Registration No. 333-__________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WINDSWEPT ENVIRONMENTAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2844247
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Sweeneydale Avenue, Bay Shore, New York 11706
(Address of principal executive offices) (Zip Code)
1998 Stock Incentive Plan
(Full title of the plan)
Michael O'Reilly, President
Windswept Environmental Group, Inc.
100 Sweeneydale Avenue
Bay Shore, New York 11706
(Name and address of agent for service)
(516) 694-7060
(Telephone number, including area code, of agent for service)
copy to:
Neil M. Kaufman, Esq.
Kaufman & Associates, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
(516) 222-5100
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount to maximum maximum Amount of
Title of each class of be offering price offering price registration
securities to be registered registered per unit(1) price(1) fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001
per sharee (the (Common Stock") 2,000,000 $0.41 $820,000 $241.90
<FN>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
upon the closing price of the Common Stock on August 14, 1998.
(2) Pursuant to Rule 416, there are also being registered such indeterminable
additional shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions contained in the 1998 Stock Incentive Plan.
</FN>
</TABLE>
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Windswept Environmental Group, Inc. (the
"Registrant") with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(Commission File No. 0-17072), are hereby incorporated into this Registration
Statement on Form S-8 (this "Registration Statement") by reference thereto:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal
year ended April 30, 1998; and
(b) The description of the Common Stock contained in the
Registrant's Registration Statement on Form 8-A, including any amendment or
report filed for the purpose of updating such description.
In addition, all documents subsequently filed by the Registrant pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of the offering of the Common Stock pursuant to the 1998 Stock Incentive Plan
(the "Plan"), shall be deemed to be incorporated by reference in this
Registration Statement and made a part hereof as of the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Registration Statement shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation, as amended to date,
eliminates, in certain circumstances, the liability of directors of the
Registrant for monetary damages for breach of their fiduciary duties as
directors unless the breach involves: (i) a director's duty of loyalty to the
Registrant or the Registrants' stockholders, (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) liability for unlawful payments of dividends or unlawful stock purchases
or redemptions by the Registrant or (iv) a transaction from which a director
derived an improper personal benefit. Additionally, the Registrant's By-laws
provide that any person who is made party to an action by reason of the fact
that such person is or was a director, officer, advisor, employee or agent of
the Registrant shall be indemnified by the Registrant to the fullest extent
authorized by Delaware law, which indemnification shall not be deemed exclusive
of any other rights to which any indemnified person may be entitled under any
By-Law, agreement, vote of stockholders or disinterested directors or otherwise.
<PAGE>
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Set forth below are all exhibits to the Registration Statement:
Exhibit
Number Description
4.1 1998 Stock Incentive Plan.
5.1 Opinion of Kaufman & Associates, LLC.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Kaufman & Associates, LLC. (Included in legal opinion filed
as Exhibit 5.1.)
24 Powers of Attorney (set forth on the Signature Page of the
Registration Statement).
Item 9. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to any of the provisions
described under Item 6 above, or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(c) Include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, the undertakings set forth in clauses (1)(a) and (1)(b)
above shall not apply if the information required to be included in a post-
effective amendment by such clauses is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act, that are incorporated by reference in the
Registration Statement.
<PAGE>
(2) For determining any liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering; and
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.
The Registrant hereby further undertakes that, for purposes of determining
liability under the Securities Act, each of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Islip, State of New York, on the 19th day of August
1998.
WINDSWEPT ENVIRONMENTAL GROUP, INC
By: /s/ Michael O'Reilly
Michael O'Reilly
Chairman, President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on August 19, 1998 by the following
persons in the capacities indicated. Each person whose signature appears below
constitutes and appoints Michael O'Reilly and Alan W. Schoenbart, or either of
them, with full power of substitution, his/her true and lawful attorneys-in-fact
and agents to do any and all acts and things in his/her name and on his/her
behalf in his/her capacities indicated below which they or either of them may
deem necessary or advisable to enable Windswept Environmental Group, Inc. to
comply with the Securities Act of 1933, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
this Registration Statement including specifically, but not limited to, power
and authority to sign for him/her in his/her name in the capacities stated
below, any and all amendments (including post-effective amendments) thereto,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as we might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or said attorneys-in-fact's and agents' substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
Chairman, President and Chief Executive Officer
/s/ Michael O'Reilly (Principal Executive Officer)
Michael O'Reilly
/s/ Alan W. Schoenbart Chief Financial Officer (Principal Accounting
Alan W. Schoenbart (Officer)
/s/ Anthony Towell Director
Anthony Towell
/s/ Samuel Sadove Director
Samuel Sadove
/s/ Joann O'Reilly Director
Joann O'Reilly
Director
Dr. Kevin Phillips
<PAGE>
WINDSWEPT ENVIRONMENTAL GROUP, INC
REGISTRATION STATEMENT ON FORM S-8
Exhibit Index
Exhibit
Number Description
4.1 1998 Stock Incentive Plan.
5.1 Opinion of Kaufman & Associates, LLC.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Kaufman & Associates, LLC. (Included in legal opinion filed
as Exhibit 5.1.)
24 Powers of Attorney (set forth on the Signature Page of the
Registration Statement).
WINDSWEPT ENVIRONMENTAL GROUP, INC.
1998 Stock Incentive Plan
I. DEFINITIONS.
1.1 Definitions. As used herein, capitalized terms not otherwise defined
shall have the meanings assigned to them in this Section 1.1.
(a) "Award" shall mean an Option (which may be designated as a
Nonqualified Stock Option or an Incentive Stock Option), Stock Appreciation
Right, Restricted Stock Award or Performance Share Award, in each case granted
under this Plan.
(b) "Award Agreement" shall mean a written agreement setting forth the
terms of an Award.
(c) "Award Date" shall mean the date upon which the Committee took the
action granting an Award or such later date as is prescribed by the Committee.
(d) "Award Period" shall mean the period beginning on an Award Date
and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person(s), trust(s) or other
entity(ies) entitled by will or the laws of descent and distribution to receive
the benefits specified under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the Corporation.
