<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 2
TO
SCHEDULE 14D-9
---------------------------
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT
TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
ULTRA PAC, INC.
(Name of Subject Company)
ULTRA PAC, INC.
(Names of Person(s) Filing Statement)
COMMON STOCK, NO PAR VALUE (INCLUDING THE
ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
903886
(Cusip Number of Class of Securities)
CALVIN S. KRUPA
CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND PRESIDENT
21925 INDUSTRIAL BOULEVARD
ROGERS, MINNESOTA 55374
(612) 428-8340
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
---------------------------
WITH A COPY TO:
<TABLE>
<S> <C>
FRANK I. HARVEY, ESQ. HERBERT S. WANDER, ESQ.
LARKIN HOFFMAN DALY DAVID J. KAUFMAN, ESQ.
& LINDGREN, LTD. KATTEN MUCHIN & ZAVIS
7900 XERXES AVENUE SOUTH 525 WEST MONROE
SUITE 1500 SUITE 1600
BLOOMINGTON, MINNESOTA 55431 CHICAGO, ILLINOIS 60661-3693
(612) 835-3800 (312) 902-5200
</TABLE>
================================================================================
<PAGE> 2
INTRODUCTION
Ultra Pac, Inc. ("Ultra Pac") hereby amends and supplements its
Solicitation/Recommendation Statement on Schedule 14D-9, as filed on March 26,
1998, as amended on April 1, 1998 (the "Schedule 14D-9"), with respect to the
tender offer made by Package Acquisition, Inc., an indirect wholly-owned
subsidiary of Ivex Packaging Corporation ("Ivex"), for all of the outstanding
Shares. Capitalized terms not defined herein have the meanings assigned thereto
in the Schedule 14D-9.
Item 4, Item 8 and the Exhibit Index of the Schedule 14D-9 is hereby
amended and restated as follows:
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation
The Board of Directors of Ultra Pac and a disinterested committee of the
Board of Directors (as contemplated by Sections 302A.673 and 302A.675 on the
MBCA) have each unanimously approved the Merger Agreement, the Offer and the
Merger and determined that the terms of the Offer and the Merger are fair to,
and in the best interests of, the shareholders of Ultra Pac. The Board of
Directors recommends that all holders of Shares accept the Offer and tender
their Shares pursuant to the Offer.
(b)(i) Background
Over the last several years, from time to time, George V. Bayly, Chairman
of the Board, President and Chief Executive Officer of Parent, contacted Calvin
S. Krupa, Chairman of the Board, President and Chief Executive Officer of the
Company, to express Parent's interest in exploring the possibility of a business
combination with the Company. On these occasions, Mr. Krupa indicated that the
Company was not for sale. On January 22, 1998, Mr. Bayly called Mr. Krupa to
reiterate Parent's interest in a possible business combination with the Company
and to express his willingness to meet and discuss the terms of such a possible
transaction. Mr. Krupa again advised Mr. Bayly that the Company was not for sale
and declined to meet with Mr. Bayly, but said he would discuss with his Board of
Directors the possibility of having a meeting. On January 27, 1998, Mr. Bruce
Boehm, an advisor to the Company, called Mr. Bayly to inquire as to the nature
of Parent's interest in pursuing an acquisition with the Company. During the
next two weeks, Mr. Boehm and Mr. Tannura, Parent's Chief Financial Officer, had
several telephone conversations regarding the structure, process and valuation
of a possible acquisition and the timing for a possible meeting between the
management of the Company and Parent. Mr. Boehm and Mr. Tannura also discussed a
preliminary valuation for the Company's Common Stock, with Mr. Tannura
suggesting a value of $11.00 per share. On February 9, 1998, Mr. Bayly sent Mr.
Krupa a letter (reprinted below) again expressing an interest regarding a
potential business combination with the Company.
The text of the letter sent by Mr. Bayly to Mr. Krupa on February 9, 1998
is as follows:
Via Federal Express
February 9, 1998
Mr. Calvin S. Krupa
Chairman of the Board, President
and Chief Executive Officer
Ultra Pac, Inc.
21925 Industrial Blvd.
Rogers, Minnesota 55374
Dear Mr. Krupa:
I have believed for quite some time that there is an important strategic role
for PET in Ivex's Consumer Packaging business. As you know from our January 22,
1998 telephone conversation, we are very interested in
<PAGE> 3
meeting with you to discuss the possibility of combining our respective
companies. Since our January 22nd telephone call, Frank Tannura, our CFO, and I
have, at your request, attempted to pursue these discussions with your advisor,
Bruce Boehm, without much success. Because of your inability or unwillingness to
arrange a meeting with us, I find it necessary to communicate to you in this
letter.
I want you to know that given the success of Ivex's recently completed initial
public offering and the current breadth of our Consumer Packaging business
(various materials and international presence), our interest in significantly
expanding our PET business is greater today than it has ever been.
As you may or may not be aware, Ivex has been investing internally in PET
extrusion and thermoforming over the past few years and expects to invest
significant capital in our PET business (both internally and through
acquisition) during 1998 and 1999.
We believe that there are clear and compelling advantages to both Ivex and Ultra
Pac from the combination of our two companies and that such a transaction would
create significant value for each of our two companies and our respective
stockholders. We are extremely impressed with the business that you and your
management team have developed and the manner in which it would complement our
business. We believe that the complementary aspects of our two companies'
products, customers and distribution capabilities would enable the combined
entity to be an even more effective competitor.
As I have briefly discussed with you and as Frank Tannura has emphasized to Mr.
Boehm, we are prepared to meet with you and/or your representatives at your
earliest convenience to discuss our ideas and to negotiate a mutually
satisfactory merger transaction (at a significant premium over current market
value) which we are confident could be quickly and successfully concluded. We
have existing bank availability and/or Ivex stock to fund any proposed
transaction that best serves your shareholders.
We hope that you and your Board of Directors will view our proposal to combine
our respective companies as an excellent opportunity for the Ultra Pac
stockholders to realize the full value of their shares (to an extent not likely
to be available to them in the marketplace in the foreseeable future). In the
context of a negotiated, friendly transaction, we are prepared to discuss all
aspects of our proposal fully with you and would hope and expect that you and
your management team would manage our combined PET business.
At this point, we hope that you will agree that the best way to proceed would be
to begin confidential, non-public discussions to see if we can quickly negotiate
a transaction that can be presented to your stockholders as the joint effort of
Ivex's and Ultra Pac's Board of Directors and management. Therefore, at this
point, we hope this letter and its contents will remain private between us,
although we believe that your shareholders may be interested in learning more
about our ideas.
