the Common Stock multiplied by the number of
Performance Shares credited to his or her account at the time the cash dividend
was declared.
ARTICLE 11.
PERFORMANCE UNITS
11.1 Award of Performance Units. For each Performance Period (as defined
--------------------------
in Section 10.2), Performance Units may be granted under the Plan to such
employees of the Corporation and its subsidiaries as the Committee shall
determine in its sole discretion. The award agreement covering such Performance
Units shall specify a value for each Performance Unit or shall set forth a
formula for determining the value of each Performance Unit at the time of
payment (the "Ending Value"). If necessary to make the calculation of the
amount to be paid to the employee pursuant to Section 11.3, the Committee shall
also state in the award agreement the initial value of each Performance Unit
(the "Initial Value"). Performance Units granted to an employee shall be
credited to an account (a "Performance Unit Account") established and maintained
for such employee.
11.2 Right to Payment of Performance Units. With respect to each award of
-------------------------------------
Performance Units under the Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the employee to vest in the
Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an employee for the
Performance Period are partially but not fully met, the Committee may,
nonetheless, in its sole discretion, determine that all or a portion of the
Performance Units have vested. If the Performance Objectives for a Performance
Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Units to the employee. The Committee may,
in its sole discretion, adjust the Performance Objectives or the Initial Value
or Ending Value of any Performance Units to reflect extraordinary events, such
as stock splits, recapitalizations, mergers, combinations, divestitures, spin-
offs and the like. The Committee may also determine, in its sole discretion,
that Performance Units awarded to an employee shall become partially or fully
vested upon the employee's termination of employment due to Disability,
Retirement, death or otherwise, or upon a Relocation Event or Special Event.
11.3 Payment for Performance Units. As soon as practicable following the
-----------------------------
end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 11.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the employee
pursuant to Section 11.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Corporation shall pay to the employee an amount with respect
to each vested Performance Unit equal to the Ending Value of the Performance
Unit or, if the Committee shall so specify at the time of grant, an amount equal
to (i) the Ending Value of the Performance Unit less (ii) the Initial Value of
the Performance Unit. Payment shall be made entirely in cash, entirely in
Common Stock (including Restricted Shares) or in such combination of cash and
Common Stock as the Committee shall determine in its sole discretion.
- 11 -
<PAGE>
ARTICLE 12.
UNRESTRICTED SHARES
12.1 Award of Unrestricted Shares. The Committee may cause the
----------------------------
Corporation to grant Unrestricted Shares to employees at such time or times, in
such amounts and for such reasons as the Committee, in its sole discretion,
shall determine. No payment shall be required for Unrestricted Shares.
12.2 Delivery of Unrestricted Shares. The Corporation shall issue, in the
-------------------------------
name of each employee to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
employee, and shall deliver such certificates to the employee as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
ARTICLE 13.
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under the
Plan or anytime thereafter to make Tax Offset Payments to assist employees in
paying income taxes incurred as a result of their participation in the Plan.
The Tax Offset Payments shall be determined by multiplying a percentage
established by the Committee by all or a portion (as the Committee shall
determine) of the taxable income recognized by an employee upon (i) the exercise
of Non-qualified Stock Options or Stock Appreciation Rights, (ii) the
disposition of shares received upon exercise of Incentive Stock Options, (iii)
the lapse of restrictions on Restricted Shares, (iv) the award of Unrestricted
Shares, or (v) payments for Performance Shares or Performance Units. The
percentage shall be established, from time to time, by the Committee at that
rate which the Committee, in its sole discretion, determines to be appropriate
and in the best interests of the Corporation to assist employees in paying
income taxes incurred as a result of the events described in the preceding
sentence. Tax Offset Payments may be made in either cash or Unrestricted
Shares, in the sole discretion of the Committee.
ARTICLE 14.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may: (i) at
any time, make or provide for such adjustments to the Plan or to the number and
class of shares available thereunder or (ii) at the time of grant of any
Options, Stock Appreciation Rights, Restricted Shares or Performance Shares,
provide for such adjustments to such Options, Stock Appreciation Rights,
Restricted Shares or Performance Shares, in each case, as the Committee shall
deem appropriate to prevent dilution or enlargement of rights, including,
without limitation, adjustments in the event of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, spin-offs, reorganizations, liquidations and the like.
ARTICLE 15.