(g) A "Change in Control" shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities or (B) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the Corporation's shareholders,
of each new Board member was approved by a vote of at least three-fourths of the
Board members then still in office who were Board members at the beginning of
such period.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Commission" shall mean the Securities and Exchange Commission.
(j) "Committee" shall mean either a committee appointed by the Board
to administer the Plan and consisting of two or more members, each of whom is a
Non-Employee Director, or the entire Board. If there are two or more members of
the Board who are "outside directors" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder, then the Committee shall
consist only of such members.
(k) "Common Stock" shall mean the Common Stock, par value $.0001 per
share of the Corporation.
(l) "Company" shall mean, collectively, the Corporation and its
Subsidiaries.
(m) "Corporation" shall mean Windswept Environmental Group, Inc., a
Delaware corporation, and its successors.
<PAGE>
(n) "Eligible Person" shall mean an employee, director or officer of
the Company or any other person or entity who, in the opinion of the Committee,
is rendering valuable services to the Company, including, without limitation, an
independent contractor, outside consultant or advisor to the Company.
(o) "Event" shall mean any of the following:
(i) Approval by the shareholders of the Corporation of the
dissolution or liquidation of the Corporation;
(ii) Approval by the shareholders of the Corporation of an
agreement to merge or consolidate, or otherwise reorganize, with or into
one or more entities which are not Subsidiaries, as a result of which less
than 50% of the outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by former shareholders of the Corporation;
(iii) Approval by the shareholders of the Corporation of the
sale of substantially all of the Corporation's business and/or assets to a
person or entity which is not a Subsidiary; or
(iv) The occurrence of a Change in Control.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(q) "Fair Market Value" shall mean: (i) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of the
stock on the Composite Tape, as published in The Wall Street Journal, of the
principal national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite Tape on
the next preceding date on which there was trading in such shares; (ii) if the
stock is not listed or admitted to trade on a national securities exchange but
is listed and quoted on The Nasdaq Stock Market ("Nasdaq"), the last sale price
for the stock on such date as reported by Nasdaq, or, if there is no reported
trading of the stock on such date, then the last sale price for the stock on the
next preceding date on which there was trading in the stock; (iii) if the stock
is not listed or admitted to trade on a national securities exchange and is not
listed and quoted on Nasdaq, the mean between the closing bid and asked price
for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. ("NASD") or similar organization; or (iv) if the stock
is not listed or admitted to trade on a national securities exchange, not listed
and quoted on Nasdaq and if bid and asked prices for the stock are not furnished
by the NASD or a similar organization, the value established in good faith by
the Committee in the Committee's sole discretion.
(r) "Incentive Stock Option" shall mean an Option which is designated
as an Incentive Stock Option, the Award of which contains such provisions as are
necessary to comply with Section 422 of the Code.
(s) "Non-Employee Director" shall mean a Non-Employee Director within
the meaning of the applicable regulatory requirement promulgated under Section
16 of the Exchange Act.
(t) "Nonqualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(u) "Option" shall mean an option to purchase Common Stock granted
under this Plan.
(v) "Participant" shall mean an Eligible Person, who has been granted
an Award.
(w) "Performance Share Award" shall mean an Award of shares of Common
Stock, the issuance of such shares being contingent upon attainment of
performance objectives specified by the Committee.
(x) "Personal Representative" shall mean the person or persons who,
upon the disability or incompetence of a Participant, shall have acquired on
behalf of the Participant by legal proceeding or otherwise the power to exercise
the rights and receive the benefits specified in this Plan.
<PAGE>
(y) "Plan" shall mean this Windswept Environmental Group, Inc. 1998
Stock Incentive Plan.
(z) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are subject to the restrictions set
forth in the related Award Agreement.
(aa) "Restricted Stock Award" shall mean an award of a fixed number of
shares of Common Stock to the Participant subject, however, to payment of such
consideration, if any, and such forfeiture provisions, as are set forth in the
Award Agreement.
(bb) "Retirement" shall mean termination of employment with the
Company pursuant to the Company's retirement policy, as in effect from time to
time, or otherwise with the consent of the Company.
(cc) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(dd) "Stock Appreciation Right" shall mean a right to receive a number
of shares of Common Stock or an amount of cash, or a combination of shares and
cash, determined as provided in Section 4.3(a).
(ee) "Subsidiary" shall mean any corporation or other entity a
majority or more of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
(ff) "Tax-Offset Bonus" shall mean a bonus payable pursuant to a
disqualifying disposition of Common Stock acquired pursuant to the exercise of
an Incentive Stock Option, determined as provided in Section 3.6.
(gg) "Total Disability" shall mean a "permanent and total disability"
within the meaning of Section 22 (e)(3) of the Code.
II. THE PLAN.
2.1 Purpose. The purpose of this Plan is to promote the success of the
Company by providing an additional means to attract and retain directors,
officers, employees, consultants and other persons and entities through added
long-term incentives and for significant efforts to improve the financial
performance of the Company by granting Awards.
2.2 Administration.
(a) This Plan shall be administered by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of a majority of its members.
In the event action by the Committee is taken by written consent, the action
shall be deemed to have been taken at the time specified in the consent or, if
none is specified, at the time of the last signature. The Committee may delegate
administrative functions (other than functions which are required to be
performed by the Committee pursuant to requirements promulgated under Section 16
of the Exchange Act and Section 162(m) of the Code) to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the Committee
shall have the authority to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Participants under this
Plan, to further define the terms used in this Plan, to prescribe, amend and
rescind rules and regulations relating to the administration of this Plan, to
determine the duration and purposes of leaves of absence which may be granted to
Participants without constituting a termination of their employment for purposes
of this Plan and to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive and binding upon all persons.
(c) Any action taken by, or inaction of, the Corporation, any
Subsidiary, the Board or the Committee relating to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. No member of the Board or Committee, or officer of the
Corporation or Subsidiary, shall be
<PAGE>
liable for any such action or inaction of the entity or body, of another person
or, except in circumstances involving bad faith, of himself or herself. Subject
only to compliance with the express provisions hereof, the Board and Committee
may act in their absolute discretion in matters related to this Plan.