We would appreciate it if you and your Board of Directors will give this
proposal prompt and serious consideration. We would request a response as soon
as possible, and preferably no later than February 13, 1998.
Sincerely yours,
George V. Bayly
Chairman, President and
Chief Executive Officer
After receiving Mr. Bayly's letter, Frank Harvey, a Director of the
Company, called Parent to ascertain possible dates for a meeting between the
management of the Company and Parent.
On February 25, 1998, the Company retained WP&Co. as the Company's
financial advisor. On February 25, 1998 and February 26, 1998, the Company's
Board of Directors, its legal advisors and representatives of WP&Co. met to
discuss the Company's strategic alternatives through the sale of the Company,
through continued implementation of the Company's strategic plan as an
independent company and through other possible strategies such as a leveraged
recapitalization, a share repurchase program and the
<PAGE> 4
pursuit of strategic acquisitions of other companies. At the conclusion of the
meeting, the Board of Directors authorized WP&Co. to approach a limited number
of potential acquirors to determine their level of interest regarding a
potential strategic transaction with the Company and directed management to meet
with and listen to a possible proposal from Parent. The Board did not pursue
some of these other strategic alternatives because the Board believed at that
time that a possible transaction with Parent or another entity would likely
maximize shareholder value without additional delay or undue risk. The Board of
Directors also adopted a shareholder rights plan and amendments to the Company's
bylaws regarding certain notice provisions.
On March 2, 1998, the Company and Parent entered into a confidentiality
agreement preceding Parent's review of confidential information regarding the
Company, and members of the Company's and Parent's management met. During such
meeting, Parent indicated that it would be interested in discussing the
acquisition of the Shares, pursuant to a merger transaction, at a price in the
range of $12.00 per share, subject to certain conditions.
Also on March 2, 1998, WP&Co., on behalf of the Company, began to approach
a limited number of potential acquirors to determine their level of interest
regarding a potential strategic transaction with the Company.
On March 8, 1998, the Company's Board held a special meeting to explore
further the Company's strategic alternatives including, remaining a public
company, the sale of the Company, a leveraged recapitalization, a share
repurchase program and the pursuit of strategic acquisitions of other companies.
The Company's management and representatives of WP&Co. reported to the Board the
status of discussions with Parent and the results of WP&Co.'s preliminary
discussions with other potential acquirors. Again, the Board determined not to
pursue these other strategic alternatives because they believed that a possible
transaction with Parent or another entity would likely maximize shareholder
value without the delay and risks associated with those alternative strategic
transactions.
On March 10, 1998, WP&Co. met with representatives of Parent to discuss
possible purchase price ranges for the Company and the nature and extent of
Parent's proposed due diligence investigation of the Company. Thereafter,
representatives of the Company and the Company's financial advisors had several
telephone conversations with representatives of Parent to review business issues
with respect to a possible transaction with Parent.
On March 14, 1998, representatives of the Company, its legal advisors and
WP&Co. held a conference call to discuss the indications of interests received
to date from other potential acquirors.
On March 16, 1998, the Company delivered to Parent certain limited due
diligence information for Parent's review. The information shared with Parent
included financial projections prepared by the Company's management (see Section
8).
On March 18, 1998, a representative of Parent conducted certain financial
due diligence at the Company's auditors and on March 19, 1998, representatives
of Parent toured the Company's manufacturing facility in Rogers, Minnesota and
met with the Company's management to discuss further the nature and performance
of the Company's business. During the evening of March 19, 1998, members of
senior management of the Company and Parent met to continue discussions
concerning Parent's valuation of the Company. The parties discussed a range of
$15 to $18 per share in cash as merger consideration, as well as other terms of
a possible transaction. The parties considered that a value of $17.60 a share
was appropriate to discuss with their respective Boards and directed their
respective legal advisors to negotiate the terms of a definitive merger
agreement providing for Parent's acquisition of the Company for cash.
Negotiations between the Company and Parent continued from March 20 through
the early morning on March 23, 1998. Following meetings of its Board of
Directors, Parent presented the Company with an offer of $15.50 per Share, and,
after further negotiations between the parties and receipt of the opinion of
WP&Co., the Company's Board of Directors and a Special Committee established
pursuant to the MBCA approved the Merger Agreement and the transactions
contemplated thereby. Following this approval, the Merger Agreement and the
Tender Agreements were executed, and the transaction was publicly announced on
March 23, 1998.
<PAGE> 5
Although on March 19, 1998, senior management of the companies considered
that a value of $17.60 a share was appropriate to discuss with their respective
Boards, Ivex ultimately offered the Company $15.50 a share. After further
negotiation between the parties, the Company's Board met with its financial
advisor, WP&Co. and its legal advisor. WP&Co. again reviewed the process it had
conducted to that date and the types of expressions of interests from other
parties. Bearing in mind the factors listed below under "Reasons for the
Recommendations", the Board and the Special Committee recommended to approve of
the Merger Agreement and accept the $15.50 a share offer, the highest definitive
offer made by Ivex and approved by its Board.
The Company received indications of potential interest from a number of
strategic purchasers. The Company pursued these indications concurrently with
its discussions with Ivex and provided Ivex and each of these companies with
certain due diligence information. One of the parties discontinued their
expression of interest, in part, because the Company did not provide them with
certain requested information. Some of these other expressions of interest were
contingent upon due diligence, financing and other contingencies. Some of these
bidders structured their potential transaction as requiring a special
shareholder meeting and distribution of a proxy statement. The Board believed,
at that time, that these other alternatives would therefore take more time to be
consummated, with potentially increased risk of consummation. Therefore, in part
because of these reasons and the reasons described below under "Reasons for
Recommendations", the Board and Committee recommend the Offer and the Merger.
(b)(ii) Reasons for the Recommendations
Prior to approving the Merger Agreement and the transactions contemplated
thereby, the Board held meetings on February 25, 26, March 8 and 22, 1998. At
its meeting on March 22, 1998, the Board considered presentations from, and
reviewed the terms and conditions of the Merger Agreement and the Merger and the
Offer with senior executive officers of Ultra Pac, Ultra Pac's legal counsel and
Ultra Pac's financial advisor, WP&Co. At the March 22, 1998 meeting, the Board
received final reports from senior management, legal counsel and WP&Co. and
approved the Merger Agreement and the transactions contemplated thereby. In
reaching the conclusions set forth in paragraph (a) above, the Board of
Directors of Ultra Pac considered a number of factors including, without
limitation, the following:
(A) The consideration offered by the Purchaser, and in particular the
fact that the $15.50 per Share to be received by Ultra Pac's shareholders
in the Offer or the Merger represents an approximately 132% premium over
the closing market price of $6.688 per Share on March 20, 1998 (the last
trading day prior to the March 22 Board of Directors meeting and an
approximately 123% premium over the closing market price 30 days prior to
March 22, 1998.
