LANDAUER, INC.
2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425-1586
TELEPHONE (708) 755-7000
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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Notice is hereby given that the annual meeting of the stockholders of
Landauer, Inc., a Delaware corporation, will be held at the DuPage Club,
1901 Meyers Road, Oakbrook Terrace, Illinois, at 4:00 p.m., local time, on
Wednesday, February 3, 1999 for the following purposes:
1. To elect three directors to hold office for a term of
three years each.
2. To vote on the proposal to approve the selection of Arthur
Andersen LLP as the auditors of the Company for the fiscal
year ending September 30, 1999.
3. To approve an amendment and restatement of the Landauer, Inc.
1996 Equity Plan to increase the number of shares issuable
thereunder from 210,000 shares to 410,000 shares.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on December 10,
1998 are entitled to notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND VOTE IN PERSON,
YOUR PROXY WILL NOT BE USED.
James M. O'Connell
Vice President, Treasurer, Secretary
and Chief Financial Officer
December 31, 1998
<PAGE>
PROXY STATEMENT
Approximate Date of Mailing: DECEMBER 31, 1998
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Landauer, Inc. (the "Company") for use at the annual meeting
of stockholders of the Company to be held on Wednesday, February 3, 1999 at
4:00 p.m., local time, at the DuPage Club, 1901 South Meyers Road, Oakbrook
Terrace, Illinois, or any adjournments or postponements thereof. It is
subject to revocation at any time prior to the exercise thereof by giving
written notice to the Secretary of the Company, by submission of a later
dated proxy or by voting in person at the meeting. The costs of
solicitation, including the preparation, assembly and mailing of proxy
statements, notices and proxies, will be paid by the Company. Such
solicitation will be made by mail and, in addition, may be made by the
officers and employees of the Company personally or by telephone or
telegram. Forms of proxies and proxy material may also be distributed, at
the expense of the Company, through brokers, custodians and other similar
parties to the beneficial owners of the Common Stock. The Company has
retained American Stock Transfer Company, 40 Wall Street, New York, New
York.
On December 10, 1998, the Company had outstanding 8,609,299 shares of
Common Stock, $.10 par value, which is its only class of voting stock, held
of record by approximately 600 holders. Only stockholders of record at the
close of business on December 10, 1998 will be entitled to receive notice
of and to vote at the meeting. With respect to all matters which will come
before the meeting, each stockholder may cast one vote for each share
registered in his name on the record date. A stockholder may, with regard
to the election of directors (i) vote for the election of all named
director nominees, (ii) withhold authority to vote for all named director
nominees or (iii) vote for the election of all named director nominees
other than any nominee with respect to whom the stockholder withholds
authority to vote by so indicating in the appropriate space on the proxy.
A stockholder may, with respect to the proposal to approve the selection of
Arthur Andersen LLP as auditors or the proposal to approve the amendment
and restatement of the 1996 Equity Plan (i) vote FOR such proposal, (ii)
vote AGAINST such proposal or (iii) ABSTAIN from voting on such proposal.
The shares represented by every proxy received will be voted, and where a
choice has been specified, the shares will be voted in accordance with the
specification so made. If no choice has been specified on the proxy, the
shares will be voted FOR the election of the nominees as directors, FOR
approval of Arthur Andersen LLP as auditors and FOR the approval of the
Amended and Restated 1996 Equity Plan. The proxy also gives authority to
the proxies to vote the shares in their discretion on any other matter
presented at the meeting. If a proxy indicates that all or a portion of
the shares represented by such proxy are not being voted with respect to a
particular proposal, such non-voted shares will not be considered present
and entitled to vote on such proposal, although such shares may be
considered present and entitled to vote on other proposals and will count
for the purpose of determining the presence of a quorum. An abstention
with respect to the proposal to approve the selection of Arthur Andersen
LLP as auditors or the proposal to approve the amendment and restatement of
the 1996 Equity Plan has the effect of a vote against such proposal.
<PAGE>
BENEFICIAL OWNERSHIP OF CERTAIN VOTING SECURITIES
The following table provides information as of December 10, 1998
concerning beneficial ownership of Common Stock by each person known by the
Company to own beneficially more than 5% of the outstanding shares of
Common Stock, each director, each director nominee, each executive officer
of the Company named under the caption "Executive Compensation" and all
directors and executive officers of the Company as a group. Unless
otherwise noted, the listed persons have sole voting and dispositive powers
with respect to shares held in their names, subject to community property
laws if applicable.
Amount
Beneficially Percent
Name of Beneficial Owner Owned of Class
- ------------------------ ------------ ----------
T. Rowe Price Associates 807,100 (1) 9.2%
Dr. Marvin G. Schorr 571,556 6.4%
Dr. Gary D. Eppen 1,100 *
Thomas M. Fulton 280,745 (2) 3.2%
Richard R. Risk 500 *
Paul B. Rosenberg 83,560 (3) 1.0%
Michael D. Winfield 431 *
Brent A. Latta 45,359 (4) *
James M. O'Connell 54,000 (5) *
Dr. R. Craig Yoder 42,518 (6) *
All directors and
executive officers
as a group (9 persons) 1,042,769 11.8%
__________
* Less than one percent.
(1) As reported in Statement on Schedule 13G filed with the
Securities and Exchange Commission on February 12, 1998. Includes 650,200
shares owned by the T. Rowe Price Small Cap Value Fund, Inc. Price
Associates expressly disclaims that it is the beneficial owner of such
securities. The address of this stockholder is 100 East Pratt Street,
Baltimore, MD 21201.
(2) Includes 99,251 shares subject to options exercisable within
60 days following the record date for the annual meeting.
(3) Includes 23,950 shares owned by Mr. Rosenberg's wife to which
he disclaims beneficial ownership.
(4) Includes 30,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
(5) Includes 50,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
(6) Includes 30,000 shares subject to options exercisable within
60 days following the record date for the annual meeting.
<PAGE>
ELECTION OF DIRECTORS
Members of the Company's Board of Directors are divided into three
classes serving staggered three-year terms. The terms of three of the
Company's eight current directors (Robert J. Cronin, Brent A. Latta, and
Richard R. Risk) expire at the annual meeting. They are the Company's
nominees for re-election to a three-year term by the stockholders at the
annual meeting. The Company's by-laws provide that nominations for
directorships by stockholders may be made only pursuant to written notice
received at the Company's principal office not less than 50 nor more than
75 days prior to the meeting. No such nominations have been received for
the 1998 annual meeting. Directors are elected by a plurality of the votes
present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Thus, assuming a quorum is present, the
three persons receiving the greatest number of votes will be elected to
serve as directors. Accordingly, withholding authority to vote for a
director and non-votes with respect to the election of directors will not
affect the outcome of the election of directors. If a nominee should
become unavailable for election, the persons voting the accompanying proxy
may in their discretion vote for a substitute.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NAMED
NOMINEES AS DIRECTORS OF THE COMPANY.
The following table contains certain information as to the three
nominees for election at the annual meeting and each other person whose
term of office as a director will continue after the meeting. The nominees
for election at the meeting are indicated by an asterisk.
Has Been a
Expira- Director of the
tion Company or its
Date of Business Experience Predecessor
Current During Past Five Years Tech/Ops, Inc.
Name Term and Other Directorships Since
---- ------- ----------------------- ---------------
*Robert J. Cronin 1999 Since November, 1992, President, 1997
(3)(4) Chief Executive Officer and
Age - 53 director of Wallace Computer
Services; previously President
and COO. Mr. Cronin joined
Wallace Computer Services in 1967,
initially holding various sales
management positions. Wallace
Computer Services is a provider
of information management products,
services and solutions.