(d) Subject to the requirements of Section 1.1 (j), the Board, at any
time it so desires, may increase or decrease the number of members of the
Committee, may remove from membership on the Committee all or any portion of its
members, and may appoint such person or persons as it desires to fill any
vacancy existing on the Committee, whether caused by removal, resignation or
otherwise.
2.3 Participation. Awards may be granted only to Eligible Persons. An
Eligible Person who has been granted an Award may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine.
2.4 Stock Subject to the Plan. The stock to be offered under this Plan
shall be shares of the Corporation's authorized but unissued Common Stock. The
aggregate amount of the Common Stock that may be issued or transferred pursuant
to Awards granted under this Plan shall not exceed 2,000,000 shares, subject to
adjustment as set forth in Section 7.2; provided that any Stock Appreciation
Rights granted concurrently in accordance with Section 4.1 are not subject to
the foregoing limitation. If an Option and any Stock Appreciation Right shall
lapse or terminate without having been exercised in full, or any Common Stock
subject to a Restricted Stock Award shall not vest or any Common Stock subject
to a Performance Share Award shall not have been transferred, the unpurchased or
nontransferred shares subject thereto shall again be available for purposes of
this Plan; provided, however, that the counting of shares subject to Awards
granted under the Plan against the number of shares available for further Awards
shall in all cases conform to the requirements of Rule 16b-3 under the Exchange
Act; and provided, further, that, with respect to any Option and any Stock
Appreciation Right granted to any Eligible Person who is a "covered employee" as
defined in Section 162(m) of the Code and the regulations promulgated thereunder
that is canceled, the number of shares subject to such Option and Stock
Appreciation Right shall continue to count against the maximum number of shares
which may be the subject of Options and Stock Appreciation Rights granted to
such Eligible Person. For purposes of the preceding sentence, if, after grant,
the exercise price of an Option and/or the base amount of any Stock Appreciation
Right is reduced, such reduction shall be treated as a cancellation of such
Option and/or Stock Appreciation Right and the grant of a new Option and/or
Stock Appreciation Right (if any), and both the cancellation of the Option
and/or Stock Appreciation Right and the new Option and/or Stock Appreciation
Right shall reduce the maximum number of shares for which Options and Stock
Appreciation Rights may be granted to the holder of such Option and/or Stock
Appreciation Right to the extent required by Section 162(m) of the Code and the
regulations promulgated thereunder.
2.5 Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
and entities to whom Awards under the Plan shall be granted, the terms of Awards
(which need not be identical) and the number of shares of Common Stock subject
to each Award; provided, however, that no Eligible Person may be granted Options
and Stock Appreciation Rights relating in the aggregate to more than 250,000
shares of Common Stock (subject to adjustment as provided in Section 7.2) in any
calendar year; and provided, further, that any shares of Common Stock relating
to Stock Appreciation Rights granted concurrently with one or more Options in
accordance with Section 4.1 shall only be counted once for purposes of such
limit. Each Award shall be subject to the terms and conditions set forth in the
Plan and such other terms and conditions established by the Committee as are not
inconsistent with the purpose and provisions of the Plan.
2.6 Exercise of Awards. An Option or Stock Appreciation Right shall be
deemed to be exercised when the Secretary of the Corporation, or such other
person(s) designated by Committee, receives written notice of such exercise from
the Participant, together with payment of the exercise price made in accordance
with Subsection 3.1(b) or 3.2(b), as the case may be, except to the extent
payment may be permitted to be made following delivery of written notice of
exercise in accordance with Subsection 3.1(b) or 3.2(b), as the case may be.
Notwithstanding any other provision of this Plan, the Committee may impose, by
rule and/or in Award Agreements, such conditions upon the exercise of Awards
(including, without limitation, conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 (or any successor rule)
promulgated under the Exchange Act or for any other reason in the sole
discretion of the Committee.
<PAGE>
III. OPTIONS.
3.1 Grants.
(a) One or more Options may be granted to any Eligible Person. Except
for Options granted pursuant to Subsection 3.1(b), all Options granted to
members of the Committee must be ratified by a majority of the members of the
Board. Unless specifically designated by the Committee as an Incentive Stock
Option, each Option granted under the Plan shall be a Nonqualified Stock Option.
Notwithstanding any designation as an Incentive Stock Option, an Option (or
portion thereof) not qualifying as an Incentive Stock Option under Section 422
of the Code, shall be deemed a Nonqualified Stock Option.
(b) Notwithstanding any other provision of the Plan, effective on the
date of the approval of the Plan and on each subsequent date a director who is
not also an employee of the Company is appointed, elected or, commencing in
1999, re-elected to the Board, such director will automatically be granted a
Nonqualified Stock Option to purchase 25,000 shares of Common Stock at an
exercise price per share equal to the Fair Market Value of the Common Stock on
the date of grant, such Nonqualified Stock Options to have a duration of ten
years and to become exercisable in equal tranches of one-third (1/3) of such
shares on each of the first three anniversaries of the date of grant.
The exercise price of any shares purchased pursuant to the exercise of
an Option granted pursuant to this Section 3.2(b) shall be paid in full at the
time of each purchase in one or a combination of the following methods: (i)
cash; (ii) check (subject to collection); or (iii) in the discretion of the
Committee, by (A) delivery to the Company of a promissory note containing such
terms and conditions determined by the Committee, in the Committee's sole
discretion, but at a rate of interest at least equal to the imputed interest
specified under Section 483 or Section 1274, whichever is applicable, of the
Code, and secured by the Common Stock issuable upon exercise of the Option for
which the promissory note is being delivered and otherwise in compliance with
applicable law (including, without limitation, state corporate law and federal
margin requirements), (B) assignment to the Corporation of the net proceeds (to
the extent necessary to pay such exercise price) to be received from a
registered broker upon the sale of the shares or assignment of the net proceeds
(to the extent necessary to pay such exercise price) of a loan from such broker
in such amount or (C) such other consideration and method of payment for the
issuance of stock to the extent permitted under Delaware law and satisfying the
requirements of Rule 16b-3 promulgated pursuant to the Exchange Act.