(B) Ultra Pac's financial condition, results of operations, assets,
liabilities, business and prospects and industry, economic and market
conditions, including the inherent risks and uncertainties in Ultra Pac's
lines of business (including its dependence on the price of raw materials)
and in Ultra Pac's expansion plans, in each case on a historical, current
and prospective basis all weighed in favor of the transaction with Ivex;
(C) Ultra Pac had seriously considered pursuing a transaction with
Ivex because it believed that the two companies' strengths were
complementary and that the combination of the two companies would permit
the achievement of certain economies of scale and other synergies. The
Board of Directors ultimately determined, after consideration of views of
senior management, that in its view the combination of the two companies
presented the best available means of achieving the highest value
reasonably obtainable for holders of its Shares;
(D) Ivex's expressed intent that after the Merger, Ultra Pac would
continue to be run as an independent business unit of Ivex and therefore
there would be minimal disruption to Ultra Pac's customers, suppliers and
employees;
<PAGE> 6
(E) Management's analysis of the future prospects of Ultra Pac on a
stand-alone basis as a relatively small company in a rapidly consolidating
industry enforced their belief that a business combination with Ivex would
strengthen Ultra Pac's future prospects;
(F) The historical and recent market prices for the Shares and
potential future share prices if a business combination with Ivex was not
pursued;
(G) The Board's view, after consultation with management, counsel to
Ultra Pac and WP&Co., regarding the likelihood of the existence of other
viable purchasers on terms as favorable as those in the Offer and the
Merger which led the Board to recommend the Offer and the Merger;
(H) The opinion of WP&Co. to the effect that as of the date of such
opinion, the cash consideration to be received in the Offer and the Merger,
based upon and subject to the assumptions and limitations set forth therein
by the Ultra Pac shareholders is fair to such shareholders from a financial
point of view. A copy of the written opinion of WP&Co. dated March 22,
1998, which sets forth the factors considered, assumptions made and
limitations on the review conducted by WP&Co. is attached as Annex C
hereto, and is incorporated herein by reference. SHAREHOLDERS ARE
ENCOURAGED TO READ THE OPINION OF WP&CO. CAREFULLY AND IN ITS ENTIRETY;
(I) the availability of appraisal rights under Sections 302A.471 and
302A.473 of the MBCA for Dissenting Shares;
(J) The terms and conditions of the Merger Agreement, including
provisions that (a) although prohibiting Ultra Pac and its representatives
from soliciting or initiating any Acquisition Transaction, permit Ultra Pac
and its representatives to furnish information to, and negotiate and
otherwise engage in discussions with, any third party in response to an
unsolicited written Superior Proposal to the extent the Board determines in
good faith, after consultation with its financial advisors and based upon
the advice of outside independent counsel, that failing to take such action
would result in a breach of the fiduciary duties of the Board under
applicable law, and (b) permit Ultra Pac to terminate the Merger Agreement
to accept a an alternative Acquisition Transaction (upon which termination
of the Merger Agreement, the Tender and Option Agreements would also
terminate), subject to payment of a termination fee of $2,500,000 plus
reasonable expenses of Parent and the Purchaser not to exceed $600,000;
(K) Calvin S. Krupa's and James A. Thole's, directors and principal
shareholders of Ultra Pac, support of the Merger Agreement and the
transactions contemplated thereby and their willingness to enter into the
Tender Agreements, the fact that such shareholders would receive the same
consideration as the other shareholders of Ultra Pac, and that the Tender
Agreements would not preclude an alternative third-party proposal, as the
Tender Agreements would terminate in the event the Merger Agreement were
terminated in connection with the Company entering into a Superior Proposal
thereby reinforcing the Board's belief that a business combination with
Ivex is in the Company's best interest;
(L) The proposed structure of the Offer and the Merger involving an
immediate cash tender offer followed by a merger for the same consideration
and the fact that there is no financing or due diligence contingency to the
Offer weighed in favor of the Offer and the Merger. In this connection, the
Board also considered the likelihood that the proposed acquisition would be
consummated, including the likelihood of satisfaction of the conditions to
the Offer and the Merger contained in the Merger Agreement, and the risks
to Ultra Pac if the acquisition were not consummated; and
(M) The recommendation of Ultra Pac's management with respect to the
proposed transaction.
The Board evaluated the factors listed above in light of the directors'
knowledge of the business and operations of Ultra Pac and in their business
judgment. In view of the variety of factors considered by the Board in
connection with its evaluation of the Merger Agreement and the Offer and the
Merger, the Board did not find it practicable to and did not quantify or
otherwise assign relative weight to the specific factors considered in reaching
its determination. In addition, individual members of the Board may have given
different weights to different factors in making their individual
determinations.
<PAGE> 7
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Regulatory Filing. Pursuant to Section 3.7(b) of the Merger Agreement, on
April 1, 1998, Ultra Pac filed its Notification and Report Form with respect to
the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). Ivex filed a Notification and Report Form with respect
to the Offer on March 31, 1998. Under the provisions of the HSR Act applicable
to the Offer, the purchase of shares pursuant to the Offer may not be
consummated until the expiration of a 15-calendar day waiting period following
the Ivex filing under such HSR Act. On April 13, 1998, Federal Trade
Commission's Premerger Notification Office advised Ultra Pac that early
termination of the applicable waiting period under the HSR Act with respect to
the Offer had been granted as of such date.
<PAGE> 8
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
1 Agreement and Plan of Merger dated as of March 23, 1998
among Ivex Packaging Corporation, Package Acquisition, Inc.
and Ultra Pac, Inc. (attached as Annex A herein)
2 Form of Tender and Option Agreement (attached as Annex B
herein).
3 Amendment No. 3 to Employment Agreement between Ultra Pac
and Calvin S. Krupa dated March 22, 1998.(1)
4 **Portions of Ultra Pac's Proxy Statement, dated May 12,
1997.
5 **Employment Agreement between Ultra Pac and Thomas F. Rains
dated March 31, 1997.
6 **Employee Confidentiality, Non-Compete and Separation
Agreement between Ultra Pac and William J. Howard dated
January 31, 1997.
7 *Ultra Pac's 1991 Stock Option Plan.
8 Ultra Pac's 1996 Stock Option Plan.(2)
9 **Ultra Pac's 1997 Stock Option Plan.
10 *Ultra Pac's Outside Director Stock Option Plan.
