<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
</TABLE>
TRANSNATIONAL INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
TRANSNATIONAL INDUSTRIES, INC.
POST OFFICE BOX 198
U.S. ROUTE 1
CHADDS FORD, PENNSYLVANIA 19317
(610) 459-5200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders (the "Annual Meeting") of Transnational
Industries, Inc. (the "Company") will be held at the offices of William D.
Witter, Inc., 153 East 53rd Street, Suite 5100, New York, New York 10022, on
Thursday, August 19, 1999, at 10:00 a.m., for the following purposes:
1. To elect five persons to the Board of Directors, each to hold office
until the next Annual Meeting of Stockholders or until his respective
successor is elected and qualified.
2. To consider and vote upon an amendment to the Transnational Industries,
Inc. 1995 Stock Option and Performance Incentive Plan to increase the
number of shares of Common Stock available for awards under the Option
Plan from 50,000 shares to 150,000 shares.
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 22, 1999, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting.
PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED STAMPED RETURN ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL
MEETING.
By Order of the Board of Directors,
/s/ Paul L. Dailey
Paul L. Dailey
Secretary
Dated: July 27, 1999
<PAGE> 3
TRANSNATIONAL INDUSTRIES, INC.
POST OFFICE BOX 198
U.S. ROUTE 1
CHADDS FORD, PENNSYLVANIA 19317
(610) 459-5200
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 19, 1999
INTRODUCTION
This proxy statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Directors of Transnational
Industries, Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held on August 19, 1999 and at any adjournment of that meeting. The Annual
Meeting will be held at the offices of William D. Witter, Inc., 153 East 53rd
Street, Suite 5100, New York, New York 10022, at 10:00 a.m. local time. All
proxies will be voted in accordance with the stockholders' instructions and, if
no choice is specified, the proxies will be voted in favor of the matters set
forth in the accompanying Notice of Annual Meeting. Any proxy may be revoked by
a stockholder at any time before its exercise by delivery of written revocation
or a subsequently dated proxy to the Secretary of the Company or by voting in
person at the Annual Meeting.
The Company's Annual Report on Form 10-KSB (as amended by Form 10-KSB/A-1)
for the Company's fiscal year ended January 31, 1999, is included herewith, but
is not to be considered as a part of the proxy soliciting materials.
VOTING RIGHTS
Proxies are solicited on behalf of and at the direction of the Board of
Directors, which has fixed the close of business on July 22, 1999, as the record
date (the "Record Date") for the determination of holders of outstanding shares
of the Company's Common Stock entitled to notice of and to vote at the Annual
Meeting or any adjournment(s) thereof. As of July 22, 1999, there were 502,461
shares of the Company's Common Stock issued and outstanding, which were held of
record on such date by approximately 101 holders. Each stockholder is entitled
to one vote, exercisable in person or by proxy, for each share of the Company's
Common Stock held of record on the Record Date with respect to each matter. A
plurality of the votes of the shares of the Company's Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote is
required with respect to the election of Directors. The affirmative vote of the
holders of a majority of the shares of the Company's Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote is
required for the adoption of the resolution authorizing and approving the
amendment to the Option Plan. Therefore, a stockholder who attends the Annual
Meeting, either in person or by proxy, and abstains from voting on the
resolution authorizing and approving the Option Plan would in effect be voting
against the Option Plan. Broker non-votes would have the same effect.
All shares of the Company's Common Stock represented by properly executed
proxies will be voted at the Annual Meeting in accordance with the directions
indicated on the proxies unless such proxies have previously been revoked. To
the extent that no direction is indicated, the shares will be voted FOR the
election of all of the Company's nominees as Directors, and FOR the adoption of
a resolution authorizing and approving the amendment to the Option Plan. See
"ELECTION OF DIRECTORS" and "AMENDMENT TO THE OPTION PLAN". If any other matters
are properly presented at the Annual Meeting for action, including a question of
adjourning the meeting from time to time, the person named in the proxies and
acting thereunder will have discretion to vote on such matters in accordance
with his best judgment. The Annual Meeting may be adjourned, and additional
proxies solicited, if at the time of the Annual Meeting the votes necessary to
approve the amendment to the Option Plan have not been obtained. Any adjournment
of the Annual Meeting
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<PAGE> 4
would require the affirmative vote of the holders of at least a majority of the
shares of the Company's Common Stock represented at the Annual Meeting
(regardless of whether such shares constituted a quorum).
Any stockholder who has executed and returned a proxy has the power to
revoke it at any time before it is voted. A stockholder who wishes to revoke a
proxy can do so by attending the Annual Meeting and voting in person, or by
executing a later-dated proxy relating to the same shares or a writing revoking
the proxy and, in the latter two cases, delivering such later-dated proxy or
writing to the Secretary of the Company prior to the vote at the Annual Meeting.