Dr. Gary D. Eppen 2001 Since July, 1998 Deputy Dean of 1992
(4) Part-time Programs and Ralph and
Age 62 Dorothy Keller Distinguished
Service Professor of Operations
Management, Graduate School of
Business, The University of
Chicago. Professor of Industrial
Administration since 1970. Dr. Eppen
is also a director of The Hub Group
Inc., Lombard, Illinois, an inter-
modal transportation marketing
company.
<PAGE>
Has Been a
Expira- Director of the
tion Company or its
Date of Business Experience Predecessor
Current During Past Five Years Tech/Ops, Inc.
Name Term and Other Directorships Since
---- ------- ----------------------- ---------------
Thomas M. Fulton 2000 President and Chief Executive 1988
(1) Officer of the Company from
Age - 65 January 1988 until December 1998;
previously General Manager of the
personnel dosimetry division of
Tech/Ops, Inc., the Company's
predecessor. Mr. Fulton is a
Director of Great Lakes Chemical
Corporation, a diversified
producer of chemicals, and Octel
Corporation, a fuel additives
and specialty chemicals company.
*Brent A. Latta President and Chief Executive 1998
(1) Officer of the Company since
Age - 55 1999 December, 1998. Mr. Latta joined
the Company in 1987 as Vice
President - Marketing until 1997
when he was elected Executive
Vice President.
*Richard R. Risk 1999 President and Chief Executive 1997
(2) (3) Officer of Advocate Health
Age 52 Care since 1995; previously
Mr. Risk served as President
and CEO of EHS Health Care
(which merged into Advocate
Health Care), a company
specializing in health care
management.
Paul B.
Rosenberg 2000 Mr. Rosenberg is President and 1988
(1) (2) Chief Executive Officer of
Age 66 Tech/Ops Corporation, Boston,
Mass., a consulting firm, and
is a director of Tech/Ops Sevcon,
Inc., Boston, Mass., a
manufacturer of electronic
controllers.
Dr. Marvin G.
Schorr 2001 Chairman of the Company's Board 1951
(1) of Directors since January 1988.
Age 73 Dr. Schorr is Chairman of the
Board of Directors of Tech/Ops
Sevcon, Inc., Boston, Mass.,
a manufacturer of electronic
controllers, Chairman of the
Board of Directors of Helix
Technology Corporation,
Waltham, Mass., manufacturer
of cryogenic equipment, and
Chairman of the Board of
Directors of Tech/Ops Corpor-
ation, Boston, Mass., a consulting
firm.
<PAGE>
Has Been a
Expira- Director of the
tion Company or its
Date of Business Experience Predecessor
Current During Past Five Years Tech/Ops, Inc.
Name Term and Other Directorships Since
---- ------- ----------------------- ---------------
Michael D. Winfield2001 Since February 1992, President 1994
(2) (3) and Chief Executive Officer
Age 59 (prior to that date since 1983,
a Vice President) of UOP,
a general partnership of Allied-
Signal, Inc. and Union Carbide
Corporation, engaged in the
licensing of technologies to
the oil refining and petro-
chemical industries.
(1) Executive Committee
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Governance Committee.
The Board of Directors has an Audit Committee, a Compensation
Committee, and a Governance Committee. The Audit Committee reviews the
results and scope of the audit and other services provided by the Company's
independent public accountants and recommends the appointment of
independent public accountants to the Board of Directors. The Compensation
Committee approves all executive compensation and has responsibility for
granting stock options to eligible members of management and administering
the Company's stock option and incentive plans. The Governance Committee
establishes corporate governance policy and selects nominees for the Board
of Directors. The Governance Committee will consider nominees that have
been properly and timely recommended by stockholders. See "Proposals of
and Nominations by Security Holders for 2000 Annual Meeting." The
membership of each committee consists of non-employee directors. During
the fiscal year ended September 30, 1998, the Audit Committee met three
times, the Compensation Committee met twice and the Governance Committee
met once.
During the fiscal year ended September 30, 1998, the Board of
Directors held a total of five meetings. During such year, no director
attended fewer than 75 percent of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by
all committees of the Board on which such director served.
Mr. Risk, the Chairman of the Audit Committee, Mr. Michael D.
Winfield, the Chairman of the Compensation Committee, and Dr. Gary D.
Eppen, the Chairman of the Governance Committee, were paid $21,000 each in
fiscal 1998 for their services as directors. The other directors (except
Mr. Fulton and Mr. Latta) were paid $20,000 each. The Company maintains a
stock option plan for its non-employee directors which provides an option
for each eligible director to purchase 5,000 shares of common stock at the
fair market value on the date of grant and vests ratably over 10 years.
The plan, approved by the Company's shareholders at its 1997 annual
meeting, granted options to seven directors for a total of 35,000 shares at
an option price of $22.31 per share on January 29, 1997. During fiscal
1998, one of the directors retired thereby forfeiting options on 4,500
shares. The Company formerly maintained a Directors' Retirement Plan which
provides certain retirement benefits for non-employee directors. This plan
<PAGE>
was terminated in January, 1997. Benefits accrued under the retirement
plan are frozen and will be payable to directors upon their retirement at
age 70. As of September 30, 1998, the aggregate liability for these
benefits amounted to $369,000, which has been accrued in the financial
statements.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation
for services to the Company for the last three fiscal years of the
Company's executive officers.
Summary Compensation Table
--------------------------
Long-Term
Compensa-
tion
Awards
----------
Name and Annual Compensation Securities All Other
Principal Fiscal -------------------- Underlying Compensa-
Position Year Salary($) Bonus($) Options(#) tion($)(1)
- --------- ------ --------- --------- ---------- ----------
Thomas M. Fulton (2) 1998 $295,500 $ 90,000 -- $1,150
President & 1997 279,000 100,000 -- 1,150
Chief Executive 1996 267,500 75,000 -- 1,150
Officer (Retired)
Brent A. Latta (3) 1998 $196,250 $ 60,000 -- $1,150
President & 1997 183,000 65,000 -- 1,150
Chief Executive 1996 175,250 43,000 -- 1,150
Officer
James M. O'Connell 1998 $152,750 $ 35,000 -- $1,150
Vice President, 1997 144,500 44,000 -- 1,150
Treasurer, Secre- 1996 138,750 45,000 -- 1,150
tary & Chief
Financial Officer
R. Craig Yoder 1998 $151,500 $ 50,000 -- $1,150
Vice President - 1997 139,500 50,000 -- 1,150
Operations 1996 133,750 38,000 -- 1,150
(1) Represents the Company's contribution to its 401(k) plan on behalf
of each of these employees.
(2) On December 1, 1998, Mr. Fulton retired as President and
Chief Executive Officer of the Company.
(3) Mr. Latta was elected as President and Chief Executive
Officer effective on December 1, 1998.
<PAGE>
OPTIONS GRANTS IN LAST FISCAL YEAR
There were no stock options granted in the year ended September 30,
1998 to the Company's executive officers.
Shown below is information regarding holdings of unexercised stock
options at September 30, 1998 by the Company's executive officers.
No. of Securities
Underlying Unexercised Value of Unexercised
Options Held at In-the-Money Options at
September 30, 1998 September 30, 1998 ($)(1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Thomas M. Fulton 62,720 36,531 $940,800 $548,415
Brent A. Latta 25,000 5,000 257,500 45,000
James M. O'Connell45,000 5,000 417,188 45,000
R. Craig Yoder 25,000 5,000 257,500 45,000
(1) Aggregate market value on September 30, 1998 less aggregate
exercise price.