11 **Change of Control Agreement between Ultra Pac and Thomas
V. Bissell dated November 13, 1997.
12 **Change of Control Agreement between Ultra Pac and Charles
C. Ahern, Jr. dated November 13, 1997.
13 Change of Control Agreement between Ultra Pac and Gregory L.
Nelson dated March 3, 1997.(3)
14 Change of Control Agreement between Ultra Pac and Dan
Erikstrup dated February 28, 1997.(3)
15 Change of Control Agreement between Ultra Pac and William J.
Howard dated January 31, 1997.(3)
16 **Press release dated March 23, 1998.
17 Amendment No. 1 to Rights Agreement dated as of March 22,
1998 between Ultra Pac, Inc. and Norwest Bank Minnesota,
N.A.(4)
</TABLE>
- -------------------------
* Filed herewith.
** Previously filed.
(1) To be filed by Amendment to this 14D-9.
(2) Incorporated by reference to the specified exhibit to the Form 10-Q for the
quarter ended April 30, 1997.
(3) Incorporated by reference to the specified exhibit to the 10-K for the year
ended January 31, 1997.
(4) Incorporated by reference to the specified exhibit to the Registration
Statement on Form 8-A/A dated March 26, 1998.
<PAGE> 9
SIGNATURE
AFTER REASONABLE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I
CERTIFY THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND
CORRECT.
ULTRA PAC INC.
By: /s/ CALVIN S. KRUPA
--------------------------------------
Name: Calvin S. Krupa
Title: Chairman, Chief Executive
Officer and President
Dated: April 17, 1998
<PAGE> 1
EXHIBIT 7
ULTRA PAC, INC.
1991 STOCK OPTION PLAN
1.) Purposes. The principal purposes of the Ultra Pac, Inc. (the
"Corporation") 1991 Stock Option Plan (the "Plan") are (a) to improve
individual performance by providing long-term incentives and rewards to
employees and consultants of the Corporation, (b) to assist the Corporation in
attracting, retaining and motivating employees and consultants with experience
and ability, and (c) to associate the interests of such persons with those of
the Corporation's shareholders.
Options granted under this Plan may either be Incentive Stock Options
qualified under Section 422A of the Code or Non-Qualified Options.
2.) Definitions. For purposes of this Plan, the following terms shall
have the meanings indicated below:
(01) "Capital Stock" - any of the Corporation's authorized but unissued
shares of voting common stock, no par value per share.
(02) "Code" - the Internal Revenue Code of 1986, as amended from time to
time.
(03) "Corporation" - Ultra Pac, Inc., a Minnesota corporation and any of
its Subsidiaries.
(04) "Exchange Act": the Securities Exchange Act of 1934, as amended.
(05) "Fair Market Value" - the price per share determined as follows: (a)
if the security is listed for trading on one or more national securities
exchanges (including the NASDAQ National Market System), the reported last
sales price on such principal exchange on the date in question, or if such
security shall not have been traded on such principal exchange on such
date, the reported last sales price on such principal exchange on the
first day prior thereto on which such security was so traded; or (b) if the
security is not listed for trading on a national securities exchange
(including the NASDAQ National Market System) but is traded in the
over-the-counter market, the mean of the highest and lowest bid prices for
such security on the date in question, or if there are no such bid prices
for such security on such date, the mean of the highest and lowest bid
prices on the first day prior thereto on which such prices existed; or (c)
if neither (a) nor (b) is applicable, by any means deemed fair and
reasonable by the Committee, which determination shall be final and binding
on all parties.
<PAGE> 2
(06) "Incentive Stock Option" - an option defined in Section 422A of
the Code to purchase shares of the Capital Stock of the Corporation.
(07) "Non-Qualified Stock Option" - an option, not intended to qualify
as an Incentive Stock Option as defined in Section 422A of the Code, to
purchase Capital Stock of the Corporation.
(08) "Option" - the term shall refer to either an Incentive Stock
Option or a Non-Qualified Stock Option.
(09) "Option Agreement" - a written agreement pursuant to which the
Corporation grants an option to an Optionee and sets the terms and
conditions of the option.
(10) "Option Date" - the date upon which an Option Agreement for an
option granted pursuant to this Plan is duly executed by or on behalf of
the Corporation.
(11) "Option Stock" - the voting common stock of the Corporation, no
par value per share (subject to adjustment as described in Section 8)
reserved for options pursuant to this Plan, or any other class of stock of
the Corporation which may be substituted therefor by exchange, stock split
or otherwise.
(12) "Optionee" - an officer, management level employee, other
employee, and consultant of the Corporation or one of its Subsidiaries to
whom an option has been granted under the Plan.
(13) "Plan" - this l99l Stock Option Plan as amended hereafter from
time to time.
(14) A "Subsidiary" - any corporation in an unbroken chain of
corporations beginning with the Corporation, if, at the time of granting
the option, each of the corporations other than the last corporation in
the chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain. The term shall include any subsidiaries which
become such after adoption of this Plan.
3.) Options Available Under Plan. An amount of Capital Stock equal to
100,000 shares of the Corporation's then issued and outstanding shares of
Capital Stock is hereby made available, and shall be reserved for issuance,
under this Plan. The aggregate number of shares available under this Plan shall
be subject to adjustment on the occurrence of any of the events and in the
manner set forth in Section 8. Except as provided in Section 8, in no event
shall the numbers of shares reserved be reduced below the number of shares
issuable upon exercise of
2.
<PAGE> 3
outstanding Options. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares, shall (unless
the Plan shall have been terminated) become available for other Options under
the Plan.
4.) Administration. The Plan shall be administered by a committee
consisting solely of not less than two members of the Board of Directors of the
Corporation (the "Committee") who are "disinterested" within the meaning of and
to the extent required by the General Rules and Regulations promulgated pursuant
to Section 16 of the Exchange Act (Section 16 Regulations). To the extent
permitted by the Section 16 Regulations, the Board of Directors may serve as
the Committee.
The Corporation shall grant Options pursuant to the Plan upon
determinations of the Committee as to which of the eligible persons shall be
granted Options, the number of shares to be Optioned and the term during which
any such Options may be exercised. The Committee may from time to time adopt
rules and regulations for carrying out the Plan and interpretations and
constructions of any provision of the Plan, which shall be final and
conclusive.
5.) Eligibility for Incentive Stock Options. Incentive Stock Options may
only be granted to an officer, management level employee or other employee of
the Corporation or any of its Subsidiaries. A director of the Corporation who
is not also an employee shall not be eligible to receive an Incentive Stock
Option.