Notwithstanding anything to the contrary contained in Section 7.2 or
7.4, each such Option shall be adjusted and shall accelerate, respectively, in
the following events:
(i) If the outstanding shares of Common Stock are increased,
decreased or changed into, or exchanged for, a different number or kind of
shares or securities of the Corporation through a reorganization or merger
in which the Corporation is the surviving entity, or through a combination,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation or otherwise, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to each such Option;
provided, however, that any such adjustment shall be made without change in
the total payment, if any, applicable to the portion of such Option not
exercised but with a corresponding adjustment in the price for each share;
(ii) Upon the dissolution or liquidation of the Corporation,
or upon a reorganization, merger or consolidation of the Corporation with
one or more corporations as a result of which the Corporation is not the
surviving corporation, any such Option then outstanding shall terminate and
be forfeited; provided, however, that in the event any such Option
terminates as aforesaid in connection with such a dissolution, liquidation,
reorganization, merger or consolidation, the holder of any such Option
shall be entitled to receive from the Corporation cash in an amount equal
to the excess of (A) the Fair Market Value (determined on the basis of the
amount received by shareholders in connection with such transaction) of the
shares of Common Stock subject to the portion of such Option not
theretofore exercised (whether or not such Option is then exercisable
pursuant to its terms or otherwise), over (B) the aggregate exercise price
which would be payable for such shares upon the exercise of such Option;
<PAGE>
(iii) In adjusting such Options to reflect the changes
described in this Section 3.1(b) or in determining that no such adjustment
is necessary, the Committee shall make only such adjustment as shall be
necessary to maintain the proportionate interest of the holder and preserve
the value of the respective Option and may rely upon the advice of
independent counsel and accountants of the Corporation, and the
determination of the Committee shall be conclusive;
(iv) No fractional shares of stock shall be issued under
this Plan on account of any such adjustment; and
(v) Upon the occurrence of an Event, each such Option shall
become immediately exercisable to the full extent theretofore not
exercisable; provided, however, that such acceleration shall comply with
applicable regulatory requirements, including without limitation Rule 16b-3
promulgated by the Commission pursuant to the Exchange Act.
All or any part of any remaining unexercised Options granted pursuant
to this Section 3.1(b) may be exercised in the event of the holder's cessation
of service as a director of the Company due to the holder's death, during the
period beginning on the date of death and ending twelve months thereafter, but
in no event after the expiration of the term of the Option or during the
six-month period commencing on the date of grant unless such exercise complies
with applicable regulatory requirements. Any Option granted pursuant to this
Section 3.1(b), to the extent unexercised, shall terminate immediately upon the
holder's ceasing to serve as a director of the Company due to Total Disability,
except that the holder or the holder's Personal Representative shall have twelve
months following such cessation of service to exercise any unexercised Option
that the holder could have exercised on the day on which such service
terminated; provided that such exercise must be accomplished prior to the
expiration of the term of such Option. Any Option granted pursuant to this
Subsection 3.1(b), to the extent unexercised, shall terminate immediately upon
the holder's ceasing to serve as a director of the Company (for reasons other
than Total Disability or death), except that the holder shall have three months
from the date of such cessation of service to exercise any unexercised Option
that he or she could have exercised on the day on which such service terminated;
provided that such exercise must be accomplished prior to the expiration of the
term of such Option. Notwithstanding the preceding, if the service as a director
of any holder of an Option granted pursuant to this Subsection 3.1(b) shall be
terminated because of the holder's (i) fraud or intentional misrepresentation or
(ii) embezzlement, misappropriation or conversion of assets or opportunities of
the Company, then all such unexercised Options of the holder shall terminate
immediately upon such holder's ceasing to serve as a director.
Subject to the limitations of Section 7.7, the award formula in this
Subsection 3.1(b) may be amended from time to time by the Board with respect to
timing and amount; provided that the provisions of this Subsection 3.1(b) shall
not be amended more than once every six months, other than to comport with
changes in the Code or the Employee Retirement Income Security Act of 1974, as
amended (and to such extent, if any, as it may be applicable to the Plan) or the
rules and regulations thereunder.
3.2 Option Price.
(a) The exercise price per share of the Common Stock covered by each
Option shall be determined by the Committee but, in the case of Incentive Stock
Options, shall not be less than 100% (110% in the case of a Participant who owns
more than 10% of the total combined voting power of all classes of stock of the
Company) of the Fair Market Value of the Common Stock on the date the Incentive
Stock Option is granted and, in the case of Nonqualified Stock Options, shall
not be less than 85% of the Fair Market Value of the Common Stock on the date
the Nonqualified Stock Option is granted.
(b) The exercise price of any shares purchased pursuant to an Option
granted pursuant to the Plan, other than an Option granted under Subsection
3(b), shall be paid in full at the time of each purchase in one or a combination
of the following methods: (i) cash; (ii) check (subject to collection); (iii) in
the discretion of the Committee, surrender to the Company of other shares of
Common Stock owned by the Optionee which (A) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the shares as to
which the Option shall be exercised and (B) have been owned of record by the
Participant exercising the Option for at least six months; (iv) commencing three
years from the Date of Grant, in the discretion of the Committee, by "cashless
exercise," by means of exercising the
<PAGE>
Option in full and receiving such number of shares of Common Stock having a
Fair Market Value on the date of such cashless exercise equal to the difference
between (A) the Fair Market Value of the shares issuable upon exercise of the
Option in full on the date of such cashless exercise and (B) the exercise price
of the Option multiplied by the number of shares issuable upon exercise of
the Option in full; or (v) in the discretion of the Committee, by (A) delivery
to the Company of a promissory note containing such terms and conditions
determined by the Committee, in the Committee's sole discretion, but at a
rate of interest at least equal to the imputed interest specified under Section
483 or Section 1274, whichever is applicable, of the Code, and secured by the
Common Stock issuable upon exercise of the Option for which the promissory note
is being delivered and otherwise in compliance with applicable law (including,
without limitation, state corporate law and federal margin requirements), (B)
assignment to the Corporation of the net proceeds (to the extent necessary to
pay such exercise price) to be received from a registered broker upon the sale
of the shares or assignment of the net proceeds (to the extent necessary to pay
such exercise price) of a loan from such broker in such amount or (C) such other
consideration and method of payment for the issuance of stock to the extent
permitted under Delaware law and satisfying the requirements of Rule 16b-3
promulgated pursuant to the Exchange Act. The Committee, in the Committee's
sole discretion, may impose additional requirements with respect to any of the
above-stated methods of payment of the exercise price of an Option.