Mr. Fulton, Mr. Latta and Dr. Yoder exercised options on 100,000,
40,000 and 15,000 shares, respectively, during the last fiscal year.
EMPLOYMENT AND COMPENSATION AGREEMENTS. The Company has entered into
an Employment and Compensation Agreement with Mr. Fulton providing for his
employment in that capacity through December 31, 1998. Under the
Agreement, a non-statutory stock option to purchase 100,000 shares at a
price of $10.50 per share was granted to Mr. Fulton, which may become
exercisable for up to 10,000 shares a year on each December 1 from 1989
through 1998 under a formula reflecting average return on stockholders'
investment and earnings per share over successive three-year periods. The
Agreement also provides that previously granted shares may become
exercisable up to the maximum number of 100,000 at the end of the term of
the Agreement based upon ten-year performance criteria. At December 1,
1998 the option had become exercisable for a total of 99,251 shares.
The Company has entered into Employment Agreements with Messrs. Latta
and O'Connell and Dr. Yoder providing for their employment in their
respective capacities indefinitely. The Agreement provides that, in the
event of termination of employment under certain circumstances by the
Company other than for cause, death, disability or voluntary termination,
or by the executive for Good Reason (which includes a good faith
determination by the executive that he believes that he will not be able to
effectively discharge his duties or where the Company fails to obtain an
assumption in writing of its obligations under the Agreement by a
successor, as defined) the executive will become entitled to continuation
of base salary and average bonuses determined in accordance with the
Agreement for a period of eighteen months and certain other benefits. The
amounts otherwise payable to the executive will be offset by any
compensation earned by the executive from employment with a new employer
during the eighteen-month period but will not be reduced below an amount
equal to six month's base salary and average bonuses. The benefits payable
to Messrs. Latta and O'Connell and Dr. Yoder under these Agreements if
their employment had been terminated as of September 30, 1998 would have
had an estimated value of $497,000, $311,000 and $327,000, respectively.
<PAGE>
RETIREMENT PLAN AND SUPPLEMENTAL RETIREMENT PLAN. Messrs. Fulton,
Latta, and O'Connell, and Dr. Yoder participate in the Company's Retirement
Plan, a defined benefit plan under which benefits are based upon the
average of the annual rates of base salary in effect as of October 1 of
each year for the period of five consecutive years which produces the
highest such average and also based on years of service as set forth below.
U.S. tax law places limitations on the annual compensation eligible for
benefit consideration and on the aggregate annual amount payable to an
individual under qualified retirement plans.
Messrs. Latta, and O'Connell, and Dr. Yoder also participate in the
Company's Supplemental Key Executive Retirement Plan, under which a
participant is entitled to such payments from the Company during his life
after retirement at age 65 as may be necessary, when added to his benefits
under other Company-funded retirement or profit sharing plans, to provide a
minimum annual benefit equal to 50% of his highest five-year average or
final base salary, whichever is greater. Such payments continue to a
participant's spouse after the participant's death, but at a decreased
percentage of 25%. Benefits are reduced by 2% (1% for spouses) for each
year of service less than 25 years. Mr. Fulton had been a participant in
the supplemental plan until November, 1998, when he agreed to exchange any
interest in such plan for a commitment by the Company to fund a split-
dollar insurance arrangement. Under the terms of the insurance
arrangement, the present value of the insurance premium commitments, net of
refunds thereof, is approximately equal to the lump sum value of Mr.
Fulton's supplemental benefit.
The following table (except for Mr. Fulton) sets forth information
concerning the combined annual benefits payable pursuant to the Retirement
Plan on a straight-life annuity basis and the Supplemental Retirement Plan
on a 50% joint-and-survivor basis upon retirement at age 65 for specified
compensation levels (assuming continuation of 1997 fiscal year base salary)
and years of service classifications. Benefits under the Retirement Plan
and the Supplemental Retirement Plan are computed solely on the base salary
of participants, exclusive of bonuses, incentive and other compensation.
Benefits under the Retirement Plan which are reduced on account of Social
Security entitlement on the basis of the Internal Revenue Service permitted
disparity rules may be reinstated under the Supplemental Retirement Plan.
Pension Plan Table
------------------
Earnings Estimated Combined Annual Pension Based on
on Which Combined Years of Service Indicated
Retirement ---------------------------------------------
Benefits are Based 20 years 25 years 30 years 35 years
------------------ -------- -------- -------- --------
$ 125,000 $ 50,000 $ 62,500 $ 62,500 $ 70,200
150,000 60,000 75,000 75,000 85,500
175,000 70,000 87,500 87,500 87,500
200,000 80,000 100,000 100,000 100,000
225,000 90,000 112,500 112,500 112,500
250,000 100,000 125,000 125,000 125,000
275,000 110,000 137,500 137,500 137,500
300,000 120,000 150,000 150,000 150,000
Credited years of service at September 30, 1998 were 21 for Mr.
Fulton, 11 for Mr. Latta, 8 for Mr. O'Connell, and 15 for Dr. Yoder.
Credited years of service at age 65 would be 21 for Mr. Fulton, 21 for Mr.
Latta, 22 for Mr. O'Connell and 35 for Dr. Yoder.
<PAGE>
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate and retain
employees by encouraging and rewarding performance. The program is
administered by the Compensation Committee of the Board of Directors (the
"Committee"), consisting of three independent outside directors who are not
employees of the Company. The Committee regularly reviews and approves
generally all compensation and fringe benefit programs of the Company, and
also reviews and determines the base salary, and incentive compensation of
the executive officers named above, as well as stock option grants to all
employees. All compensation actions taken by the Committee are reported to
the full Board of Directors, who, excluding employee directors, approve the
actions of the Committee. The Committee also reviews and makes
recommendations to the Board on policies and programs for the development
of management personnel, as well as management structure and organization.
The Committee administers the Company's 1996 Equity Plan (the "Equity
Plan") and Incentive Compensation Plan for Executive Officers (the
"Executive Officer Plan"); each of which was approved by the Compensation
Committee, the Board of Directors and the Company's shareholders.
The Company believes that stock options are an important incentive to
motivate executive officers and other key employees for improved long-term
performance of the Company. The Company considers stock ownership, options
currently held and options previously granted when granting options
although there are no specific levels of ownership for such grants.
The Company believes that the combination of salary and incentive
compensation is the best tool for compensating its executive officers and
senior managers to promote uniform excellence, long-term commitment and
team performance. Management salaries are determined as a result of
individual performance, level of responsibility and experience. The
Company reviews these salaries annually and measures them against
compensation data obtained from published compensation surveys and surveys
that the Committee makes of a group of peer companies. The peer companies
are generally of about the same size as the Company and are in technical,
rather than consumer or distribution fields. The peer companies may
include some of the companies in the testing laboratory group used in the
Performance Graph. The Company believes that its competitors for executive
talent are not necessarily companies which engage in the same business as
the Company and, therefore, the companies used for comparative compensation
purposes differ from the companies included in the testing laboratory
group.
The Executive Officer Plan covers executive officers of the Company
who are elected by the Board of Directors to such offices and establishes
incentive pools which are related to aggregate executive officer base
salary and performance of the Company relative to (i) budgeted operating
income ("Operating Income Pool"), (ii) growth in earnings per share ("EPS
Pool"), and (iii) the AMEX Market Value Index ("Stockholder Return Pool").
The target percentages of aggregate executive officer base salary for the
Operating Income, EPS, and Stockholder Return Pools are 15%, 7.5%, and
7.5%, respectively. The actual size of each pool varies as a result of
actual performance compared with the performance measure for each pool.