Any writing intended to revoke a proxy should be sent to the Company at its
principal executive offices, Post Office Box 198, U.S. Route One, Chadds Ford,
Pennsylvania 19317, Attention: Paul L. Dailey, Secretary.
In addition to the use of the mail, proxies may be solicited via personal
interview and telephone or telegraph by the Directors, officers and regular
employees of the Company. Such persons will receive no additional compensation
for such services. Arrangements will also be made with certain brokerage firms
and certain other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of the Company's Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed by the Company for reasonable out-of-pocket
expenses incurred by them in connection therewith.
In addition to the Company's Common Stock, the Company has outstanding
Series B Preferred Stock (the "B Preferred"). The holders of the B Preferred are
not, however, entitled to vote upon any of the matters being taken up at the
Annual Meeting.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The following paragraphs set forth the slate of nominees proposed for
election as Directors, the present principal occupation, including position, if
any, with the Company, of each nominee, and his age and his business experience
during the past five years. All nominees proposed for election as Directors are
currently Directors of the Company. The paragraphs below are based in part on
information received from the respective nominees and in part from the records
of the Company.
MICHAEL S. GOSTOMSKI, 48, joined the Company in May 1986 as Vice
President -- Finance, Treasurer, and a Director and became Corporate Secretary
in March 1988. In October 1989, he became Executive Vice President of the
Company. On May 1, 1992, he became President and Chief Executive Officer of the
Company. Mr. Gostomski resigned as an employee of the Company, while remaining
as a Director of the Company, in September 1993, at which time he became
Executive Vice President of Roller Bearing Company. Mr. Gostomski, who is a
Certified Public Accountant, holds B.S. and M.B.A. degrees from the University
of Connecticut.
CHARLES H. HOLMES, JR., 58, became a Director of the Company in 1994. He
has held various operating and management positions at the Company's Spitz,
Inc., subsidiary since 1962. Mr. Holmes has been President of Spitz since 1988.
He has been President of the Company since September 1993. Mr. Holmes holds a
degree in Business Management from Goldey Beacom College.
CHARLES F. HUBER, 69, became a Director of the Company in February 1992 and
Chairman in 1994. He is currently a Managing Director of William D. Witter
Associates, Inc. He holds a B.A. degree from Princeton University.
CALVIN A. THOMPSON, 74, became a Director of the Company in October 1994.
He has been a Managing Director of William D. Witter Associates, Inc. since
1982. Mr. Thompson holds a B.S. degree in industrial engineering from Columbia
University.
WILLIAM D. WITTER, 69, became a Director of the Company in 1977 and Vice
Chairman in August 1987. He has been President of William D. Witter Associates,
Inc., an investment management concern, since 1976. Mr. Witter holds an A.B.
degree from Yale University and an M.B.A. from Stanford Business School.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends voting in favor of the slate of nominees
proposed for election as Directors. Proxies solicited by the Board of Directors
will be voted FOR the nominees unless stockholders specify otherwise. Such
nominees, if elected, will hold office until the next Annual Meeting of
Stockholders or until their respective successors are duly elected and
qualified. It is not anticipated that any nominee will be unavailable to serve
as a Director of the Company, but if that contingency should arise prior to the
election, the persons named in the accompanying proxy, when voting at the
meeting, are authorized to substitute another person chosen by the Company's
Board of Directors.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Board's Audit Committee consists of Michael S. Gostomski, Charles F.
Huber, Calvin A. Thompson and William D. Witter. The Audit Committee did not
meet during the fiscal year ended January 31, 1999. The principal functions of
the Audit Committee are to recommend to the Board the selection of the
independent auditors for the Company and to review and approve the scope of
audits of the Company's annual financial statements, the Company's internal
financial controls, and the fees paid to the Company's independent auditors.
The Board's Compensation Committee consists of Michael S. Gostomski,
Charles F. Huber, Calvin A. Thompson and William D. Witter. The Compensation
Committee met one time during the fiscal year ended January 31, 1999. All of the
members of the Compensation Committee attended the meeting. The principal
functions of the Compensation Committee are to review and make recommendations
regarding compensation to be paid to the Company's and its subsidiaries'
officers.
The Board does not have a nominating committee; the Board of Directors
selects the nominees for Directors.
The Board of Directors held two meetings during the fiscal year ended
January 31, 1999. Each Director attended 100% of the total number of meetings of
the Board of Directors.
COMPENSATION OF DIRECTORS
The Chairman of the Board of Directors is paid a fee of $50,000 per annum
and each other outside Director is paid a fee of $10,000 per annum. The fee paid
to the Chairman is based on the Chairman's spending one-third of his working
hours assisting the Company and its subsidiary.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION AGE
- ---- -------- ---
<S> <C> <C>
Charles H. Holmes, Jr. .......... President and Chief Executive Officer of 58
the Company and President of Spitz, Inc.
Paul L. Dailey, Jr. ............. Chief Financial Officer and Secretary of 42
the Company and Vice President --
Finance of Spitz, Inc.