3.3 Option Period. Each Option and all rights or obligations thereunder
shall expire on such date as shall be determined by the Committee, but not later
than ten years after the Award Date of an Incentive Stock Option or ten years
and one day after the Award Date of a Nonqualified Stock Option, and shall be
subject to earlier termination as hereinafter provided.
3.4 Exercise of Options. Except as otherwise provided in Section 7.4, an
Option may become exercisable, in whole or in part, on the date or dates
specified in the Award Agreement, and thereafter shall remain exercisable until
the expiration or earlier termination of such Option. Unless otherwise
determined by the Committee and reflected in the Award Agreement with respect to
the Option, each Option shall become exercisable in equal tranches of one-third
(1/3) of the shares of Common Stock subject to such Option on each of the first
three anniversaries of the date of grant of such Option. The Committee may, at
any time after grant of the Option and from time to time increase the number of
shares purchasable at any time so long as the total number of shares subject to
the Option is not increased. No Option shall be exercisable except in respect of
whole shares, and fractional share interests shall be disregarded. Not less than
100 shares of Common Stock may be purchased at one time unless the number
purchased is the total number at the time available for purchase under the terms
of the Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the Award Date)
of the Common Stock for which Incentive Stock Options may first become
exercisable by any Participant during any calendar year under this Plan
(other than as a result of acceleration pursuant to Section 7.2 or 7.4),
together with that of common stock subject to incentive stock options first
exercisable by such Participant under any other plan of the Company, shall not
exceed $100,000; to the extent such limitation is exceeded for any reason,
including as a result of acceleration, such Option(s) shall be treated
as Nonqualified Stock Option(s).
(b) There shall be imposed in the Award Agreement relating to
Incentive Stock Options such terms and conditions as are required in order
that the Option qualify as an "incentive stock option" as that term is defined
in Section 422 of the Code.
(c) No Incentive Stock Option may be granted to any person who, at the
time the Incentive Stock Option is granted, owns securities possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or any Subsidiary, unless the exercise price of such Option is at
least 110% of the Fair Market Value of the stock subject to the Option and such
Option by its terms is not exercisable after the expiration of five years from
the date such Option is granted.
(d) No Incentive Stock Option may be granted to any person who is not
an employee of the Company.
<PAGE>
3.6 Additional Rights. In its discretion the Committee may, in the Award
Agreement, provide for a Tax-Offset Bonus to any Participant who elects to make
a disqualifying disposition (as defined in Section 422(a)(1) of the Code) of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option. The
Tax-Offset Bonus shall be in the form of a cash payment equal to a percentage of
the difference between the exercise price and the lesser of (a) the Fair Market
Value on the date of exercise of the Common Stock with respect to which the
disqualifying disposition occurs or (b) the amount realized from such
disqualifying disposition. Such percentage shall be set out in the Award
Agreement and shall be designed to offset the impact of additional taxes which
result from the disqualifying disposition. Notwithstanding the preceding
sentence, the Committee may reserve the right to from time to time change the
percentage applicable with respect to the Award Agreement.
IV. STOCK APPRECIATION RIGHTS.
4.1 Grants. In its discretion, the Committee may grant Stock Appreciation
Rights concurrently with the grant of Options. A Stock Appreciation Right shall
extend to all or a portion of the shares covered by the related Option. A Stock
Appreciation Right shall entitle the Participant who holds the related Option,
upon exercise of the Stock Appreciation Right and surrender of the related
Option, or portion thereof, to the extent the Stock Appreciation Right and
related Option each were previously unexercised, to receive payment of an amount
determined pursuant to Section 4.3. Any Stock Appreciation Right granted in
connection with an Incentive Stock Option shall contain such terms as may be
required to comply with the provisions of Section 422 of the Code and the
regulations promulgated thereunder. In its discretion, the Committee may also
grant Stock Appreciation Rights independently of any Option subject to such
conditions as the Committee may, in the Committee's sole discretion, provide.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right granted concurrently with an Option
shall be exercisable only at such time or times, and to the extent, that the
related Option shall be exercisable and only when the Fair Market Value of the
stock subject to the related Option exceeds the exercise price of the related
Option.
(b) In the event that a Stock Appreciation Right granted concurrently
with an Option is exercised, the number of shares of Common Stock subject to the
related Option shall be charged against the maximum amount of Common Stock that
may be issued or transferred pursuant to Awards under this Plan. The number of
shares subject to the Stock Appreciation Right and the related Option of the
Participant shall be reduced by such number of shares.
(c) If a Stock Appreciation Right granted concurrently with an Option
extends to less than all the shares covered by the related Option and if a
portion of the related Option is thereafter exercised, the number of shares
subject to the unexercised Stock Appreciation Right shall be reduced only if and
to the extent that the remaining number of shares covered by such related Option
is less than the remaining number of shares subject to such Stock Appreciation
Right. The number of shares subject to unexercised Stock Appreciation Rights may
also be reduced proportionately.
(d) A Stock Appreciation Right granted independently of any Option
shall be exercisable pursuant to the terms of the Award Agreement with respect
to such Stock Appreciation Right.
(e) In order to achieve the Plan's objective of encouraging ownership
of the Common Stock, the Committee may require that Stock Appreciation Rights
can only be exercised if the Participant uses all or a portion of any cash
received upon exercise of the Stock Appreciation Right to concurrently exercise
all or a portion of the Option the Participant holds.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and surrender of an
exercisable portion of the related Option, the Participant shall be entitled to
receive payment of an amount determined by multiplying (i) the difference
obtained by (A) subtracting the exercise price per share of Common Stock under
the related Option from (B)
<PAGE>
the Fair Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by (ii) the number of shares with respect to which
the Stock Appreciation Right shall have been exercised.