OPERATING INCOME POOL. At 100% actual-to-budget operating income,
the Operating Income Pool is 15% of aggregate executive officer base
salary; at 80% actual-to-budget, the pool is 7.5% of base salary; and at
120% actual-to-budget, the pool is 25.5% of base salary. If actual-to-
budget is less than 60%, the Operating Income Pool is zero.
<PAGE>
EPS POOL. At average three-year growth in earnings per share of 10%,
the EPS Pool is 7.5% of aggregate executive officer base salary; at average
growth in earnings per share of 8%, the pool is 3.75% of base salary; and
at average growth in earnings per share of 12% the pool is 12.75% of base
salary. If average growth in earnings per share is 6% or lower, the EPS
Pool is zero.
STOCKHOLDER RETURN POOL. Where the three-year total return to
stockholders is equal to or exceeds the total return of the AMEX Market
Value Index, the Stockholder Return Pool is 7.5% of aggregate executive
officer base salary. In all other cases, the Stockholder Return Pool is
zero.
One-half of the Operating Income Pool is awarded to executive
officers, as a percentage of their base salaries, if the actual-to-budget
operating income is at least 90%. One-half of the EPS Pool is awarded to
executive officers, as a percentage of their base salaries, if the average
growth in earnings per share is at least 9%. One-half of the Stockholder
Return Pool is awarded to executive officers, as a percentage of their base
salaries, if the total return to stockholders of the Company exceeds the
total return of the AMEX Market Value Index. With respect to the balance
of each of the pools, The Compensation Committee has the discretion to
award to any participant an amount relating to each of the Operating Income
Pool, EPS Pool, and/or the Stockholder Return Pool ranging in value from
zero to one-half of the award such participant would otherwise receive.
Any amounts not so awarded may, at the discretion of the Committee, be
reallocated to any other participant based upon the Committee's evaluation
of the participant's individual performance relative to written objectives
and other factors.
If the actual-to-budget operating income is at least 60%, but less
than 90%, the Committee has the discretion to award to any participant an
amount relating to the Operating Income Pool ranging in value from zero to
the full amount of the award such participant would otherwise receive. If
the average growth in earnings per share is at least 6%, but less than 9%,
the Committee has the discretion to reduce an award to any participant an
amount relating to the EPS Pool ranging in value from zero to the full
amount of the award such participant would otherwise receive.
The aggregate amount of incentive compensation awards for any fiscal
year under the Executive Officer Plan and other incentive compensation
plans is limited to 5% of the Company's operating income for such fiscal
year.
The recommended base salary and incentive compensation award for the
President is determined each year by the Committee based upon overall
financial performance of the Company and the performance of the President
relative to corporate objectives and other factors under the terms of the
Executive Officer Plan.
Mr. Fulton's base salary and incentive compensation during fiscal
1998 increased to $385,500 from fiscal 1997. The increase in Mr. Fulton's
base salary related to the level of responsibility and accountability of
the Chief Executive Officer, as well as external factors such as inflation
and base salary levels in comparable companies. The amount of incentive
compensation awarded to Mr. Fulton was determined based on performance
relative to budgeted operating income, growth in earnings per share, the
total return to shareholders of the Company relative to the Amex Market
Value Index and individual performance relative to stated objectives under
the terms of the Executive Officer Plan. Each of these financial measures
was met or exceeded, and Mr. Fulton achieved substantially all of the
personal objectives established by the Board of Directors during fiscal
1998.
<PAGE>
In 1993, the tax laws were amended to limit the deduction a publicly-
held company is allowed for compensation paid to the chief executive
officer and the four most highly compensated executive officers other than
the chief executive officer. Generally, amounts paid in excess of $1
million to a covered executive, other than performance-based compensation,
cannot be deducted. In order to constitute performance-based compensation,
the performance measures must be approved by stockholders. No executive
officer of the Company has earned over $1 million in any fiscal year of the
Company.
MEMBERS OF THE COMPENSATION COMMITTEE:
Richard R. Risk, Chairman Robert J. Cronin Michael D. Winfield
<PAGE>
PERFORMANCE GRAPH
The following graph reflects a comparison of the cumulative total
return (change in stock price plus reinvested dividends) assuming $100
invested in the Common Stock of the Company, in the American Stock Exchange
("AMEX") Index, and in an industry index represented by a group of testing
laboratories during the period from September 30, 1993 through September
30, 1998. The comparisons in the following table are historical and are
not intended to forecast or be indicative of possible future performance of
the Common Stock of the Company.
Value of Investment at September 30,
------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Landauer, Inc. $ 100 $ 104 $ 129 $ 142 $ 188 $ 203
AMEX Index 100 100 118 124 156 141
Industry Index 100 86 115 153 121 79
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the 1988 transfer of the personnel dosimetry
business, the Company has entered into a Liability Assumption and Sharing
Agreement with Tech/Ops, Inc. (Tech/Ops) providing for, among other things,
(i) assumption by the Company of all determinable and contingent
liabilities and obligations of Tech/Ops relating to the personnel dosimetry
and radon detection business, (ii) assumption by the other former
subsidiary of Tech/Ops of all determinable and contingent liabilities and
obligations of Tech/Ops relating to its electronic controller business,
(iii) joint and several assumption by the Company and the other former
subsidiary of all contingent liabilities of Tech/Ops and (iv) the
allocation of other liabilities jointly and severally assumed to the
business in which they relate or, if they relate to neither business, in
ratios reflective of relative profit contributions of the respective
businesses for the five years ended September 30, 1987. Under the terms of
this agreement, no expense was charged to operations of the Company for the
fiscal year ended September 30, 1998.
SELECTION OF AUDITORS
The stockholders of the Company will be asked at the annual meeting
to approve the selection of auditors for the fiscal year ending September
30, 1999. Arthur Andersen LLP, 33 West Monroe Street, Chicago, Illinois,
has served as auditors for the Company and its predecessor Tech/Ops, Inc.
since the latter was formed, and it will be recommended to the stockholders
that such firm be selected again. The Audit Committee of the Board of
Directors comprised of Richard R. Risk, Paul B. Rosenberg, and Michael D.
Winfield, has approved this recommendation. Representatives of Arthur
Andersen LLP are expected to be present at the meeting with an opportunity
to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
If a quorum is present, in order to approve the selection of Arthur
Andersen LLP as the Company's auditors for the fiscal year ending
September 30, 1999, a majority of the shares present in person or by proxy
at the annual meeting and entitled to vote on such proposal must vote in
favor of it. Accordingly, abstentions will have the same effect as votes
against and non-votes will reduce the number of shares considered present
and entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF ARTHUR
ANDERSEN LLP AS AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1999.
<PAGE>
APPROVAL OF AMENDMENT AND RESTATEMENT OF
1996 EQUITY PLAN
GENERAL
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The Board of Directors is proposing for stockholder approval an
amendment and restatement of the Landauer, Inc. 1996 Equity Plan (the "1996
Plan") which increases the number of shares of Common Stock issuable
thereunder from 210,000 to 410,000.
The 1996 Plan was originally approved by stockholders at the
Company's 1996 Annual Meeting. The purposes of the 1996 Plan are (i) to
align the interests of the Company's stockholders and recipients of awards
under the 1996 Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, (ii) to advance the
interests of the Company by attracting and retaining officers and other key
employees and (iii) to motivate such employees to act in the long-term best
interests of the Company's stockholders. Under the 1996 Plan, the Company
may grant non-qualified stock options, "incentive stock options" (within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), stock appreciation rights ("SARs"), restricted stock, bonus
stock, long-range performance awards and performance shares.