Jonathan A. Shaw................. Chief Operating Officer, Executive Vice 42
President of the Company and Spitz, Inc.
John A. Fogelman................. Vice President -- Operations of Spitz, 50
Inc.
</TABLE>
Information with respect to Mr. Holmes is set forth above.
Paul Dailey joined Spitz in September 1983 as Controller. In June 1986 he
became Vice President -- Finance for Spitz. In April 1993, he became Chief
Accounting Officer of the Company. In September 1993 he
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<PAGE> 6
became Chief Financial Officer and Secretary of the Company. Mr. Dailey is a
certified public accountant and holds a B.A. degree in accounting from Rutgers
University.
Jonathan Shaw became Executive Vice President and Chief Operating Officer
of the Company and Spitz in April 1999. He was Vice President -- Sales and
Technology for Spitz since July 1992. He has held various engineering and
management positions at Spitz since 1986. Mr. Shaw is a registered Professional
Engineer, holds an M.B.A. degree from Widener University and a B.S. degree in
Mechanical and Aerospace Engineering from the University of Delaware.
John Fogelman became Vice President -- Operations for Spitz in July 1992.
He has held various operating and management positions at Spitz since 1972. Mr.
Fogelman holds a B.A. degree in business management from Wilmington College.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation paid
to Charles H. Holmes, Jr., the Company's President and Chief Executive Officer,
for the Company's last three fiscal years. Except for Mr. Holmes, the Company
did not have any executive officer whose total annual salary and bonus exceeded
$100,000 for the last completed fiscal year.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------------
ANNUAL SECURITIES
COMPENSATION(A) UNDERLYING
---------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED(#) COMPENSATION
- --------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Charles H. Holmes, Jr., 1999 $133,762 $4,834(c)
President and Chief 1998 133,762 $ 15,000(b) 12,000 5,062(c)
Executive Officer 1997 130,999 3,000 4,480(c)
</TABLE>
- ---------------
(a) Perquisites and other personal benefits amounted to less than 10 percent of
salary and are therefore not reported in the table.
(b) In fiscal 1998, Mr. Holmes received a $5,000 annual performance bonus and an
additional $10,000 bonus awarded at the completion of the refinancing of the
Company's debt agreements.
(c) Consists entirely of Company contributions to 401(k) plan.
------------------------
The Company entered into an employment agreement with Mr. Holmes effective
May 1, 1995. Under the agreement, Mr. Holmes is currently paid an annual base
salary of $140,000 which may be increased from time to time by the Company's
Board of Directors, plus certain fringe benefits including group insurance,
supplemental medical benefits and an automobile allowance. Mr. Holmes may also
receive, at the sole discretion of the Company's Board of Directors, additional
compensation in the form of a cash bonus or equity securities under the Option
Plan. The original term of the agreement was one year, but the agreement
automatically extends an additional one year unless otherwise terminated by
either party by October 31 of the existing term. Pursuant to such provision, Mr.
Holmes's contract automatically renewed on May 1, 1999, for the period through
April 30, 2000. In the event that Mr. Holmes's employment is terminated without
cause, he will be entitled to a lump sum payment equal to twice his annual base
salary and the continuation of his fringe benefits for a period of two years. A
non-renewal of the contract term by the Company within six months prior to or
three years after a "Change in Control" will be treated as a termination without
cause. A "Change in Control" is defined as (i) a change within twelve months of
a majority of the Company's Board of Directors, (ii) a change in control of 50
percent of the Company's voting stock, (iii) the sale of the assets of Spitz, or
(iv) any merger or consolidation of the Company's business which results in a
change in ownership of the majority of the equity of the Company. The agreement
also includes a restrictive covenant whereby
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<PAGE> 7
Mr. Holmes agrees not to engage in a competing business of the Company for a
period of (i) three years in the event of a termination for cause or (ii) one
year in the event that his employment is otherwise terminated.
There were no awards under the Option Plan during the fiscal year ended
January 31, 1999. The following table sets forth information relating to prior
option awards to Charles H. Holmes, Jr. None of such option awards was "in the
money" at January 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
UNEXERCISED OPTIONS(#)
AT FISCAL YEAR END
NAME EXERCISABLE/UNEXERCISABLE
- ---- -------------------------
<S> <C>
Charles H. Holmes, Jr. 4,500/10,500
</TABLE>
EMPLOYEE BENEFIT PLANS
STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
On July 14, 1995, the stockholders of the Company voted to approve the
Transnational Industries Inc. 1995 Stock Option and Performance Incentive Plan
adopted by the Board of Directors of the Company on March 21, 1995. Under the
Option Plan, awards are granted to key employees whose initiative is deemed
valuable for the successful conduct and development of the Company's business.