(b) The Committee, in its sole discretion, may settle the amount
determined under Subsection 4.3(a) solely in cash, solely in shares of Common
Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, provided that
the Committee shall have determined that such exercise and payment are
consistent with applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary, all Stock
Appreciation Rights shall be settled in cash as soon as practicable after
exercise. Notwithstanding the foregoing, the Committee may, in the Award
Agreement, determine the maximum amount of cash or stock or a combination
thereof which may be delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right granted independently
of any Option, the Participant shall be entitled to receive payment in cash of
an amount based on a percentage, specified in the Award Agreement, of the
difference obtained by subtracting the Fair Market Value per share of Common
Stock on the Award Date from the Fair Market Value per share of Common Stock on
the date of exercise of the Stock Appreciation Right.
V. RESTRICTED STOCK AWARDS.
5.1 Grants. Subject to Section 2.4, the Committee may, in its discretion,
grant one or more Restricted Stock Awards to any Eligible Person. Each
Restricted Stock Award Agreement shall specify the number of shares of Common
Stock to be issued to the Participant, the date of such issuance, the price, if
any, to be paid for such shares by the Participant and the restrictions imposed
on such shares. Shares of Restricted Stock shall be evidenced by a stock
certificate registered only in the name of the Participant, which stock
certificate shall bear a legend making appropriate reference to the restrictions
imposed and shall be held by the Corporation until the restrictions on such
shares shall have lapsed and those shares shall have thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock Awards may not
be sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall be entitled to
voting and dividend rights for the shares issued even though they are not
vested; provided that any dividends declared and paid on the shares issued but
not yet vested shall be returned to the Corporation immediately as to any
forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants. The Committee may, in its discretion, grant Performance Share
Awards to Eligible Persons based upon such factors as the Committee shall
determine. A Performance Share Award Agreement shall specify the number of
shares of Common Stock subject to the Performance Share Award, the price, if
any, to be paid for such shares by the Participant and the conditions upon which
issuance to the Participant shall be based.
<PAGE>
VII. OTHER PROVISIONS.
7.1 Rights of Eligible Persons, Participants and Beneficiaries.
(a) Status as an Eligible Person shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Person or
to Eligible Persons generally.
(b) Nothing contained in this Plan (or in Award Agreements or in any
other documents related to this Plan or to Awards) shall confer upon any
Eligible Person or Participant any right to continue in the employ of the
Company or constitute any contract or agreement of employment, or interfere in
any way with the right of the Company to reduce such person's compensation or to
terminate the employment of such Eligible Person or Participant, with or without
cause, but nothing contained in this Plan or any document related thereto shall
affect any other contractual right of any Eligible Person or Participant.
(c) Amounts payable pursuant to an Award shall be paid only to the
Participant or, in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Total Disability, to the
Participant's Personal Representative or, if there is none, to the Participant.
Other than by will or the laws of descent and distribution, or pursuant to a
"qualified domestic relations order" as defined by the Code, no benefit payable
under, or interest in, the Plan or in any Award shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void and no such benefit or
interest shall be, in any manner, liable for or subject to, debts, contracts,
liabilities, engagements or torts of any Eligible Person, Participant or
Beneficiary. The Committee shall disregard any attempted transfer, assignment or
other alienation prohibited by the preceding sentence and shall pay or deliver
such cash or shares of Common Stock in accordance with the provisions of the
Plan.
(d) No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Common Stock) of the Company by reason of any Award granted hereunder. Neither
the provisions of the Plan (or of any documents related hereto), nor the
creation or adoption of the Plan, nor any action taken pursuant to the
provisions of the Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Company.
7.2 Adjustments upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are increased, decreased
or changed into, or exchanged for, a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares that
may be issued pursuant to Awards. A corresponding adjustment to the
consideration payable with respect to Awards granted prior to any such change
and to the price, if any, paid in connection with Restricted Stock Awards or
Performance Share Awards shall also be made. Any such adjustment, however, shall
be made without change in the total payment, if any, applicable to the portion
of the Award not exercised but with a corresponding adjustment in the price for
each share. Corresponding adjustments shall be made with respect to Stock
Appreciation Rights based upon the adjustments made to the Options to which they
are related or, in the case of Stock Appreciation Rights granted independently
of any Option, based upon the adjustments made to Common Stock. Corresponding
adjustments may also be made in particular stock grants with respect to
extraordinary cash dividends.
(b) Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, the Plan shall terminate, and any outstanding Awards shall
terminate and be forfeited. Notwithstanding the foregoing, the Committee may
provide in writing in connection with, or in contemplation of, any such
transaction for any or all of the following alternatives (separately or in
combinations): (i) for the assumption by the successor corporation of the Awards
theretofore granted or the substitution by such corporation for such Awards of
<PAGE>
awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; (ii) for the continuance of the Plan by such successor
corporation in which event the Plan and the Awards shall continue in the manner
and under the terms so provided; or (iii) for the payment in cash or shares of
Common Stock in lieu of and in complete satisfaction of such Awards.
(c) In adjusting Awards to reflect the changes described in this
Section 7.2, or in determining that no such adjustment is necessary, the
Committee may rely upon the advice of independent counsel and accountants of the
Corporation, and the determination of the Committee shall be conclusive. No
fractional shares of stock shall be issued under this Plan on account of any
such adjustment.
7.3 Termination of Employment.
(a) Unless otherwise determined by the Committee and reflected in the
Award Agreement with respect to an Option, if the Participant's employment by
the Company terminates for any reason other than Retirement, death or Total
Disability, the Participant shall have, subject to earlier termination pursuant
to or as contemplated by Section 3.3, three months (or up to one year, if so
determined by the Committee in the grant or otherwise) from the date of
termination of employment to exercise any Option to the extent such Option shall
have become exercisable on such date, and any Option (or portion thereof) not
exercisable on such date shall terminate. Notwithstanding the preceding
sentence, in the event the Participant is discharged for cause as determined by
the Committee, in the Committee's sole discretion, all Options granted to such
Participant shall lapse immediately upon such termination of employment.