In selecting the employees to whom Incentive Stock Options shall be
granted, as well as determining the number of shares subject to each Option,
the Committee shall take into consideration such factors as it deems relevant
in connection with accomplishing the purpose of the Plan. For any calendar
year, the aggregate Fair Market Value (determined at the Option Date) of the
stock with respect to which any Incentive Stock Options are exercisable for the
first time by any individual employee (under all Incentive Stock Option plans
of the Corporation and all Subsidiary corporations) shall not exceed $100,000.
Subject to the provisions of Section 3, an employee who has been granted an
Option may, if he or she is otherwise eligible, be granted an additional Option
or Options if the Committee shall so determine.
No Incentive Stock Option may be granted under this Plan later than the
expiration of ten (10) years from the effective date.
6.) Eligibility for Non-Qualified Options. Non-Qualified Options may be
granted only to an officer, director, management level employee, other employee
or consultant of the Corporation
3.
<PAGE> 4
or a subsidiary. No further restrictions are placed on the Committee in
determining eligibility for granting Non-Qualified Options.
7.) Terms and Conditions of Options. Whenever the Committee shall
designate an Optionee, it shall communicate to the Secretary of the Corporation
the name of the Optionee, the number of shares to be Optioned and such other
terms and conditions as it shall determine, not inconsistent with the
provisions of this Plan. The President or other officer of the Corporation
shall then enter into an Option Agreement with the Optionee, complying with and
subject to the following terms and conditions and setting forth such other
terms and conditions of the Option as determined by the Committee:
(01) Number of shares and option price. The Option Agreement shall
state the total number of shares to which it pertains. The price of Option
Stock for an Incentive Stock Option, shall be not less than one hundred
percent (100%) of the Fair Market Value of the Option Stock at the Option
Date. The price of the Option Stock for a Non-Qualified Stock Option shall
be determined by the Committee and may be less than the Fair Market Value
at the Option Date. In the event an Incentive Stock Option is granted to
an employee, who, at the Option Date, owns more than ten percent (10%) of
the voting power of all classes of the Corporation's stock then
outstanding, the price of the shares of common stock which will be covered
by such Option shall be not less than one hundred ten percent (110%) of
the Fair Market Value of the common stock at the Option Date. The Option
price shall be subject to adjustment as provided in Section 8 hereof.
(02) Time and Manner of Exercise of Option. Except as otherwise determined
from time to time by the Board, Incentive Stock Options granted under the
Plan shall be exercisable as follows:
(a) After six months following the date of a grant, the option
may be exercised as to thirty-three and one-third percent (33 1/3%)
of the shares covered thereby;
(b) During each twelve (12) month period thereafter from the
date on which the option was granted, on such date designated by the
Board, the option shall become exercisable as to an additiona1
thirty-three and one-third percent (33 1/3%) of the shares covered
thereby: and
(c) No option may be exercised after ten (10) years from the
date on which the option was granted; provided that no incentive
stock option granted
4.
<PAGE> 5
to a 10% Holder may be exercised after five (5) years from the
date on which it was granted.
(03) Termination of Employment, Except Death or Disability. In the event
that an Optionee shall cease to be employed by the Corporation for any
reason other than his death, disability or "for cause", subject to the
condition that no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it is granted, such Optionee
shall have the right to exercise any outstanding Options at any time
within three (3) months after the termination of the employee. In the
event that Optionee shall be terminated "for cause" including but not
limited to (i) his willful breach of any agreement entered into with the
Corporation, (ii) misappropriation of the Corporation's property, fraud,
embezzlement, other acts of dishonesty against the Corporation, or (iii)
conviction of any felony or crime involving moral turpitude, the Option
may be terminated as of the date of the Optionee's termination of
employment.
(04) Leaves of Absence. The Optionee may not exercise any part of any
Incentive Stock Option while the Optionee is on leave of absence.
(05) Death or Disability of Optionee. If the Optionee shall die or
become disabled within the definition of Section 105(d)(4) of the Code,
(i) while in the employ of the Corporation or any Subsidiary, or (ii)
within a period of three (3) months after the termination of his or her
employment with the Corporation or any Subsidiary as provided in paragraph
(03) of this section, and in either case shall not have fully exercised
his or her Options, any Options granted pursuant to the Plan shall be
exercisable only within six (6) months following his death or date of
disability or until the earlier originally stated expiration thereof. In
the case of death, such Option shall be exercised pursuant to subparagraph
(07) of this Section by the person or persons to whom the Optionee's
rights under the Option shall pass by the Optionee's will or by the laws
of descent and distribution, and only to the extent that such Options were
exercisable at the time of his death.
(06) Transfer of Option. Each Option granted hereunder shall, by its
terms, be not transferable by the Optionee other than by will or by the
laws of descent and distribution, and shall be, during the Optionee's
lifetime, exercisable only by the Optionee or Optionee's guardian or legal
representative. Except as permitted by the preceding sentence, each Option
granted under the Plan and the rights and privileges thereby conferred
shall not be transferred, assigned or pledged in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
5.
<PAGE> 6
attachment or similar process. Upon any attempt to so transfer, assign,
pledge, or otherwise dispose of the Option, or of any right or privilege
conferred thereby, contrary to the provisions of the Option or the Plan,
or upon levy of any attachment or similar process upon such rights and
privileges, the Option, and such rights and privileges, shall immediately
become null and void.
(07) Manner of Exercise of Options. An Option may be exercised, in whole
or in part, at such time or times and rights with respect to such shares
which have accrued and are in effect. Such option shall be exercisable
only within the Option period and only by (i) written notice to the
Corporation of intent to exercise the Option with respect to a specified
number of shares of stock; (ii) tendering the original Option Agreement to
the Corporation; and (iii) payment to the Corporation of the amount of the
Option purchase price for the number of shares of stock with respect to
which the Option is then exercised. Payment of the Option purchase price
may be made in cash (including certified check, bank draft or postal or
express money order), by delivery of shares of common stock of the
Corporation with a Fair Market Value equal to the Option purchase price,
by a combination of cash and such shares, whose value together with such
cash shall equal the Option purchase price or by any other method of
payment which the Board shall approve and, in the case of an Incentive
Stock Option, which shall not be inconsistent with the provisions of
Section 422A of the Code, provided, however, that there shall be no such
exercise at any one time as to fewer than ten (10) shares or all of the
remaining shares then purchasable by the Optionee or person exercising the
Option. When shares of stock are issued to the Optionee pursuant to the
exercise of an Option, the fact of such issuance shall be noted on the
Option Agreement by the Corporation before the Agreement is returned to
the Optionee. When all shares of Optioned stock covered by the Option
Agreement have been issued to the Optionee, or the Option shall expire,
the Option Agreement shall be cancelled and retained by the Corporation.