The Option Plan provides for the awarding of up to 50,000 shares of the
Company's Common Stock to employees of the Company and its subsidiaries. In
April 1999, the Company's Board of Directors voted, subject to stockholder
approval, to increase the number of awards available under the Option Plan by
100,000 shares. As of the date of this Proxy Statement, no awards have been made
from the additional 100,000 shares. Awards may be in various forms of stock
options, stock appreciation rights, and shares of Common Stock. Awards are
granted by the Compensation Committee of the Board of Directors of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table set forth certain information as to the only persons
known to the Company to be the beneficial owners of more than five percent (5%)
of the outstanding Common Stock of the Company as of March 31, 1999 (except for
William D. Witter and Charles Huber, whose respective beneficial ownership is
disclosed in the immediately following table). The Common Stock is the Company's
only class of voting securities (except for matters as to which the Class B
Preferred is entitled to voting rights as a matter of Delaware corporate law).
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP % OF COMMON STOCK
- ---------------- ----------------------- -----------------
<S> <C> <C>
Penfield Limited Partnership........... 81,760 16.3%
c/o William D. Witter, Inc.
153 East 53rd Street
New York, NY 10022
Estate of Alan Drew.................... 45,710 9.1%
421 Sable Palm Lane
Vero Beach, FL 32963
</TABLE>
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<PAGE> 8
The following table sets forth, as of March 31, 1999, the number of shares
of the outstanding Common Stock of the Company beneficially owned by each of the
current Directors and each of the executive officers for whom disclosure is made
in the Summary Compensation Table, individually, and by the Company's Directors
and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP % OF COMMON STOCK
- ---------------- ----------------------- -----------------
<S> <C> <C>
William D. Witter...................... 246,498(1) 49.1%
c/o William D. Witter, Inc.
153 East 53rd Street
Suite 5100
New York, New York 10022
Charles Huber.......................... 49,500 9.9%
c/o William D. Witter, Inc.
153 East 53rd Street
Suite 5100
New York, New York 10022
Michael S. Gostomski................... 21,290 4.2%
c/o Roller Bearing Company of America
60 Round Hill Road
Fairfield, Connecticut 06430
Charles H. Holmes, Jr.................. 7,750(2) 1.5%(3)
c/o Spitz, Inc.
P.O. Box 198
Chadds Ford, Pennsylvania 19317
Calvin A. Thompson..................... 18,400(4) 3.7%
c/o William D. Witter, Inc.
153 East 53rd Street
Suite 5100
New York, New York 10022
All current Directors and executive
officers as a group (8 persons)...... 357,693(5) 69.1%(3)
</TABLE>
- ---------------
(1) Includes (i) 102,813 shares of Common Stock owned by Mr. Witter's spouse and
adult children, (ii) 20,600 shares of Common Stock owned by the William D.
Witter, Inc., Profit Sharing Fund, (iii) 646 shares of Common Stock owned by
ADW Inc., (iv) 222 shares of Common Stock owned by Virginia Woods Witter,
(v) 209 shares of Common Stock owned by the Helen C. Witter Trust, (vi) 214
shares of Common Stock owned by Elizabeth Tacy Witter and (vii) the 81,760
shares of Common Stock beneficially owned by Penfield Limited Partnership
and described in the immediately preceding table. Mr. Witter disclaims a
beneficial interest in the shares of Common Stock owned by Mr. Witter's
spouse and children.
(2) Includes 5,250 shares of Common Stock acquirable within sixty days upon the
exercise of Mr. Holmes's stock options.
(3) Assumes the issuance by the Company of all securities issuable to such
executive officer or all Directors and executive officers as a group, as the
case may be, upon the exercise of all options owned by such person or group.
(4) Includes 2,500 shares of Common Stock owned by Mr. Thompson's spouse. Mr.
Thompson disclaims a beneficial interest in the shares of Common Stock owned
by his spouse.
(5) Includes a total of 15,250 shares of Common Stock acquirable within sixty
days upon the exercise of all stock options owned by the Company's executive
officers.
------------------------
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Directors, executive officers and 10% beneficial owners of the Company's Common
Stock to file certain reports concerning their ownership of the Company's equity
securities. Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recently competed fiscal year, and
Forms 5 and amendments thereto furnished to the Company with respect to its most
recently completed fiscal year, and other information of which the Company is
aware, no Director, executive officer or beneficial owner of 10% or more of the
Company's Common Stock failed to make a requisite filing on a timely basis.
PROPOSAL NO. 2:
AMENDMENT TO THE OPTION PLAN
BACKGROUND
On March 21, 1995, the Board of Directors adopted, subject to stockholder
approval, the Transnational Industries, Inc. 1995 Stock Option and Performance
Incentive Plan. The stockholders of the Company approved the Option Plan at the
1995 Annual Meeting of Stockholders held on July 14, 1995. The Option Plan, as
now in effect, provides for awards of up to 50,000 shares of Common Stock to
employees of the Company and its subsidiaries during the term of the Option
Plan. Corresponding tax offset payments also may be awarded. Awards are subject
to adjustment in certain circumstances.