(b) Unless otherwise determined by the Committee and reflected in the
Award Agreement with respect to an Option, if the Participant's employment by
the Company terminates as a result of Retirement or Total Disability, the
Participant or Participant's Personal Representative, as the case may be, shall
have, subject to earlier termination pursuant to or as contemplated by Section
3.3, twelve months from the date of termination of employment (or three months
from the date of termination of employment as a result of Retirement, with
respect to an Incentive Stock Option) to exercise any Option to the extent such
Option shall have become exercisable by such date, and any Option (or portion
thereof) not exercisable on such date shall terminate.
(c) Unless otherwise determined by the Committee and reflected in the
Award Agreement with respect of an Option, if the Participant's employment by
the Company terminates as a result of death while the Participant is employed by
the Company or during the twelve-month period referred to in Subsection
7.3(b) above, the Participant's Option shall be exercisable by the Participant's
Beneficiary, subject to earlier termination pursuant to or as contemplated by
Section 3.3, during the twelve-month period or such shorter period as is
provided in the Award Agreement following the Participant's death, to the extent
such Option shall have become exercisable by such date, and any Option (or
portion thereof) not exercisable on such date shall terminate.
(d) Each Stock Appreciation Right granted concurrently with an Option
shall have the same termination provisions and exercisability periods as the
Option to which it relates. The termination provisions and exercisability
periods of any Stock Appreciation Right granted independently of an Option shall
be established in accordance with Subsection 4.2(d). The exercisability period
of a Stock Appreciation Right shall not exceed that provided in Section 3.3 or
in the related Award Agreement, and the Stock Appreciation Right shall expire at
the end of such exercisability period.
(e) In the event of termination of employment with the Company for any
reason, (i) shares of Common Stock subject to the Participant's Restricted Stock
Award shall be forfeited in accordance with the provisions of the related Award
Agreement to the extent such shares have not become vested on such date and (ii)
shares of Common Stock subject to the Participant's Performance Share Award
shall be forfeited in accordance with the provisions of the related Award
Agreement to the extent such shares have not been issued or become issuable on
such date.
(f) In the event of termination of employment with the Company for any
reason, other than discharge for cause, the Committee may, in its discretion,
increase the portion of the Participant's Award available to the Participant, or
Participant's Beneficiary or Personal Representative, as the case may be, upon
such terms as the Committee, in the Committee's sole discretion, shall
determine.
<PAGE>
(g) If an entity ceases to be a Subsidiary, such action shall be
deemed for purposes of this Section 7.3 to be a termination of employment of
each employee of that Subsidiary.
(h) Upon forfeiture of a Restricted Stock Award pursuant to this
Section 7.3, the Participant, or the Participant's Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid an exercise price, in which event,
repayment, if any, of that price shall be governed by the Award Agreement.
Notwithstanding any such transfer to the Corporation, or failure, refusal or
neglect to transfer, by the Participant, or the Participant's Beneficiary or
Personal Representative, as the case may be, such nonvested portion of any
Restricted Stock Award shall be deemed transferred automatically to the
Corporation on the date of termination of employment. The Participant's original
acceptance of the Restricted Stock Award shall constitute the Participant's
appointment of the Corporation and each of the Corporation's authorized
representatives as attorney(s)-in-fact to effect such transfer and to execute
such documents as the Corporation or such representatives deem necessary or
advisable in connection with such transfer.
7.4 Acceleration of Awards. Unless prior to an Event the Committee
determines that, upon the Event's occurrence, there shall be no acceleration of
Awards or determines those Awards which shall be accelerated and the extent to
which they shall be accelerated, upon the occurrence of an Event (a) each Option
and each Stock Appreciation Right shall become immediately exercisable to the
full extent theretofore not exercisable, (b) Restricted Stock shall immediately
vest free of restrictions and (c) the number of shares covered by each
Performance Share Award shall be issued to the Participant. Acceleration of
Awards shall comply with applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated under the Exchange Act and Section 422 of the
Code.
7.5 Government Regulations. The Plan, the granting of Awards under the Plan
and the issuance or transfer of shares of Common Stock (and/or the payment of
money) pursuant thereto are subject to all applicable federal and state laws,
rules and regulations and to such approvals by any regulatory or governmental
agency (including, without limitation, interpretive letters of the Commission)
which may, in the opinion of counsel for the Corporation, be necessary or
advisable in connection therewith. Without limiting the generality of the
foregoing, no Awards may be granted under the Plan, and no shares shall be
issued by the Corporation, or cash payments made by the Corporation, pursuant to
or in connection with any such Award, unless and until, in each such case, all
legal requirements applicable to the issuance or payment have, in the opinion of
counsel to the Corporation, been complied with. In connection with any stock
issuance or transfer, the person acquiring the shares shall, if requested by the
Corporation, give assurances satisfactory to counsel to the Corporation in
respect of such matters as the Corporation may deem desirable to assure
compliance with all applicable legal requirements.
7.6 Tax Withholding.
(a) Upon the disposition by a Participant or other person of shares of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option
prior to satisfaction of the holding period requirements of Section 422 of the
Code, or upon the exercise of a Nonqualified Stock Option or a Stock
Appreciation Right, the vesting of a Restricted Stock Award, the payment of a
Performance Share Award, payment pursuant to a Stock Appreciation Right or
payment of a Tax-Offset Bonus, the Company shall have the right to (i) require
such Participant or other person to pay the Company, by cash or certified or
cashier's check payable to the Company, the amount of any taxes which the
Company may be required to withhold with respect to such transactions or (ii)
deduct from amounts payable to such Participant in cash the amount of any taxes
which the Company may be required to withhold with respect to such cash amounts.
The above notwithstanding, in any case where a tax is required to be withheld in
connection with the issuance or transfer of shares of Common Stock under this
Plan, the Participant may elect, pursuant to such rules as the Committee may
establish, to have the Company reduce the number of such shares issued or
transferred by the appropriate number of shares to accomplish such withholding;
provided that the Committee may impose such conditions on the payment of any
withholding obligation as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 promulgated under the
Exchange Act.
(b) The Committee may, in its discretion, permit a loan from the
Company to a Participant (other than a member of the Committee) in the amount of
any taxes which the Company may be required to withhold with
<PAGE>
respect to shares of Common Stock received pursuant to a transaction described
in Subsection 7.6(a). Such a loan will be for a term, at a rate of interest
and pursuant to such other terms and rules as the Committee may establish.