(08) Delivery of Certificate. Except where shares are held for unpaid
withholding taxes, between fifteen (15) and thirty (30) days after receipt
of the written notice and payment specified above, the Corporation shall
deliver to the Optionee certificates for the number of shares with respect
to which the Option has been exercised, issued in the Optionee's name;
provided, however, that such delivery shall be deemed effected for all
purposes when the Corporation, or the stock transfer agent for the
Corporation, shall have deposited such certificates in the
6.
<PAGE> 7
United States mail, postage prepaid, addressed to the Optionee and the
address specified in the written notice of exercise.
(09) Other Provisions. The Option Agreements under this Section shall
contain such other provisions as the Committee shall deem advisable.
8.) Adjustments. In the event that the outstanding shares of the common
stock of the Corporation are changed into or exchanged for a different number
or kind of shares or other securities of the Company or of another corporation
by reasons of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up; combination of shares or dividends payable in
capital stock, appropriate adjustment shall be made in the number and kind of
shares as to which Options may be granted under the Plan and as to which
outstanding Options or portions thereof then unexercised shall be exercisable,
to the end that the proportionate interest of the participant shall be
maintained as before the occurrence of such event; such adjustment in
outstanding Options shall be made without change in the total price applicable
to the unexercised portion of such Options and with a corresponding adjustment
in the Option Price per share. No such adjustment shall be made which shall,
within the meaning of any applicable sections of the Code, constitute a
modification, extension or renewal of an Option or a grant of additional
benefits to a participant.
If the Corporation is a party to a merger, consolidation, reorganization
or similar corporate transaction and if, as a result of that transaction, its
shares of common stock are exchanged for (i) other securities of the Company or
(ii) securities of another corporation which has assumed the outstanding
Options under the Plan or has substituted for such Options its own Options,
then each Optionee shall be entitled (subject to the conditions stated herein
or in such substituted Options, if any), in respect of that Optionee's Options,
to purchase that amount of such other securities of the Corporation or of such
other corporation as is sufficient to ensure that the value of the Optionee's
Options immediately before the corporate transaction is equivalent to the value
of such Options immediately after the transaction, taking into account the
Option Price of the Option before such transaction, the fair market value per
share of the common stock immediately before such transaction and the fair
market value immediately after the transaction, of the securities then subject
to that Option (or to the Option substituted for that Option, if any). Upon the
happening of any such corporate transaction, the class and aggregate number of
shares subject to the Plan which have been heretofore or may be hereafter
granted under the Plan shall be appropriately adjusted to reflect the events
specified in this clause.
7.
<PAGE> 8
9.) Rights as Stockholder. An Optionee shall not, by reason of any
Option granted hereunder, have any right of a stockholder of the Corporation
with respect to the shares covered by his Option until such shares shall have
been issued to the Optionee.
10.) No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option. Neither shall
the Plan confer upon the Optionee any rights respecting continued employment
nor limit the Optionee's rights or the employer corporation's rights to
terminate such employment.
11.) Withholding Taxes. Whenever under the Plan shares of Option Stock
are to be issued upon exercise of the Options granted hereunder and prior to
the delivery of any certificates or certificates for said shares by the
Corporation, the Corporation shall have the right to require the employee to
remit to the Corporation an amount sufficient to satisfy any federal and state
withholding or other employment taxes resulting from such exercise. In the
event that withholding taxes are not paid within five days after the date of
exercise, to the extent permitted by law the Corporation shall have the right,
but not the obligation, to cause such withholding taxes to be satisfied by
reducing the number of shares of stock deliverable or by offsetting such
withholding taxes against amounts otherwise due from the Corporation to the
Optionee. If withholding taxes are paid by reduction of the number of shares
deliverable to Optionee, such shares shall be valued at the Fair Market Value
as of the fifth business day following the date of exercise.
12.) Purchase for Investment; Rights of Holder on Subsequent
Registration. Unless the shares to be issued upon exercise of an Option granted
under the Plan have been effectively registered under the Securities Act of
1933 as now in force or hereafter amended (the "1933 Act"), the Corporation
shall be under no obligation to issue any shares covered by any Option unless
the person who exercises such Option, whether such exercise is in whole or in
part, shall give a written representation and undertaking to the Corporation
which is satisfactory in form and scope to counsel for the Corporation and upon
which, in the opinion of such counsel, the Corporation may reasonably rely,
that he or she is acquiring the shares issued to him or her pursuant to such
exercise of the Option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the 1933
Act, or any other applicable law, and that if shares are issued without such
registration a legend to this effect may be endorsed on the securities so
issued. In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under
8.
<PAGE> 9
the 1933 Act or other applicable statutes any shares with respect to which an
Option shall have been exercised, or to qualify any such shares for exemption
from the 1933 Act or other applicable statutes, then the Corporation shall take
such action at its own expense and may require from each participant such
information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers
and Directors from such holder against all losses, claims, damage and
liabilities arising from such use of the information so furnished and caused by
any untrue statement of any material fact required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances under which they were made.
13.) Modification of Outstanding Options. The Board may accelerate the
exercisability of an outstanding Option and may authorize modification of any
outstanding Option with the consent of the participant when and subject to such
conditions as are deemed to be in the best interests of the Corporation and in
accordance with the purposes of the Plan.
14.) Foreign Employees. Without amending the Plan, the Committee may
grant Options to eligible employees who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment
of the Committee be necessary or desirable to foster and promote achievement of
the purposes of the Plan, and, in furtherance of such purposes the Committee
may make such modification, amendments, procedures, subplans and the like as
may be necessary or advisable to comply with provisions of laws in other
countries in which the Corporation operates or has employees.
15.) Approval of Shareholders. This Plan is expressly subject to
approval of holders of the majority of the outstanding shares of Common Stock
of the Corporation, and if it is not so approved on or before one (1) year
after the date of adoption of this Plan by the Board of Directors, the Plan
shall not come into effect and any Options granted pursuant to this Plan shall
be deemed cancelled.
16.) Liquidation. Upon the complete liquidation of the Corporation, any
unexercised Options theretofore granted under this Plan shall be deemed
cancelled, except as otherwise provided in Section 8 in connection with a
merger, consolidation or reorganization of the Corporation.
17.) Restrictions on Issuance of Shares. Notwithstanding the provisions
of Section 7, the Corporation may delay the issuance of shares covered by the
exercise of any Option and the delivery of a certificate for such shares until
one of the following conditions shall be satisfied:
9.