As of the date of this Proxy Statement, options to purchase 50,000 shares
have been granted under the Option Plan, all of which remain unexercised.
The Board has approved, subject to stockholder approval at the Annual
Meeting, an amendment to the Option Plan.
PROPOSED AMENDMENT
As noted above, the Option Plan currently authorizes the grant of options
on up to 50,000 shares (subject to adjustments), and options to purchase all of
such 50,000 shares have been granted under the Option Plan through the date of
this Proxy Statement. In April 1999, the Board of Directors approved, subject to
approval of stockholders at the Annual Meeting, amending the Option Plan to
increase the number of shares in respect of which options may be granted under
the Option Plan to 150,000. The Board did so to enable the Company to be in a
position to provide appropriate incentives to key employees, in order to
motivate employees to contribute to the Company's future growth and
profitability.
SUMMARY OF MATERIAL PROVISIONS OF THE OPTION PLAN
The following is a summary of the terms of the Option Plan. The description
reflects the amendment to the Option Plan proposed for adoption by the
stockholders at the Annual Meeting. The complete text of the Amended and
Restated Option Plan is attached to this Proxy Statement as Exhibit A.
Purpose of the Option Plan. The purpose of the Option Plan is to attract
and retain the best available employees for the Company and its subsidiaries and
to encourage the highest level of performance by such employees, thereby
enhancing the value of the Company for the benefit of its stockholders. The
Option Plan is also intended to motivate employees to contribute to the
Company's future growth and profitability and to reward their performance in a
manner that provides them with a means to increase their holding of the Common
Stock of the Company and aligns their interests with the interests of the
stockholders of the Company.
Number of Authorized Shares. The Option Plan provides for awards of up to
150,000 shares of Common Stock to employees of the Company and its subsidiaries
during the term of the Option Plan. Corresponding Tax Offset Payments (as
hereinafter defined) also may be awarded at the discretion of the Committee.
Awards are subject to adjustment in certain circumstances as hereinafter
described.
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<PAGE> 10
Administration of the Option Plan. The Board of Directors of the Company
designates a committee of two or more of its members to administer the Option
Plan (the "Committee"). The Committee must be composed of disinterested
directors. The Committee has the full power in its discretion to grant awards
under the Option Plan, to determine the terms thereof, to interpret the
provisions of the Option Plan and to take such action as it deems necessary or
advisable for the administration of the Option Plan.
Eligibility and Participation. Eligibility to participate in the Option
Plan is limited to employees of the Company and its subsidiaries, including
directors who are employed by the Company or its subsidiaries. Approximately 50
employees of the Company and its subsidiaries are eligible to participate in the
Option Plan. Unless otherwise indicated, references herein to employees include
employees and directors who are employed by the Company and/or its subsidiaries.
Participation in the Option Plan is at the discretion of the Committee and shall
be based upon the employee's present and potential contributions to the success
of the Company and its subsidiaries and such other factors as the Committee
deems relevant.
Type of Awards Under the Option Plan. The Option Plan provides that the
Committee may grant awards to eligible employees in any of the following forms,
subject to such terms, conditions and provisions as the Committee may determine
to be necessary or desirable: (i) incentive stock options ("ISOs"), (ii)
nonstatutory stock options ("NSOs"), (iii) stock appreciation rights ("SARs"),
(iv) shares of Common Stock of the Company subject to certain restrictions
("Restricted Shares"), (v) units representing shares of Common Stock
("Performance Shares"), (vi) units which do not represent shares of Common Stock
but which may be paid in Common Stock ("Performance Units"), (vii) shares of
unrestricted Common Stock ("Unrestricted Shares") and (viii) tax offset payments
("Tax Offset Payments"), which may consist of cash and/or Unrestricted Shares.
Grant of Options and SARs. The Committee may award ISOs and/or NSOs to
eligible employees (collectively, "Options"). SARs may be awarded either in
tandem with Options ("Tandem SARs") or on a stand-along basis ("Nontandem
SARs").
Exercise Price. The exercise price of each NSO is determined by the
Committee at the time of grant, while the exercise price of each ISO shall be
the fair market value of the Common Stock on the date of grant. The exercise
price determined with respect to an Option shall also be applicable in
connection with the exercise of any Tandem SAR granted with respect to such
Option. At the time of grant of a Nontandem SAR, the Committee will specify the
base price of the shares of Common Stock to be used for determining the amount
of cash or number of shares of Common Stock to be distributed upon the exercise
of such Nontandem SAR. Neither the exercise price per share of Common Stock
under an NSO nor the base price of Nontandem SARs will be less than 90% of the
fair market value of the Common Stock on the date of such grant.
Vesting. The Committee will determine at the time of grant the terms under
which Options and SARs shall vest and become exercisable.