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (i) materially increase the aggregate number of shares
which may be issued under the Plan, (ii)
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<PAGE>
materially increase the benefits accruing to employees under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to the approval of the Corporation's stockholders, except
that any such increase or modification that may result from adjustments
authorized by Article 14 hereof shall not require such stockholder approval. If
the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the employee to whom an award shall theretofore have been granted,
adversely affect the rights of such employee under such award.
ARTICLE 16.
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement containing such restrictions,
terms and conditions, if any, as the Committee may require. In the event of any
conflict between a written agreement and the Plan, the terms of the Plan shall
govern.
ARTICLE 17.
MISCELLANEOUS PROVISIONS
17.1 Tax Withholding. The Corporation shall have the right to require
---------------
employees or their beneficiaries or legal representatives to remit to the
Corporation an amount sufficient to satisfy Federal, state and local withholding
tax requirements, or to deduct from all payments under the Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an employee in cash, such
payments shall be net of any amounts sufficient to satisfy all Federal, state
and local withholding tax requirements. The Committee may, in its sole
discretion, permit an employee to satisfy his or her tax withholding obligation
either by (i) surrendering shares owned by the employee or (ii) having the
Corporation withhold from shares otherwise deliverable to the employee. Shares
surrendered or withheld shall be valued at their Market Price as of the date on
which income is required to be recognized for income tax purposes.
17.2 Compliance With Section 16(b). In the case of employees who are or
-----------------------------
may be subject to Section 16 of the Act, it is the intent of the Corporation
that the Plan and any award granted hereunder satisfy and be interpreted in a
manner that satisfies the applicable requirements of Rule 16b-3, so that such
persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 of the Act and will not be subjected to liability thereunder.
If any provision of the Plan or any award would otherwise conflict with the
intent expressed herein, that provision, to the extent possible, shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, such provision shall be
deemed void as applicable to employees who are or may be subject to Section 16
of the Act.
17.3 Successors. The obligations of the Corporation under the Plan shall
----------
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Corporation, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of the Corporation. In the event of any of the
foregoing, the Committee may, at its discretion prior to the consummation of the
transaction and subject to Article 15 hereof, cancel, offer to purchase,
exchange, adjust or modify any outstanding awards, at such time and in such
manner as the Committee deems appropriate and in accordance with applicable law.
- 13 -
<PAGE>
17.4 General Creditor Status. Employees shall have no right, title, or
-----------------------
interest whatsoever in or to any investments which the Corporation may make to
aid it in meeting its obligations under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Corporation and any employee or beneficiary or legal representative of such
employee. To the extent that any person acquires a right to receive payments
from the Corporation under the Plan, such right shall be no greater than the
right of an unsecured general creditor of the Corporation. All payments to be
made hereunder shall be paid from the general funds of the Corporation and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts except as expressly set forth in the
Plan.
17.5 No Right to Employment. Nothing in the Plan or in any written
----------------------
agreement entered into pursuant to Article 16 hereof, nor the grant of any
award, shall confer upon any employee any right to continue in the employ of the
Corporation or a subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such written agreement or interfere with or limit
the right of the Corporation or a subsidiary to modify the terms of or terminate
such employee's employment at any time.
17.6 Effect of Reverse Stock Split. The 50,000 maximum aggregate number
-----------------------------
of shares of Common Stock available for award under the Plan gives effect to the
contemplated 1 for 20 reverse split of the Corporation's Common Stock that is
being submitted to the Corporation's stockholders for approval at the
Corporation's 1995 Annual Meeting of Stockholders.
17.7 Notices. Notices required or permitted to be made under the Plan
-------
shall be sufficiently made if personally delivered to the employee or sent by
regular mail addressed (a) to the employee at the employee's address as set
forth in the books and records of the Corporation or its subsidiaries, or (b) to
the Corporation or the Committee at the principal office of the Corporation
clearly marked "Attention: Stock Option Committee."
17.8 Severability. In the event that any provision of the Plan shall be
------------
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
17.9 Governing Law. To the extent not preempted by Federal law, the Plan,
-------------
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Delaware.
- 14 -
<PAGE>
Exhibit 4.2
FORM FOR ISO UNDER 1995
STOCK OPTION AND
PERFORMANCE INCENTIVE PLAN
--------------------------
NONTRANSFERABLE INCENTIVE STOCK OPTION AGREEMENT,
dated as of ________ __, 19__, between
TRANSNATIONAL INDUSTRIES, INC., a Delaware
corporation (the "Company"), and __________ (the
"Optionee", which term as used herein shall be
deemed to include any successor to the Optionee by
will or by the laws of descent and distribution,
unless the context shall otherwise require).