<PAGE> 10
(01) The shares with respect to which the Option has been exercised are
at the time of the issue of such shares effectively registered under
applicable Federal and state securities acts as now in force or hereafter
amended; or
(02) A no-action letter in respect of the issuance of such shares shall
have been obtained by the Corporation from the Securities and Exchange
Commission and any applicable state securities commissioner; or
(03) Counsel for the Corporation shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration under applicable federal and state
securities acts as now in force or hereafter amended.
It is intended that all exercise of Options shall be effective, and the
Corporation shall use its best efforts to bring about compliance with the above
conditions within a reasonable time, except that the Company shall be under no
obligation to cause a registration statement or a post-effective amendment to
any registration statement to be prepared at its expense solely for the purpose
of covering the issue of shares in respect of which any option may be
exercised.
18.) Termination and Amendment of the Plan. This Plan shall terminate
ten (10) years after May 13, 1991, the effective date of the Plan, or at such
earlier time as the Board of Directors shall determine. Any termination shall
not affect any Options then outstanding under the Plan.
The Board may make such modifications of the Plan as it shall deem
advisable, but may not, without further approval of the stockholders of the
Corporation, except as provided in Section 8 hereof, (a) increase the number of
shares reserved for Options under this Plan, (b) change the manner of
determining the Option price for Incentive Stock Options, (c) increase the
maximum term of the Options provided for herein, or (d) change the class of
persons eligible to receive Options under the Plan.
10.
<PAGE> 1
EXHIBIT 10
OUTSIDE DIRECTORS' OPTION PLAN
OF
ULTRA PAC, INC.
1.) Definitions. As used in this Plan, the following terms have the
following meanings:
(01) "Administrator" means the Board or a committee appointed by the
Board.
(02) "Affiliate" means a "parent" or "subsidiary" corporation, as
defined in Sections 425(e) and 425(f), respectively, of the Code.
(03) "Board" means the Board of Directors of the Company.
(04) "Code" means the Internal Revenue Code of 1986, as amended.
(05) "Company" means Ultra Pac, Inc.
(06) "Director" means a member of the Board.
(07) "Eligible Director" means a Director who is not also an employee
of the Company or of an Affiliate. A director who also serves as Corporate
Secretary, and is not otherwise employed by the Company, is an Eligible
Director.
(08) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(09) "Grant Date" means the date on which an Option is granted.
(10) "Option" means an option to purchase Stock as described in Section
5(01) hereof. An Option granted under this Plan is a nonstatutory option
to purchase Stock which does not meet the requirements set forth in
Section 422A of the Code.
(11) "Option Agreement" means a written agreement evidencing an Option,
in form satisfactory to the Company, duly executed on behalf of the
Company and delivered to and executed by an Optionee.
(12) "Optionee" means an Eligible Director who has been granted an
Option.
(13) "Plan" means the Outside Directors' Option Plan.
(14) "Securities Act" means the Securities Act of 1933, as amended.
(15) "Stock" means the Common Stock, no par value, of the Company.
(16) "Subscription Agreement" means a written agreement, in form
satisfactory to the Company, duly executed by the Company and an Optionee
who has exercised an Option to purchase Stock.
<PAGE> 2
(17) "Termination Date" means the date on which an Optionee ceases to
be a Director of the Company.
(18) "Voting Shares" means the outstanding shares of the Company
entitled to vote for the election of directors.
2.) Purposes of the Plan. The purposes of the Plan are to attract and
retain the best available candidates for the Board, to provide additional
equity incentives to Eligible Directors through their participation in the
growth value of the Stock, and to promote the success of the Company's
business. To accomplish the foregoing objectives, this Plan provides a means
whereby Eligible Directors will receive Options to purchase Stock.
3.) Stock Subject to the Plan. The maximum number of shares of Stock that
may be issued upon the exercise of Options is 100,000. The shares of Stock
covered by the portion of any Option that expires or otherwise terminates
unexercised under this Plan shall become available again for grant. The number
of shares of Stock covered by Options is subject to adjustment in accordance
with Section 5(07).
4.) Administration. The Administrator shall have the authority to grant
Options upon the terms and conditions of this Plan, and to determine all other
matters relating to this Plan. The Administrator may delegate ministerial duties
to such employees of the Company as it deems proper. All questions of
interpretations, implementation and application of this Plan shall be
determined by the Administrator, and such determinations shall be final and
binding on all persons.
5.) Terms and Conditions of Options.
(01) Grant of Option. Options shall be granted pursuant to this Plan as
follows:
(a) Grant on Effective Date - As of the effective date of this
Plan, an Option for 2,500 shares of Stock shall be granted to each
Eligible Director, subject to subsequent stockholder approval of this
Plan.
(b) Subsequent Grants - On the date of each annual stockholders'
meeting subsequent to the effective date of this Plan, an Option
shall be granted immediately after such meeting to each Eligible
Director. With respect to any Eligible Director who, prior to the
annual stockholders' meeting, shall not have been granted an option
whether pursuant to this Plan, the Option shall be for 2,500 shares
of Stock. Otherwise, the Option shall be for 1,000 shares of Stock.
(02) Exercise Price - The exercise price of an Option shall be 100% of
the value of the Stock on the Grant Date, determined in accordance with
Section 6 hereof.
(03) Option Term - Each Option granted under this Plan shall expire five
(5) years from the Grant Date.
<PAGE> 3
(04) Option Exercise -
(a) Exercise - Subject to Section 5(04)(b), an Option may be
exercised in whole or in part immediately after the Grant Date of
such Option.
(b) Stockholder Approval - No option may be exercised in whole or in
part until the stockholders of the Company have approved this Plan.
(c) Compliance with Securities Laws - Stock shall not be issued
pursuant to the exercise of an Option unless the exercise of the
Option and the issuance and delivery of Stock pursuant thereto shall
comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, applicable state
securities laws, the rule and regulations promulgated under each of
the foregoing, the requirements of the New York Stock Exchange (if
the Company's securities are listed thereon) and the requirements of
NASDAQ pertaining to the National Market System (if the Company's
securities are quoted thereon), and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(05) Registration and Resale - If the Stock subject to this Plan is not
registered under the Securities Act and under applicable state securities laws,
the Administrator may require that the Optionee deliver to the Company such
documents as counsel for the Company may determine are necessary or advisable
in order to substantiate compliance with applicable securities laws and the
rules and regulations promulgated thereunder.
(06) Payment Upon Exercise - At the time written notice of exercise of an
Option is given to the Company, the Optionee shall make payment in full, in
cash or check or by one of the method specified below, for all Stock purchased
pursuant to the exercise of such Option.