Special Limitations on ISOs. No ISO may be granted to an employee who
owns, at the time of the grant, stock representing more than 10% of the total
voting power of all classes of stock of the Company or its subsidiaries (a "10%
Stockholder") unless the exercise price for the shares subject to such ISO is at
least 110% of the fair market value on the date of grant and such ISO award is
not exercisable more than five (5) years after its date of grant. In addition,
the total fair market value of shares subject to ISOs which are exercisable for
the first time by an eligible employee in a given calendar year shall not exceed
$100,000, valued as of the date of the ISO's grant. ISOs may not be granted more
than ten (10) years after the date of adoption of the Option Plan by the Board
of Directors.
Exercise of Options and SARs. An option may be exercised by written notice
to the Committee stating the number of shares of Common Stock with respect to
which the Option is being exercised and tendering payment therefor. The
Committee may, at its discretion, accept shares of Common Stock as payment
(valued at the fair market value on the date of exercise).
Tandem SARs are exercisable only to the extent that the related Option is
exercisable and only for the period determined by the Committee. Upon exercise
of all or a portion of Tandem SARs, the related Option shall be canceled with
respect to an equal number of shares of Common Stock. Similarly, upon exercise
of all
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<PAGE> 11
or a portion of an Option, the related Tandem SARs shall be canceled with
respect to an equal number of shares of Common Stock. Nontandem SARs shall be
exercisable for the period determined by the Committee.
Surrender or Exchange of SARs. Upon surrender of a Tandem SAR and the
related unexercised Option, the employee will be entitled to receive shares of
Common Stock having an aggregate fair market value equal to (i) the fair market
value of the shares subject to the unexercised Option at the time of exercise,
less (i) the aggregate exercise price specified in the Option. Upon surrender of
a Nontandem SAR, the recipient will be entitled to receive shares of Common
Stock having an aggregate fair market value equal to (i) the fair market value
of the shares covered by the Nontandem SAR at the time of exercise, less (ii)
the aggregate base price of such shares specified by the Committee. The
Committee, at its discretion, shall cause all or any portion of the payment to
be made in cash in lieu of Common Stock. Any fractional share resulting from the
exercise of an SAR will be paid in cash.
Nontransferability of Options and SARs. Options and SARs are not
transferable except by will or applicable laws of descent and distribution.
Expiration of Options. Options will expire at such time as the Committee
determines; provided, however, that an ISO may not be exercised more than ten
(10) years from the date of grant, unless held by a 10% Stockholder, in which
case such ISO may not be exercised more than five (5) years from the date of its
grant.
Effect of Termination of Employment and Similar Events on Options and
SARs. Options and SARs generally may be exercised during the three-month period
following a recipient's termination of employment to the extent exercisable on
the date of termination. However, the period during which Options and SARs may
be exercised may be extended, and the extent to which they are exercisable may
be increased, if such termination is due to the death or disability of the
recipient or to certain other circumstances. Conversely, the Committee may cause
any Options or SARs to be immediately forfeited in the event that the recipient
is terminated for a breach of fiduciary duty to the Company, or in the event of
a serious violation of Company policy, or in certain other cases.
Restricted Shares. Restricted Shares granted under the Option Plan may not
be sold, transferred, pledged or otherwise encumbered or disposed of during the
restricted period established by the Committee. The Committee may also impose
additional restrictions on the employee's right to dispose of or encumber
Restricted Shares.
Holders of Restricted Shares may not exercise the rights of a stockholder,
such as the right to vote the shares or receive dividends and other
distributions, unless and until the restrictions on such shares lapse.
Upon termination of the employee's employment (or director's term),
Restricted Shares granted to such employee shall be forfeited if the employee
terminates employment with the Company 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; provided, however, that
in the event of such employee's death or total disability, the Committee shall
have the discretion to determine otherwise.
Performance Shares and Performance Units. The Committee may award
Performance Shares equivalent to one share of Common Stock and Performance Units
which will have a specified value or formula-based value at the end of a
performance period. The Committee shall determine performance periods and
performance objectives in connection with each grant of Performance Shares or
Performance Units.
Vesting of awards of Performance Shares and Performance Units will occur
upon achievement of the applicable objectives within the applicable performance
period. The Committee may, at its discretion, permit vesting in the event
performance objectives are partially met or grant additional vested Performance
Shares or Performance Units in the event performance objectives are surpassed.
Payment for vested Performance Shares and Performance Units may be in cash,
Common Stock or any combination thereof, as determined by the Committee.
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<PAGE> 12
No voting or dividend rights attach to the Performance Shares prior to
vesting; however, the Committee may credit an employee's Performance Share
account with additional shares equivalent to the fair market value of any
dividends on an equivalent number of shares of Common Stock.
Unrestricted Shares. Unrestricted Shares may also be granted at the
discretion of the Committee. No payment shall be required for Unrestricted
Shares. The recipient of a grant of Unrestricted Shares will have and may
exercise all of the rights of an owner of Common Stock with respect to such
shares.
Tax Offset Payments. If and to the extent that Tax Offset Payments are
made in Unrestricted Shares, rather than in cash, no payment shall be required
by the recipient of such grant and such recipient will have and may exercise all
of the rights of an owner of Common Stock with respect to such shares.