The amendment and restatement of the 1996 Plan was approved by the
Board of Directors in November 1998, subject to stockholder approval. The
Amended and Restated 1996 Equity Plan (the "Plan") remains identical to the
1996 Plan except for the increase in the number of shares of Common Stock
issuable thereunder. If the Plan is not approved by stockholders at the
annual meeting, the Company would continue to operate under the 1996 Plan
previously approved by stockholders. Reference is made to Exhibit A to
this Proxy Statement for the complete text of the Plan. A summary
description of the Plan follows.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR approval of the Plan.
DESCRIPTION OF PLAN
ADMINISTRATION. The Plan will be administered by a committee of the
Board of Directors (the "Committee") consisting of not less than two
directors who are not eligible to receive discretionary awards of equity
securities of the Company under the Plan or any other plan of the Company
or any affiliate of the Company and who are "outside directors" within the
meaning of Section 162(m) of the Code. The Compensation Committee of the
Board of Directors is expected to serve as the Committee under the Plan.
Section 162(m) of the Code generally limits to $1 million the amount
that a publicly held corporation is allowed each year to deduct for the
compensation paid to each of the corporation's chief executive officer and
the corporation's four most highly compensated executive officers other
than the chief executive officer. However, "qualified performance-based
compensation" is not subject to the $1 million deduction limit. To qualify
as performance-based compensation, the following requirements must be
satisfied: (i) the performance goals are determined by a committee
consisting solely of two or more "outside directors", (ii) the material
terms under which the compensation is to be paid, including the performance
goals, are approved by a majority of the corporation's stockholders, and
(iii) the committee certifies that the applicable performance goals were
satisfied before payment of any performance-based compensation is made.
The Committee will consist solely of "outside directors" as defined for
purposes of section 162(m) of the Code. As a result, and based on certain
proposed regulations issued by the United States Department of the
Treasury, certain compensation under the Plan, such as that payable with
respect to options and SARs, is not expected to be subject to the $1
million deduction limit under Section 162(m) of the Code, but other
compensation payable under the Plan, such as any restricted stock award
which is not subject to a performance condition to vesting, would be
subject to such limit.
<PAGE>
Subject to the express provisions of the Plan, the Committee will
have the authority to select eligible officers and other key employees who
will receive awards and determine all of the terms and conditions of each
award. All awards will be evidenced by a written agreement containing such
provisions not inconsistent with the Plan as the Committee shall approve.
The Committee will also have authority to prescribe rules and regulations
for administering the Plan and to decide questions of interpretation or
application of any provision of the Plan. Except with respect to grants to
executive officers of the Company and persons whose compensation is likely
to be subject to the $1 million deduction limit under Section 162(m) of the
Code, the Committee may delegate some or all of its power and authority to
administer the Plan to the Chief Executive Officer or other executive
officer of the Company.
AVAILABLE SHARES. Under the Plan, 410,000 shares of Common Stock are
available for awards, subject to adjustment in the event of a stock split,
stock dividend, recapitalization, reorganization, merger, spin-off or other
similar change or event. The number of available shares will be reduced by
the sum of the aggregate number of shares of Common Stock (i) that are
issued upon the grant of a Stock Award and (ii) which become subject to
outstanding options, Free-Standing SARs and outstanding Performance Shares.
To the extent that shares of Common Stock subject to an outstanding option
(except to the extent shares of Common Stock are issued or delivered by the
Company in connection with the exercise of a Tandem SAR), Free-Standing
SAR, Stock Award or Performance Share are not issued or delivered by reason
of the expiration, termination, cancellation or forfeiture of such award or
by reason of the delivery or withholding of shares of Common Stock to pay
all or a portion of the exercise price of an award, if any, or to satisfy
all or a portion of the tax withholding obligations or other taxes relating
to an award, then such shares of Common Stock shall again be available
under the Plan. The maximum number of shares of Common Stock with respect
to which options and SARs may be granted during any fiscal year to any
person is 75,000, subject to adjustment as described above. As of December
10, 1998, stock options and Stock Awards with respect to an aggregate
203,500 shares of Common Stock have been granted under the 1996 Plan.
EFFECTIVE DATE, TERMINATION AND AMENDMENT. If approved by
stockholders at the annual meeting, the Plan will become effective as of
the date of the annual meeting and will terminate ten years thereafter,
unless terminated earlier by the Board of Directors. The Board of
Directors may amend the Plan at any time, subject to any requirement of
stockholder approval required by applicable law, rule or regulation and
provided that no amendment may be made without stockholder approval if such
amendment would, among other things, (i) increase the maximum number of
shares of Common Stock available under the Plan, (ii) reduce the minimum
purchase price of a share of Common Stock subject to an option or base
price of an SAR or (iii) extend the term of the Plan.
STOCK OPTIONS-GENERAL. The Committee will determine the conditions
to the exercisability of an option. Upon exercise of an option, including
an incentive stock option, the purchase price may be paid in cash, by
delivery of previously owned shares of Common Stock or by authorizing the
Company to withhold shares of Common Stock which would otherwise be
delivered upon exercise of the option. The Committee also has the
discretion to permit payment by a note or in installments under certain
circumstances.
NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The
period for the exercise of a non-qualified stock option or SAR will be
determined by the Committee. The exercise price of a non-qualified option
and the base price of an SAR will not be less than 100% of the fair market
value of the Common Stock on the date of grant of such option or SAR,
provided that the base price of an SAR granted in tandem with an option (a
"tandem SAR") will be the exercise price of the related option. The
exercise of an SAR entitles the holder thereof to receive (subject to
withholding taxes) shares of Common Stock (which may be restricted stock),
cash or a combination thereof with a value equal to the difference between
the fair market value of the Common Stock on the exercise date and the base
price of the SAR.
<PAGE>
In the event of termination of employment by reason of retirement on
or after age 65 (or prior to age 65 with the consent of the Committee),
each non-qualified stock option and SAR will become fully exercisable for a
period of no more than one year after the date of such termination of
employment (or such other period as determined by the Committee), but in no
event after the expiration of such option or SAR. In the event of
termination of employment by reason of death or disability, each non-
qualified stock option and SAR will become fully exercisable for a period
of no more than one year after the date of such termination (or such other
period as determined by the Committee), but in no event after the
expiration of such option or SAR, subject to extension in certain
circumstances. In the event of termination of employment for cause (as
defined), each option or SAR held by the holder whose employment has been
so terminated shall terminate on the date of such termination of
employment. In the event of termination of employment for any other
reason, each nonqualified stock option and SAR will terminate on a date not
later than three months after such termination of employment (or such other
period as determined by the Committee), but in no event after the
expiration of such option or SAR. If a holder dies during the specified
periods following termination of employment by reason of retirement,
disability or for any other reason, each non-qualified stock option or SAR
will be exercisable only to the extent that such option or SAR was
exercisable on the date of the holder's death, and may thereafter be
exercised for a period of no more than one year from the date of death, but
in no event after the expiration of such option or SAR, subject to
extension in certain circumstances.
INCENTIVE STOCK OPTIONS. No incentive stock option will be
exercisable more than ten years after its date of grant, unless the
recipient of the incentive stock option owns greater than ten percent of
the voting power of all shares of capital stock of the Company (a "ten
percent holder"), in which case the option will be exercisable for no more
than five years after its date of grant. The exercise price of an
incentive stock option will not be less than the fair market value of the
Common Stock on the date of grant of such option, unless the recipient of
the incentive stock option is a ten percent holder, in which case the
option exercise price will be the price required by the Code, currently
110% of fair market value.