Delivery of Stock - An Option may be exercised by delivery by the Optionee of
Stock already owned by the Optionee for all or part of the aggregate exercise
price of the Stock as to which the Option is being exercised, so long as (i)
the value of such Stock (determined as provided in Section 6) is equal on the
date of exercise to the aggregate exercise price of the shares of Stock as to
which the Option is being exercised, or such portion thereof as the Optionee is
authorized to pay by delivery of Stock and (ii) such previously owned shares
have been held by the Optionee for at least six months.
(07) Adjustments -
(a) Changes in Capital Structure - If the Stock is changed by reason of
a stock split, reverse stock split, stock dividend, or recapitalization, or
is converted into or exchanged for other securities, the Administrator
shall make such appropriate adjustments in (i) the number and class of
shares of Stock subject to this Plan, (ii) each Option outstanding under
this Plan, and (iii) the exercise price of each outstanding Option;
provided, however, that the Company shall not be required to
<PAGE> 4
issue fractional shares as a result of any such adjustment. Each
such adjustment shall be determined by the Administrator in its sole
discretion, which determination shall be final and binding on all
persons. Any new of additional Stock to which an Optionee may be
entitled under this Section (07) shall be subject to all of the
terms and conditions set forth in Section 5 of this Plan.
(08) No Assignment - No right or benefit under, or interest in, the Plan
shall be subject to assignment or transfer (other than by will or the laws
of descent and distribution), and no such right, benefit or interest shall
be subject to attachment or legal process for or against Optionee or his
or her beneficiaries, as the case may be. During the life of the Optionee,
an Option shall be exercisable only by the Optionee or, in the event of
disability of the Optionee, by the Optionee's guardian or legal
representative.
(09) Termination; Expiration of Unvested Options - Options granted to an
Optionee under this Plan, to the extent such rights have not expired or
been exercised, shall terminate on such Optionee's Termination Date;
provided, however, that an Option may be exercised, to the extent vested
and exercisable on the Termination Date, for a period of thirty (30) days
after such Optionee's Termination Date; and, provided further, that if
exercise of an Option during such thirty (30) day period would subject such
Optionee to liability under Section 16(b) of the Exchange Act, such
thirty (30) day period shall not begin to run until six (6) months from
the date of the last Stock transaction made, indirectly or directly, by
such Optionee prior to such Optionee's Termination Date.
6.) Determination of Value. For purposes of this Plan, the value of
the Stock shall be the closing sales price on the New York Stock Exchange or
the NASDAQ National Market System, as the case may be, on the date the value is
to be determined as reported in The Wall Street Journal. If there are no trades
on such date, the closing sale price on the last preceding business day upon
which trades occurred shall be the fair market value. If the Stock is not
listed on the New York Stock Exchange or quoted on the NASDAQ National Market
System, the fair market value shall be determined based on the mean between the
Closing bid and asked prices.
7.) Manner of Exercise. An Optionee wishing to exercise an Option
shall give written notice to the Company at its principal executive office, to
the attention of the President of the Company, accompanied by an executed Stock
Purchase Agreement and by payment of the Option exercise price in accordance
with Section 5(06). The date the Company receives written notice of an
exercise hereunder accompanied by payment of the Option exercise price will be
considered the date such Option was exercised. Promptly after receipt of such
written notice and payment, the Company shall deliver to the Optionee or such
other person permitted to exercise such Option under Section 4(08), a
certificate or certificates for the requisite number of shares of Stock.
8.) Rights.
(01) Rights as Optionee - No Eligible Director shall acquire any rights
as an Optionee unless and until an Option Agreement has been duly executed
on behalf of the Company, delivered to the Optionee and executed by the
Optionee.
<PAGE> 5
(02) Rights as Stockholder - No person shall have any rights as a
stockholder of the Company with respect to any Stock subject to an Option
until the date that a stock certificate has been issued and delivered to
the Optionee.
(03) No Right to Re-election - Nothing contained in the Plan or any
Option Agreement shall be deemed to create any obligation on the part of
the Board to nominate any Director for re-election by the Company's
stockholders, or confer upon any Director the right to remain a member of
the Board for any period of time, or at any particular rate of
compensation.
9.) Registration and Resale. The Board may, but shall not be required to,
cause the Plan, the Options, and Stock subject to the Plan to be registered
under the Securities Act and under the securities laws of any state. No Option
may be exercised, and the Company shall not be obliged to grant Stock upon
exercise of an Option, unless, in the opinion of counsel for the Company, such
exercise and grant is in compliance with all applicable federal and state
securities laws and the rules and regulations promulgated thereunder. As a
condition to the grant of an Option for the issuance of Stock upon the exercise
of an Option, the Administrator may require that the Optionee agree to comply
with such provisions and federal and state securities laws as may be applicable
to such grant or the issuance of Stock, and that the Optionee delivers to the
Company such documents as counsel for the Company may determine are necessary
or advisable in order to substantiate compliance with applicable securities
laws and the rules and regulations promulgated thereunder.
10.) Amendment, Suspension or Termination of the Plan. The Board may at
any time amend, alter, suspend, or discontinue this Plan, except to the extent
that stockholder approval is required for any amendment or alteration (a) by
Rule 16b-3 or applicable law in order to exempt from Section 16(b) of the
Exchange Act any transaction contemplated by this Plan, or (b) by the rules of
the New York Stock Exchange, if the Company's securities are listed thereon, or
(c) by the rules of NASDAQ pertaining to the National Market System, if the
Company's securities are quoted thereon; provided, however, no amendment,
alteration, suspension or discontinuation shall be made that would impair the
rights of any Optionee under an Option without such Optionee's consent; and
provided further, that any provision in this Plan relating to the eligibility
of Directors to participate in this Plan, the timing of Option grants made
under this Plan or the amount of Options granted to a Director under this Plan
shall not be amended more than once every six months, other than to comport
with the changes in the Code or the rules thereunder. Subject to the foregoing,
the Administrator shall have the power to make such changes in the regulations
and administrative provisions hereunder, or in any Option (with the Optionee's
consent), as in the opinion of the Administrator may be appropriate from time
to time.
11.) Indemnification of Administrator. Members of the group constituting
the Administrator shall be indemnified for actions with respect to the Plan to
the fullest extent permitted by the Articles of Incorporation, as amended, and
the By-laws of the Company and by the terms of any indemnification agreement
that has been or shall be entered into from time to time between the Company
and any such person.
<PAGE> 6
12.) Headings. The headings used in this Plan are for convenience
only, and shall not be used to construe the terms and conditions of the Plan.
13.) Effective Date. This Plan became effective on December 19, 1991
when it was adopted by the Board. This Plan shall be submitted to the
stockholders of the Company for consideration at the next annual meeting of
stockholders.