Lapsed Awards and Adjustments. Shares of Common Stock attributable to (i)
unexercised Options which expire or are terminated, surrendered or canceled
(other than in connection with the exercise of an SAR), (ii) Restricted Shares
which are forfeited to the Company, (iii) Performance Shares and Performance
Units which are not earned and paid and (iv) awards settled in cash in lieu of
shares of Common Stock may become available for subsequent award under the
Option Plan at the Committee's discretion.
Adjustment upon Changes in Capitalization. The number and class of shares
available under the Option Plan may be adjusted by the Committee to prevent
dilution or enlargement of rights in the event of various changes in the
capitalization of the Company.
Amendment and Termination. The Board of Directors may suspend, amend,
modify or terminate the Option Plan; provided, however, that the Company's
stockholders shall be required to approve any amendment that would (i)
materially increase the aggregate number of shares issuable under the Option
Plan, (ii) materially increase the benefits accruing to employees under the
Option Plan, or (iii) materially modify the requirements for eligibility to
participate in the Option Plan.
Awards granted prior to a termination of the Option Plan shall continue in
accordance with their terms following such termination. No amendment, suspension
or termination of the Option Plan shall adversely affect the rights of an
employee in awards previously granted without such employee's consent.
FEDERAL INCOME TAX CONSEQUENCES
Stock Options. There will be no Federal income tax consequences to the
employee or the Company upon the grant of either an ISO or an NSO under the
Option Plan. Upon exercise of an NSO, an employee will generally recognize
ordinary income in an amount equal to (i) the fair market value, on the date of
exercise, of the acquired shares of Common Stock, less (ii) the exercise price
of the NSO. The Company will be entitled to a tax deduction in the same amount.
Upon the exercise of an ISO, an employee recognizes no immediate taxable
income. Income recognition is deferred until the employee sells the shares of
Common Stock. If the Option is exercised no later than three (3) months after
the termination of the employee's employment, and the employee does not dispose
of the shares acquired pursuant to the exercise of the Option within two (2)
years from the date the Option was granted and within one (1) year after the
exercise of the Option, the gain on the sale will be treated as long term
capital gain. Certain of these employment requirements are liberalized in the
event of an employee's death or disability while employed by the Company. The
Company is not entitled to any tax deduction, except that if the Common Stock is
not held for the full term of the holding periods outlined above, the gain on
the sale of such Common Stock, being the lesser of (i) the fair market value of
the Common Stock on the date of exercise minus the exercise price, or (ii) the
amount realized on disposition minus the exercise price, will be taxed to the
employee as ordinary income and the Company will be entitled to a deduction in
the same amount. The excess of the fair market value of the Common Stock
acquired upon exercise over the exercise price constitutes a tax preference item
for purposes of computing the "alternative minimum tax" under the Internal
Revenue Code.
Stock Appreciation Rights. There will be no Federal income tax
consequences to either the employee or the Company upon the grant of an SAR.
However, the employee generally will recognize ordinary income
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<PAGE> 13
upon the exercise of an SAR in an amount equal to the aggregate amount of cash
and the fair market value of the shares of Common Stock received upon exercise.
The Company will be entitled to a deduction equal to the amount includable in
the employee's income.
Restricted Shares. Unless the election referred to below is made, there
will be no Federal income tax consequences to either the employee or the Company
upon the grant of Restricted Shares until expiration of the restricted period
and the satisfaction of any other conditions applicable to the Restricted
Shares. At that time, the employee will recognize taxable ordinary income equal
to the then fair market value of the Common Stock and the Company will be
entitled to a corresponding deduction. However, the employee may elect, within
thirty (30) days after the date of the grant, to recognize ordinary income as of
the date of grant and the Company will be entitled to a corresponding deduction
at that time.
Performance Shares and Units. There will be no Federal income tax
consequences to the employee or the Company upon the grant of Performance Shares
or Performance Units. Employees will recognize taxable income at the time when
payment for the Performance Shares and Performance Units is received in an
amount equal to the aggregate amount of cash and the fair market value of shares
of Common Stock acquired. The Company will be entitled to a deduction equal to
the amount includable in the employee's income.
Unrestricted Shares. Employees will recognize taxable income at the time
Unrestricted Shares are received. The Company will be entitled to a deduction
equal to the amount includable in the employee's income.