In the event of a termination of employment by reason of death or
permanent and total disability (as defined in Section 22(e)(3) of the
Code), incentive stock options will become fully exercisable for a period
of no more than one year after such termination (or such shorter period as
determined by the Committee), but in no event after the expiration of the
incentive stock option. In the event of a termination of employment by the
Company of a holder's employment for cause, incentive stock options held by
such holder shall terminate on the date of termination of employment. In
the event of a termination of employment for any other reason, incentive
stock options will be exercisable to the extent exercisable on the date of
termination for a period of three months after such termination, but in no
event after the expiration of the incentive stock option. If the holder of
an incentive stock option dies during the specified periods following
termination of employment by reason of permanent and total disability or
for any other reason, each incentive stock option will be exercisable only
to the extent such option was exercisable on the date of the holder's
death, and may thereafter be exercised for a period of no more than one
year, but in no event after expiration of the incentive stock option.
<PAGE>
BONUS STOCK AND RESTRICTED STOCK AWARDS. The Plan provides for the
grant of (i) bonus stock awards, which are vested upon grant, and (ii)
stock awards which may be subject to a restriction period ("restricted
stock"). An award of restricted stock may be subject to specified
performance measures for the applicable restriction period. Shares of
restricted stock will be non-transferable and subject to forfeiture if the
holder does not remain continuously in the employment of the Company during
the restriction period or, if the restricted stock is subject to
performance measures, if such performance measures are not attained during
the restriction period; provided, however, that, unless otherwise
determined by the Committee, termination of employment by reason of
retirement on or after age 65 (or prior to age 65 with the consent of the
Committee), disability or death, will result in the restricted stock
becoming fully vested and any performance measures will be deemed to be
satisfied at the maximum level. In the event of termination of employment
for any other reason, the portion of a restricted stock award which is then
subject to a restriction period will be forfeited and cancelled by the
Company. Unless otherwise determined by the Committee, the holder of a
restricted stock award will have rights as a stockholder of the Company,
including the right to vote and receive dividends with respect to the
shares of restricted stock.
PERFORMANCE SHARE AWARDS. The Plan also provides for the grant of
performance shares. Each performance share is a right, contingent upon the
attainment of performance measures within a specified performance period,
to receive one share of Common Stock, which may be restricted stock, or the
fair market value of such performance share in cash. Prior to the
settlement of a performance share award in shares of Common Stock, the
holder of such award will have no rights as a stockholder of the Company
with respect to the shares of Common Stock subject to the award.
Performance shares will be non-transferable and subject to forfeiture if
the specified performance measures are not attained during the applicable
performance period; provided, however, that termination of employment by
reason of retirement on or after age 65 (or prior to age 65 with the
consent of the Committee), disability or death, will result in the
performance share award becoming fully vested (if no performance measures
are required to be satisfied prior to termination of employment) or to a
level proportionate with the actual performance for the portion of the
performance period that has expired prior to termination of employment (if
any performance measures are required to be satisfied prior to termination
of employment). In the event of termination of employment for any other
reason, the portion of a performance share award which is then subject to a
performance period will be forfeited and cancelled by the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain U.S. federal income tax
consequences generally arising with respect to awards under the Plan.
A participant will not recognize any income upon the grant of an
option. A participant will recognize compensation taxable as ordinary
income (and subject to income tax withholding) upon exercise of a non-
qualified stock option equal to the excess of the fair market value of the
shares purchased over their exercise price, and the Company will be
entitled to a corresponding deduction. A participant will not recognize
income (except for purposes of the alternative minimum tax) upon exercise
of an incentive stock option. If the shares acquired by exercise of an
incentive stock option are held for the longer of two years from the date
the option was granted and one year from the date it was exercised, any
gain or loss arising from a subsequent disposition of such shares will be
taxed as long-term capital gain or loss, and the Company will not be
entitled to any deduction. If, however, such shares are disposed of within
the above-described period, then in the year of such disposition the
participant will recognize compensation taxable as ordinary income equal to
the excess of the lesser of (i) the amount realized upon such disposition
and (ii) the fair market value of such shares on the date of exercise over
the exercise price, and the Company will be entitled to a corresponding
deduction.
<PAGE>
A participant who is granted SARs will not recognize any taxable
income upon the grant of the SARs. Upon exercise, the participant
recognizes taxable compensation in an amount equal to the fair market value
of any shares delivered and the amount of cash paid by the Company. This
amount is deductible by the Company as compensation expense.
A participant receiving restricted stock will not recognize taxable
income at the time of the grant, and the Company will not be entitled to a
tax deduction at such time, unless the participant makes an election to be
taxed at the time restricted stock is granted. If such election is not
made, the participant will recognize taxable income at the time the
restrictions lapse in an amount equal to the excess of the fair market
value of the shares at such time over the amount, if any, paid for such
shares. The amount of ordinary income recognized by a participant by
making the above-described election or upon the lapse of the restrictions
is deductible by the Company as compensation expense, except to the extent
the deduction limits of Section 162(m) of the Code apply. In addition, a
participant receiving dividends with respect to restricted stock for which
the above-described election has not been made and prior to the time the
restrictions lapse will recognize taxable compensation, rather then
dividend income, in an amount equal to the dividends paid and the Company
will be entitled to a corresponding deduction, except to the extent the
deduction limits of Section 162(m) of the Code apply.
A participant receiving bonus stock will recognize taxable income at
the time the bonus stock is awarded in an amount equal to the then fair
market value of such stock. This amount is deductible by the Company as
compensation expense, except to the extent the deduction limits of Section
162(m) of the Code apply.
A participant receiving performance shares will not recognize taxable
income upon the grant of such shares and the Company will not be entitled
to a tax deduction at such time. Upon the settlement of performance
shares, the participant will recognize ordinary income in an amount equal
to the fair market value of any shares delivered and any cash paid by the
Company. This amount is deductible by the Company as compensation expense,
except to the extent the deduction limits of Section 162(m) of the Code
apply.
The affirmative vote of a majority of the shares present at the
meeting in person or by proxy is necessary to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED
AND RESTATED 1996 EQUITY PLAN FOR OFFICERS AND KEY EMPLOYEES.
<PAGE>
PROPOSALS OF AND NOMINATIONS BY SECURITY HOLDERS FOR
2000 ANNUAL MEETING
Proposals intended to be presented by security holders at the annual
meeting of the Company's stockholders scheduled for February 2, 2000 must
be received by the Company in order to be considered for inclusion in its
proxy statement and form of proxy relating to that meeting not later than
August 31, 1999. Such proposals may be included in next year's proxy
statement if they comply with certain rules and regulations of the
Securities and Exchange Commission.
Under the Company's by-laws, nominations for directorships to be
acted on at the 2000 annual meeting may be made only pursuant to written
notice received at the Company's principal office not less than 50 nor more
than 75 days prior to the meeting.
<PAGE>
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities
("Reporting Persons") to file reports of beneficial ownership and changes
in such ownership with the Securities and Exchange Commission ("SEC").
Reporting Persons are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely on a review of the Form 3, 4, and 5 filings received
from, or filed by the Company on behalf of, directors, executive officers
of the Company since the beginning of fiscal year 1998, the Company is not
aware of any failure to file on a timely basis any Form 3, 4 or 5 during
fiscal year 1998 except (i) one Form 5 for each non-employee director
reporting the automatic initial grant of stock options to such directors
under the 1997 Non-Employee Directors Stock Option Plan; (ii) one Form 4
for each of Mr. Fulton, Mr. Latta and Dr. Yoder reporting the exercise of
options; and (iii) one Form 4 for each of Dr. Eppen, Mr. Winfield and Mr.
Risk reporting the purchase of shares. In each instance, the required
forms were not filed on a timely basis.