Pursuant to the Company's 1995 Stock Option and Performance Incentive
Plan (the "Plan"), the Company, acting through the Compensation Committee of its
Board of Directors (the "Committee"), approved the issuance to the Optionee,
effective as of the date set forth above, of an incentive stock option to
purchase up to an aggregate of [# OF SHARES] shares of Common Stock, $.20 par
value, of the Company (the "Common Stock"), at the price (the "Option Price") of
[not less than 100% of the fair market value of a share of Common Stock on the
date of grant (110%, in the case of a 10% stockholder)] [PRICE] per share, upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. OPTION; OPTION PRICE. On behalf of the Company, the Committee
--------------------
hereby grants to the Optionee the option (the "Option") to purchase, subject to
the terms and conditions of this Agreement and the Plan (which are incorporated
by reference herein and which in all cases shall control in the event of any
conflict with the terms, definitions and provisions of this Agreement), [# OF
SHARES] shares of Common Stock of the Company at an exercise price per share
equal to the Option Price, which Option is intended to qualify for Federal
income tax purposes as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). A copy of
the Plan as in effect on the date hereof has been supplied to the Optionee, and
the Optionee hereby acknowledges receipt thereof.
<PAGE>
2. TERM. The term (the "Option Term") of the Option shall commence
----
on the date of this Agreement and shall expire on the ______ [number of years
option will be exercisable for, not to exceed ten (5, in the case of a 10%
stockholder)] anniversary of the date of this Agreement, unless such Option
shall theretofore have been terminated in accordance with the terms hereof or of
the Plan.
3. TIME OF EXERCISE. (a) Unless accelerated in the discretion of
----------------
the Committee or as otherwise provided herein, the Option shall become
exercisable as to the total number of shares of Common Stock subject to the
Option multiplied by the fraction specified in Exhibit A hereto, for the periods
specified in Exhibit A hereto./*/ Subject to the provisions of Sections 5 and 8
hereof, shares as to which the Option becomes exercisable pursuant to the
foregoing provisions may be purchased at any time thereafter prior to the
expiration or termination of the Option.
(b) Anything contained in this Agreement to the contrary
notwithstanding, the Option shall not be exercisable to the extent that the
aggregate Market Price (as determined in accordance with Section 5.3 of the
Plan) on the date hereof of all stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any calendar
year (under the Plan and all other plans of the Company and its subsidiaries, if
any) exceeds $100,000. In such event, the unexercisable portion of such Option
shall become exercisable in the first calendar year thereafter in which such
options could become exercisable without causing the restrictions of the
immediately preceding sentence to become appliccable for such subsequent
calendar year.
4. TERMINATION OF OPTION. (a) The unexercised portion of the
---------------------
Option shall automatically terminate and shall become null and void and be of no
further force or effect upon the first to occur of the following:
(i) the expiration of the Option Term;
(ii) the expiration of three months from the date that the
Optionee ceases to be an employee of the Company or any of its subsidiaries
(other than as a result of an Involuntary Termination (as defined in
subparagraph (iii) below) or a Termination For Cause (as defined in
subparagraph (iv) below)); provided, however, that if the Optionee shall
-------- -------
die during such three-month period, the time of termination of the
unexercised portion of the Option shall be determined in accordance with
subparagraph (iii) below;
- ------------------
/*/ Subject to modification by the Committee to accommodate performance
objectives, if any.
- 2 -
<PAGE>
(iii) the expiration of 12 months from the date that the Optionee
ceases to be an employee of the Company or any of its subsidiaries as a
result of the Optionee's death or permanent and total disability (within
the meaning of Section 22(e)(3) of the Code) (an "Involuntary
Termination");
(iv) immediately if the Optionee ceases to be an employee of the
Company or any of its subsidiaries for any of the reasons set forth in the
second sentence of the second paragraph of Section 8.1 of the Plan (any
such termination, determined in accordance with paragraph (b) below, a
"Termination For Cause");
(v) the effective date of a Special Event (as defined in Section
8.5 of the Plan) if the Optionee's employment will be terminated upon the
occurrence thereof (unless the Committee determines not to terminate the
Options in connection with such event); provided, however, that the
-------- -------
Optionee's right to exercise the Option prior to such effective date shall
in all events be suspended during the period commencing 10 days prior to
the proposed effective date of such Special Event and ending on either the
actual effective date of such Special Event or upon receipt of notice from
the Company that such Special Event will not in fact occur; and
(vi) the date on which the Option or any part thereof or right or
privilege relating thereto is transferred (otherwise than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee, or the occurrence of any
other event which, pursuant to the terms of Article VIII of the Plan,
results in any unexercised portion of the Option becoming null and void.