7.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to time,
amend, modify or suspend the Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of the Plan and,
with the consent of the Participant, make such modifications of the terms and
conditions of such Participant's Award as the Committee shall deem advisable.
The Committee, with the consent of the Participant, may also amend the terms of
any Option to provide that the exercise price of the shares remaining subject to
the original Award shall be reestablished at a price not less than 100% of the
Fair Market Value of the Common Stock on the effective date of such amendment.
No modification of any other term or provision of any Option which is amended in
accordance with the foregoing shall be required, although the Committee may, in
its discretion, make such further modifications of any such Option as are not
inconsistent with or prohibited by the Plan. No Awards may be granted during any
suspension of the Plan or after the Plan's termination.
(b) If an amendment would (i) materially increase the benefits
accruing to Participants within the meaning of Rule 16b-3(a) promulgated under
the Exchange Act or any successor thereto, (ii) increase the aggregate number of
shares which may be issued under the Plan or to any individual, (iii) modify the
requirements of eligibility for participation in the Plan or (iv) require
shareholder approval in order to qualify Options and Stock Appreciation Rights
as "performance-based compensation," within the meaning of Section 162(m) of the
Code and the regulations promulgated thereunder, the amendment shall be approved
by the Board or the Committee and holders of a majority of the voting securities
of the Company. If the provisions of Rule 16b-3 promulgated under the Exchange
Act or any successor thereto or Section 162(m) of the Code regulations
promulgated thereunder permit the amendment of stock options plans without
compliance with the shareholder approval requirements then set forth therein,
the foregoing restrictions on the ability of the Board and the Committee to
amend the Plan shall terminate to the extent such approval is not required
thereunder (or under any other applicable law or regulation), and the Board and
the Committee shall be empowered to amend the Plan without regard to the
terminated restrictions in appropriate circumstances.
(c) In the case of Awards issued before the effective date of any
amendment, suspension or termination of this Plan, such amendment, suspension or
termination of the Plan shall not, without specific action of the Board or the
Committee and the consent of the Participant, in any way modify, amend, alter or
impair any rights or obligations under any Award previously granted under the
Plan.
7.8 Privileges of Stock Ownership, Nondistributive Intent. A Participant,
and any Participant's Personal Representative, heirs, beneficiaries and
successors, shall not be entitled to the privilege of stock ownership as to any
shares of Common Stock not actually issued to the Participant or such person or
entity. Upon the issuance and transfer of shares to the Participant, unless a
registration statement is in effect under the Securities Act, relating to such
issued and transferred Common Stock and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Securities Act, the
Common Stock may be issued and transferred to the Participant only if the
Participant represents and warrants in writing to the Corporation that the
shares are being acquired for investment and not with a view to the resale or
distribution thereof. No shares shall be issued and transferred unless and until
there shall have been full compliance with any then applicable regulatory
requirements (including those of exchanges upon which the Common Stock may be
listed).
7.9 Effective Date of the Plan. The Plan shall be effective upon approval
of the Plan by the Board.
7.10 Term of the Plan. Unless previously terminated by the Board, the Plan
shall terminate at the close of business on the tenth anniversary of the date on
which the Plan shall be initially approved by the Board, and no Awards shall be
granted under the Plan thereafter, but such termination shall not affect any
Award theretofore granted.
7.11 Governing Law. This Plan and the documents evidencing Awards and all
other related documents shall be governed by, and construed in accordance with,
the laws of the State of Delaware. If any provision shall be held by
<PAGE>
a court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions of the Plan shall continue to be fully effective.
KAUFMAN & ASSOCIATES, LLC
50 Charles Lindbergh Boulevard - Suite 206
Mitchel Field, New York 11553
August 19, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Windswept Environmental Group, Inc.
Registration Statement on Form S-8
1998 Stock Incentive Plan
Dear Sirs/Madams:
We have acted as counsel to Windswept Environmental Group, Inc., a
Delaware corporation (the "Corporation"), in connection with the registration
under the Securities Act of 1933, as amended (the "Act") of 2,000,000 shares
(the "Shares") of the common stock, par value $.001 per share (the "Common
Stock"), of the Corporation, issuable under the Corporation's 1998 Stock
Incentive Plan (the "Plan"). In this regard, we have participated in the
preparation of a Registration Statement on Form S-8 (the "Registration
Statement") relating to the Shares and Plan.
We advise you that we have examined originals or copies, certified or
otherwise identified to our satisfaction, of (i) the Corporation's Certificate
of Incorporation, as amended to date, (ii) the Corporation's By-laws, as amended
to date, (iii) the records of corporate proceedings of the Corporation,
including, but not limited to, the Minutes of the Meeting of the Board of
Directors, held on August 19, 1998, at which time the Plan was approved and
2,000,000 shares of Common Stock were authorized and reserved for issuance under
the Plan and (iv) such other agreements, certificates, instruments and
documents, and we have made such examination of law, as we have deemed
appropriate as the basis for the opinions hereinafter expressed. In making such
examinations, we have assumed the genuiness of all signatures, the authenticity
of all documents presented to us as original documents, the adequacy and legal
sufficiency of the consideration being tendered to the Corporation in exchange
for the Shares and the conformity to authentic original documents of documents
presented to us as certified or photostatic copies.
Based upon and subject to the foregoing, we are of the opinion that
the Shares have been duly authorized, and, when issued and delivered in
accordance with the Plan and any applicable award agreement entered into
pursuant to the Plan, shall be validly issued, fully paid and non-assessable.
We hereby consent to be named in the Registration Statement and to the
filing of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Kaufman & Associates, LLC
Kaufman & Associates, LLC
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Windswept Environmental Group, Inc.
Bay Shore, New York
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated August 13, 1998, relating
to the consolidated financial statements of Windswept Environmental Group, Inc.
appearing in the Company's Annual Report on Form 10-KSB for the year ended April
30, 1998.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Melville, New York
August 17, 1998
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated September 29, 1997, relating to the
consolidated financial statements of Windswept Environmental Group, Inc.
included in such Company's Annual Report on Form 10-KSB for the fiscal year
ended April 30, 1998.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Melville, New York
August 17, 1998