MISCELLANEOUS
The Company's 1998 Annual Report to Stockholders (which includes a
copy of Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998) accompanies this Proxy Statement.
The Board of Directors does not know of any business which will come
before the meeting except the matters described in the notice. If other
business is properly presented for consideration at the meeting, it is
intended that the proxies will be voted by the persons named therein in
accordance with their judgment on such matters.
In the event that a quorum is not present when the meeting is
convened, it is intended to vote the proxies in favor of adjourning the
meeting from time-to-time until a quorum is obtained.
James M. O'Connell
Vice President, Treasurer, Secretary
and Chief Financial Officer
Dated: December 31, 1998
<PAGE>
EXHIBIT A
LANDAUER, INC.
AMENDED AND RESTATED 1996 EQUITY PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the Amended and Restated 1996 Equity Plan
(the "PLAN") of Landauer, Inc. (the "COMPANY") and its subsidiaries from
time to time (individually a "SUBSIDIARY" and collectively the
SUBSIDIARIES") are (i) to align the interests of the Company's stockholders
and the recipients of awards under this Plan by increasing the proprietary
interest of such recipients in the Company's growth and success, (ii) to
advance the interests of the Company by attracting and retaining officers
and other key employees and (iii) to motivate such employees to act in the
long-term best interests of the Company's stockholders. For purposes of
this Plan, references to employment by the Company shall also mean
employment by a Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AGREEMENT" shall mean the written agreement evidencing an award
hereunder between the Company and the recipient of such award.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not subject
to a Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this
Plan.
"CAUSE" shall mean any willful act of dishonesty, conviction of a
felony, significant activities harmful to the reputation or business of the
Company, refusal to perform or substantial disregard of duties properly
assigned or significant violation of any statutory or common law duty of
loyalty to the Company, in each case as determined by not less than two-
thirds of the members of the Committee.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Committee designated by the Board,
consisting of two or more members of the Board, each of whom shall be (i) a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange
Act and (ii) an "outside director" within the meaning of Section 162(m) of
the Code, subject to any transition rules applicable to the definition of
outside director.
"COMMON STOCK" shall mean the common stock, par value $.10 per share,
of the Company.
"COMPANY" has the meaning specified in Section 1.1.
"DISABILITY" shall mean the inability of the holder of an award to
perform substantially such holder's duties and responsibilities for a
continuous period of at least six months, as determined solely by the
Committee.
<PAGE>
"EMPLOYMENT TERMINATION DATE" shall mean, in the case of the
termination by the Company of an employee's employment, the date that the
Company notifies such employee of such termination of employment and, in
the case of the termination by an employee of employment with the Company,
the date on which the Company shall first receive notification from such
employee of such termination of employment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" shall mean the average of the high and low
transaction prices of a share of Common Stock as reported on the American
Stock Exchange on the date as of which such value is being determined, or,
if the Common Stock is not listed on the American Stock Exchange, the
average of the high and low transaction prices of a share of Common Stock
on the principal national stock exchange on which the Common Stock is
traded on the date as of which such value is being determined, or, if there
shall be no reported transactions for such date, on the next preceding date
for which transactions were reported; provided, however, that if Fair
Market Value for any date cannot be so determined, Fair Market Value shall
be determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at such time
deem appropriate.
"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem
with, or by reference to, an option, which entitles the holder thereof to
receive, upon exercise, shares of Common Stock (which may be Restricted
Stock), cash or a combination thereof with an aggregate value equal to the
excess of the Fair Market Value of one share of Common Stock on the date of
exercise over the base price of such SAR, multiplied by the number of such
SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of
Common Stock that meets the requirements of Section 422 of the Code, or any
successor provision, which is intended by the Committee to constitute an
Incentive Stock Option.
"NON-STATUTORY STOCK OPTION" shall mean a stock option which is not
an Incentive Stock Option.
"PERFORMANCE MEASURES" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met (i) as a
condition to the exercisability of all or a portion of an option or SAR or
(ii) during the applicable Restriction Period or Performance Period as a
condition to the holder's receipt, in the case of a Restricted Stock Award,
of the shares of Common Stock subject to such award, or, in the case of a
Performance Share Award, of payment with respect to such award. Such
criteria and objectives may include, but are not limited to, the attainment
by a share of Common Stock of a specified Fair Market Value for a specified
period of time, earnings per share, return on equity, earnings of the
Company, revenues, market share, cash flows or cost reduction goals, or any
combination of the foregoing and any other criteria and objectives
established by the Committee. In the sole discretion of the Committee, the
Committee may amend or adjust the Performance Measures or other terms and
conditions of an outstanding award in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles.
"PERFORMANCE OPTION" shall mean an Incentive Stock Option or Non-
Statutory Stock Option, the exercisability of all or a portion of which is
contingent upon the attainment of specified Performance Measures within a
specified Performance Period.
<PAGE>
"PERFORMANCE PERIOD" shall mean any period designated by the
Committee during which the Performance Measures applicable to a Performance
Share Award or Performance Option shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the
attainment of specified Performance Measures within a specified Performance
Period, to receive one share of Common Stock, which may be Restricted
Stock, or in lieu thereof, the Fair Market Value of such Performance Share
in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares
under this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"RESTRICTED STOCK" shall mean shares of Common Stock which are
subject to a Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock
under this Plan.
"RESTRICTION PERIOD" shall mean any period designated by the
Committee during which the Common Stock subject to a Restricted Stock Award
may not be sold, transferred, assigned, pledged, hypothecated or otherwise
encumbered or disposed of, except as provided in this Plan or the Agreement
relating to such award.
"SAR" shall mean a stock appreciation right which may be a Free-
Standing SAR or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock
Award.
"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted
prior to the date of grant of the SAR), which entitles the holder thereof
to receive, upon exercise of such SAR and surrender for cancellation of all
or a portion of such option, shares of Common Stock (which may be
Restricted Stock), cash or a combination thereof with an aggregate value
equal to the excess of the Fair Market Value of one share of Common Stock
on the date of exercise over the base price of such SAR, multiplied by the
number of shares of Common Stock subject to such option, or portion
thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 5.5.
"TEN PERCENT HOLDER" shall have the meaning set forth in Section
2.1(a).
1.3 ADMINISTRATION. This Plan shall be administered by the Committee.
Any one or a combination of the following awards may be made under this
Plan to eligible officers and other key employees of the Company and its
Subsidiaries: (i) options to purchase shares of Common Stock in the form
of Incentive Stock Options or Non-Statutory Stock Options (which may
include Performance Options), (ii) SARs in the form of Tandem SARs or Free-
Standing SARs, (iii) Stock Awards in the form of Restricted Stock or Bonus
Stock and (iv) Performance Shares. The Committee shall, subject to the
terms of this Plan, select eligible officers and other key employees for
participation in this Plan and determine the form, amount and timing of
each award to such persons and, if applicable, the number of shares of
Common Stock, the number of SARs and the number of Performance Shares
subject to such an award, the exercise price or base price associated with
the award, the time and conditions of exercise or settlement of the award
<PAGE>
and all other terms and conditions of the award, including, without
limitation, the form of the Agreement evidencing the award. The Committee
shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to
the grant of an award, conditions with respect to the award, such as
limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.
The Committee may delegate some or all of its power and authority
hereunder to the President and Chief Executive Officer or other executive
officer of the Company as the Committee deems appropriate; provided,
however, that the Committee may not delegate its power and authority with
regard to (i) the grant of an award under this Plan to any person who is a
"covered employee" within the meaning of Section 162(m) of the Code or who,
in the Committee's judgment, is likely to be a covered employee at any time
during the period an award hereunder to such employee would be outstanding
or (ii) the selection for participation in this Plan of an officer or other
person subject to Section 16 of the Exchange Act or decisions concerning
the timing, pricing or amount of an award to such an officer or other
person.