(b) Pursuant to Section 8.1 of the Plan, the Board of Directors of
the Company shall have the power to determine what constitutes a Termination For
Cause, and the date upon which such Termination For Cause occurs. Any such
determination shall be final, conclusive and binding upon the Optionee.
(c) Anything contained herein to the contrary notwithstanding, the
Option shall not be affected by any change of duties or position of the Optionee
(including a transfer to or from the Company or one of its subsidiaries), so
long as the Optionee continues to be an officer or employee of the Company or
one of its subsidiaries.
5. PROCEDURE FOR EXERCISE. (a) The Option may be exercised, from
----------------------
time to time, in whole or in part (but for the purchase of whole shares only),
by delivery of a written notice
- 3 -
<PAGE>
(the "Notice") from the Optionee to the Secretary of the Company, which Notice
shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares with respect to which the
Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares
pursuant to Section 5(b);
(iv) state the date upon which the Optionee desires to
consummate the purchase of the Optioned Shares (which date must be
prior to the termination of such Option and no later than 30 days from
the delivery of such Notice);
(v) include any representations of the Optionee required
under Section 8(b); and
(vi) if the Option shall be exercised pursuant to Section 10
by any person other than the Optionee, include evidence to the
satisfaction of the Committee of the right of such person to exercise
the Option.
(b) Payment of the Option Price for the Optioned Shares shall be made
(i) in cash or by personal or certified check, (ii) by delivery of stock
certificates (in negotiable form) representing shares of Common Stock that have
been owned of record by the Optionee for at least six months prior to the date
of exercise and that have a Market Price on the date of exercise (determined in
the manner set forth in Section 5.3 of the Plan) equal to the product of (A) the
number of Optioned Shares which are being purchased pursuant to the exercise of
such Option, multiplied by (B) the applicable Option Price, or (iii) a
combination of the methods set forth in the foregoing clauses (i) and (ii).
(c) The Company shall issue a stock certificate in the name of the
Optionee (or such other person exercising the Option in accordance with the
provisions of Section 10) for the Optioned Shares as soon as practicable after
receipt of the Notice and payment of the aggregate Option Price for such shares.
6. NO RIGHTS AS A STOCKHOLDER. The Optionee shall not have any
--------------------------
privileges of a stockholder of the Company with respect to any Optioned Shares
until the date of issuance of a stock certificate pursuant to Section 5(c).
- 4 -
<PAGE>
7. ADJUSTMENTS. If, at any time while the Option is outstanding, the
-----------
Common Stock is changed by reason of a stock split, reverse stock split, stock
dividend or recapitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation or reorganization, the
Committee shall make adjustments in the number and class of shares of stock
subject to the Option, and the Option Price of the Option.
8. ADDITIONAL PROVISIONS RELATED TO EXERCISE. (a) The Option shall
-----------------------------------------
be exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the procedures
set forth in Section 5 hereof. Upon the exercise of the Option at a time when
there is not in effect a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), relating to the shares of Common Stock
issuable upon exercise of the Option, the Committee in its discretion may, as a
condition to the exercise of the Option, require the Optionee (i) to represent
in writing that the shares of Common Stock received upon exercise of the Option
are being acquired for investment and not with a view to distribution and (ii)
to make such other representations and warranties as are deemed appropriate by
counsel to the Company. No shares of Common Stock shall be issued and delivered
upon the exercise of the Option unless and until the Company and/or the Optionee
shall have complied with all applicable Federal or state registration, listing
and/or qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction.
(c) Stock certificates representing shares of Common Stock acquired
upon the exercise of the Option that have not been registered under the
Securities Act shall, if required by the Committee, bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
9. NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in the
------------------------------------
Plan or this Agreement shall confer upon the Optionee any right to continue in
the employ of the Company or any of its subsidiaries or interfere in any way
with the right of
- 5 -
<PAGE>
the Company or its subsidiaries (subject to the terms of any separate agreement
to the contrary) to terminate the Optionee's employment or to increase or
decrease the Optionee's compensation at any time.
10. RESTRICTION ON TRANSFER. The Option may not be transferred,
-----------------------
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Optionee, except by will or by the laws of descent and distribution, and may be
exercised during the lifetime of the Optionee only by the Optionee. If the
Optionee dies, the Option shall thereafter be exercisable, during the period
specified in Section 4(a)(iii), by his executors or administrators to the full
extent to which the Option was exercisable by the Optionee at the time of his
death. The Option shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of any
execution, attachment or similar process upon the Option, shall be null and void
and without effect.