Tax Withholding and Tax Offset Payments. The Committee may require
payment, or withhold payments made by the Option Plan, in order to satisfy
applicable withholding tax requirements. The Committee may make Tax Offset
Payments to assist employees in paying income taxes incurred as a result of
their participation in the Option Plan. The number of shares with respect to
which Tax Offset Payments may be awarded will not exceed the number of shares
available for issuance under the Option Plan, less the number of shares
previously issued under the Option Plan. The amount of the Tax Offset Payments
shall be determined by multiplying a percentage (established by the Committee)
times all or a portion of the taxable income recognized by an employee upon (i)
the exercise of an NSO or SAR, (ii) the disposition (prior to satisfying the
applicable holding period) of shares received upon exercise of an ISO, (iii) the
lapse of restrictions on Restricted Shares, (iv) the award of Unrestricted
Shares or (v) payments for Performance Shares or Performance Units. Employees
will recognize taxable income at the time that Tax Offset Payments are received,
whether such Tax Offset Payments are made in cash, Unrestricted Shares or a
combination thereof. The Company will be entitled to a deduction equal to the
amount includable in the employee's income.
Performance-based Compensation. Generally, a federal income tax deduction
is unavailable for annual compensation in excess of $1,000,000 paid to any of
the five most highly compensated officers of a public company. Compensation that
qualifies as performance-based compensation, however, is not counted toward the
$1,000,000 limit. Certain grants made under the Option Plan are intended to
qualify as performance-based compensation, while others are not intended to
qualify as performance-based compensation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends approval of the amendment to the Option
Plan. Proxies solicited by the Board of Directors will be voted FOR the
amendment to the Option Plan unless stockholders specify otherwise.
INDEPENDENT ACCOUNTANTS
Stockton Bates & Company, certified public accountants, has audited the
Company's consolidated balance sheet as of and the related statements of
operations, changes in stockholders' equity and cash flows for the fiscal year
ended January 31, 1999. Representatives of Stockton Bates & Company will not be
present at the Annual Meeting.
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<PAGE> 14
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2000 Annual
Meeting of Stockholders must be received at the Company's principal executive
offices located at U.S. Route 1, Chadds Ford, Pennsylvania 19317 on or before
March 29, 2000, for consideration for inclusion in the Company's Proxy Statement
and form of proxy relating to that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's management does not
know of any business, other than that mentioned above, which will be presented
for consideration at the Annual Meeting. However, if any other matters should
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies in accordance with
their judgment on such matters.
By Order of the Board of Directors,
/s/ Paul L. Dailey
Paul L. Dailey
Secretary
July 27, 1999
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EXHIBIT A
TRANSNATIONAL INDUSTRIES, INC.
AMENDED AND RESTATED
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 canceled 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.
2.2 Maximum Shares Available. The maximum aggregate number of shares of
Common Stock available for award under the Plan is 150,000 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 canceled (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
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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 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
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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 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
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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 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
canceled with respect to an equal number of shares of Common Stock.
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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 canceled 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 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.
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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 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 of 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.
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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 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.
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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.
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 canceled 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.
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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 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 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.
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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.
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.
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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) 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.
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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.
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 original 50,000 maximum aggregate
number of shares of Common Stock available for award under the Plan gave effect
to the contemplated 1 for 20 reverse split of the Corporation's Common Stock
that was 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
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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.
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PROXY
TRANSNATIONAL INDUSTRIES, INC.
This Proxy is solicited by the Board of Directors
The undersigned hereby appoints William D. Witter and Charles
H. Holmes, Jr. the proxies of the undersigned with full power of substitution
and revocation, to vote and act in his name, place and stead at the Annual
Meeting of Stockholders to be held at the offices of William D. Witter, Inc.,
153 East 53rd Street, Suite 5100, New York, New York 10022, on Thursday, August
19, 1999 at 10:00 a.m., and at any adjournments thereof, with such powers as the
undersigned would have if he were present thereat.
UNLESS MARKED TO THE CONTRARY, THE PROXIES SHALL BE DEEMED TO
HAVE AUTHORITY TO VOTE "FOR" PROPOSAL 1.
ELECTION OF DIRECTORS (mark only one box)
NOMINEES: Michael S. Gostomski, Charles H. Holmes, Jr., Charles F.
Huber, Calvin A. Thompson and William D. Witter
/ / FOR all nominees listed above
/ / AUTHORITY WITHHELD as to all nominees
/ / FOR, except vote withheld as to the following
nominee(s): ___________________________________
UNLESS MARKED TO THE CONTRARY, THE PROXIES SHALL BE DEEMED TO HAVE
AUTHORITY TO VOTE "FOR" PROPOSAL 2.
/ / FOR Proposal 2
/ / AUTHORITY WITHHELD
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed on the reverse side)
<PAGE> 29
The shares represented hereby will be voted as directed by this Proxy.
If no direction is made, the Proxies will vote such shares FOR the election of
all nominees for Director listed under Proposal 1, and FOR the amendment to the
Option Plan described in Proposal 2, and such Proxies will vote in accordance
with their discretion on such other matters as may properly come before the
meeting.
---------------------------------
Signature of Stockholder
---------------------------------
Signature if held jointly
Dated: , 1999
Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both
should sign. Executors,
administrators, trustees and
other fiduciaries should so
indicate when signing. If a
corporation, please sign in full
corporate name by president, or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person. This proxy may be mailed,
postage-free, in the enclosed
envelope.