11. DISQUALIFYING DISPOSITIONS; TAXES. (a) If Optioned Shares are
---------------------------------
disposed of within two years following the date of this Agreement or one year
following the issuance thereof to the Optionee (a "Disqualifying Disposition"),
the Optionee shall, immediately prior to such Disqualifying Disposition, notify
the Company in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Company may reasonably require.
(b) At the time of a Disqualifying Disposition, the Optionee shall
remit to the Company in cash the amount of any applicable Federal, state and
local withholding taxes and employment taxes.
12. NOTICES. All notices or other communications which are required
-------
or permitted hereunder shall be in writing and sufficient if (i) personally
delivered, (ii) sent by nationally-recognized overnight courier or (iii) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Optionee, to the address set forth on the signature
page hereto; and
- 6 -
<PAGE>
if to the Company, to:
Transnational Industries, Inc.
Post Office Box 198
US Route 1
Chadds Ford, PA 19317
Attention: Secretary;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, "Business Day"
means a day that is not a Saturday, Sunday or a day on which banking
institutions in the city to which the notice or communication is to be sent are
not required to be open.
13. NO WAIVER. No waiver of any breach or condition of this
---------
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
14. OPTIONEE UNDERTAKING. The Optionee hereby agrees to take
--------------------
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
15. MODIFICATION OF RIGHTS. The rights of the Optionee are subject
----------------------
to modification and termination in certain events as provided in this Agreement
and the Plan.
16. GOVERNING LAW. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and to be wholly performed therein.
17. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement and the Plan constitute the
----------------
entire agreement between the parties with respect to the subject matter hereof,
and supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Nontransferable Incentive Stock Option Agreement as of the date first written
above.
TRANSNATIONAL INDUSTRIES, INC.
By:___________________________
Name:
Title:
OPTIONEE:
______________________________
Name: _______________________
Address: ____________________
____________________
____________________
<PAGE>
EXHIBIT A
---------
One-fourth (1/4) of the aggregate number of options issued hereunder
shall become exercisable on each anniversary of the date of grant on which the
Optionee is employed by the Company.
<PAGE>
Exhibit 5.1
[Finn Dixon & Herling LLP letterhead]
David I. Albin
January 15, 1997
Transnational Industries, Inc.
c/o Spitz, Inc.
P.O. Box 198
U.S. Route 1
Chadds Ford, PA 19317
Re: Transnational Industries, Inc. -- Registration Statement on Form S-8
--------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Transnational Industries, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission of a registration statement on Form S-8
(the "Registration Statement") of the Company, covering 50,000 shares (the
"Shares") of the Common Stock, $0.20 par value per share, of the Company, to be
issued pursuant to the Company's 1995 Stock Option and Performance Incentive
Plan (the "Plan").
In rendering the opinion set forth herein, we have examined executed
copies, telecopies or photocopies of: (i) the Registration Statement and the
Plan; (ii) the Certificate of Incorporation and By-laws of the Company; and
(iii) such other records, documents, certificates and other instruments as in
our judgment are necessary or appropriate as a basis for the opinion expressed
below. In our examination of such documents we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Company.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications, assumptions and exceptions heretofore and hereinafter set forth,
we are of the opinion that, upon the issuance of the Shares in accordance with
the Plan and with the terms of any written options, option agreements or other
agreements issued or entered into pursuant to the Plan and
<PAGE>
Transnational Industries, Inc.
January 15, 1997
Page -2-
as contemplated by the Registration Statement, the Shares will be validly
issued, fully paid and non-assessable.
We do not express, or purport to express, any opinion with respect to any
laws or of any jurisdiction other than the General Corporation Law of the State
of Delaware and the federal securities laws of the United States of America.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter occur or come to our attention or any changes in law which may
hereafter occur.
Very truly yours,
\s\ Finn Dixon & Herling LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report April 5, 1996 accompanying the consolidated financial
statements of Transnational Industries, Inc. and Subsidiaries appearing in the
Annual Report on Form 10-KSB for the fiscal year ended January 31, 1996, which
are incorporated by reference in this Registration Statement on Form S-8. We
consent to the incorporation by reference in this Registration Statement of the
aforementioned report.
STOCKTON BATES & COMPANY, P.C.
Philadelphia, Pennsylvania
January 16, 1997