No member of the Board of Directors or Committee, and neither the
President and Chief Executive Officer nor any other executive officer to
whom the Committee delegates any of its power and authority hereunder,
shall be liable for any act, omission, interpretation, construction or
determination made in connection with this Plan in good faith, and the
members of the Board of Directors and the Committee and the President and
Chief Executive Officer or other executive officer shall be entitled to
indemnification and reimbursement by the Company in respect of any claim,
loss, damage or expense (including attorneys' fees) arising therefrom to
the full extent permitted by law (except as otherwise may be provided in
the Company's Certificate of Incorporation and/or By-laws) and under any
directors' and officers' liability insurance that may be in effect from
time to time.
A majority of the Committee shall constitute a quorum. Except as
otherwise required by the definition of the term "Cause" in Section 1.2,
the acts of the Committee shall be either (i) acts of a majority of the
members of the Committee present at any meeting at which a quorum is
present or (ii) acts approved in writing by a majority of the members of
the Committee without a meeting.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such
officers or other key employees of the Company and its Subsidiaries as the
Committee in its sole discretion may select from time to time. The
Committee's selection of a person to participate in this Plan at any time
shall not require the Committee to select such person to participate in
this Plan at any other time.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 5.7,
410,000 shares of Common Stock shall be available under this Plan, reduced
by the sum of the aggregate number of shares of Common Stock (i) that are
issued upon the grant of a Stock Award and (ii) which become subject to
outstanding options, outstanding Free-Standing SARs and outstanding
Performance Shares. To the extent that shares of Common Stock subject to
an outstanding option (other than in connection with the exercise of a
Tandem SAR), Free-Standing SAR, Stock Award or Performance Share are not
issued or delivered by reason of the expiration, termination, cancellation
or forfeiture of such award or by reason of the delivery or withholding of
shares of Common Stock to pay all or a portion of the exercise price of an
award, if any, or to satisfy all or a portion of the tax withholding
obligations and other taxes referred to in Section 5.5 relating to an
award, then such shares of Common Stock shall again be available under this
Plan.
<PAGE>
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or
authorized and issued shares of Common Stock reacquired and held as
treasury shares or otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the rules
and regulations thereunder, the maximum number of shares of Common Stock
with respect to which options or SARs or a combination thereof may be
granted during any fiscal year of the Company to any person shall be
75,000, subject to adjustment as provided in Section 5.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options
to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each option, or portion thereof, that is not an
Incentive Stock Option, shall be a Non-Statutory Stock Option. Each
Incentive Stock Option shall be granted within ten years of the effective
date of this Plan. To the extent that the aggregate Fair Market Value
(determined as of the date of grant) of shares of Common Stock with respect
to which options designated as Incentive Stock Options are exercisable for
the first time by a participant during any calendar year (under this Plan
or any other plan of the Company, or any parent or Subsidiary) exceeds the
amount (currently $100,000) established by the Code, such options shall
constitute Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SHARES AND PURCHASE PRICE. The number of shares of
Common Stock subject to an option and the purchase price per share of
Common Stock purchasable upon exercise of the option shall be determined by
the Committee; provided, however, that the purchase price per share of
Common Stock purchasable upon exercise of a Non-Statutory Stock Option or
an Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the date of grant of such option;
provided further, that if an Incentive Stock Option shall be granted to any
person who, at the time such option is granted, owns capital stock
possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Company (or of any parent or Subsidiary) (a
"Ten Percent Holder"), the purchase price per share of Common Stock shall
be the price (currently 110% of Fair Market Value) required by the Code in
order to constitute an Incentive Stock Option.
(b) OPTION PERIOD AND EXERCISABILITY. The period during which an
option may be exercised shall be determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercised later than ten
years after its date of grant; provided further, that if an Incentive Stock
Option shall be granted to a Ten Percent Holder, such option shall not be
exercised later than five years after its date of grant. The Committee
may, in its discretion, determine that an option is to be granted as a
Performance Option and may establish an applicable Performance Period and
Performance Measures which shall be satisfied or met as a condition to the
grant of such option or to the exercisability of all or a portion of such
option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in
full at any time. An exercisable option, or portion thereof, may be
exercised only with respect to whole shares of Common Stock.
<PAGE>
(c) METHOD OF EXERCISE. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of
Common Stock to be purchased and accompanied by payment therefor in full
(or arrangement made for such payment to the Company's satisfaction) either
(A) in cash, (B) by delivery of previously owned whole shares of Common
Stock (which the optionee has held for at least six months prior to
delivery of such shares and for which the optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined
as of the date of exercise, equal to the aggregate purchase price payable
by reason of such exercise, (C) by authorizing the Company to withhold
whole shares of Common Stock which would otherwise be delivered upon
exercise of the option having a Fair Market Value, determined as of the
date of exercise, equal to the aggregate purchase price payable by reason
of such exercise, (D) in cash by a broker-dealer acceptable to the Company
to whom the optionee has submitted an irrevocable notice of exercise or (E)
a combination of (A), (B) and (C), in each case to the extent set forth in
the Agreement relating to the option, (ii) if applicable, by surrendering
to the Company any Tandem SARs which are cancelled by reason of the
exercise of the option and (iii) by executing such documents as the Company
may reasonably request. The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(E) and in the
case of an optionee who is subject to Section 16 of the Exchange Act, the
Company may require that the method of making such payment be in compliance
with Section 16 and the rules and regulations thereunder. Notwithstanding
the foregoing, the Committee shall also have the discretion to permit
payment to be made, in whole or in part, by a full-recourse note or in
installments at such times and upon such terms as the Committee may
approve; provided, however, that, in the case of payment by any such note
or installments, certificates for any shares of Common Stock issued in
respect thereof shall contain such legend, if any, as may be required by,
and shall otherwise be subject to the provisions of, the laws of the state
of incorporation of the Company relating to the issuance of shares on such
terms. Any fraction of a share of Common Stock which would be required to
pay such purchase price shall be disregarded and the remaining amount due
shall be paid in cash by the optionee. No certificate representing Common
Stock shall be delivered until the full purchase price therefor has been
paid.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant SARs to such eligible persons as may be selected by the Committee.
The Agreement relating to an SAR shall specify whether the SAR is a Tandem
SAR or a Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SARS AND BASE PRICE. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such
Incentive Stock Option is granted. The base price of a Tandem SAR shall be
the purchase price per share of Common Stock of the related option. The
base price of a Free-Standing SAR shall be determined by the Committee;
provided, however, that such base price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date of grant of such
SAR.
(b) EXERCISE PERIOD AND EXERCISABILITY. The Agreement relating to
an award of SARs shall specify whether such award may be settled in shares
of Common Stock (including shares of Restricted Stock) or cash or a
combination thereof. The period for the exercise of an SAR shall be
determined by the Committee; provided, however, that no Tandem SAR shall be
exercised later than the expiration, cancellation, forfeiture or other
termination of the related option. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a
condition to the exercisability of an SAR. The Committee shall determine
whether an SAR may be exercised in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable SAR, or
portion thereof, may be exercised, in the case of a Tandem SAR, only with
respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR, only with respect to a whole number of SARs. If an SAR is exercised
for shares of Restricted Stock, a certificate or certificates representing
such Restricted Stock shall be issued in accordance with Section 3.2(c) and
the holder of such Restricted Stock shall have such rights of a stockholder
of the Company as determined pursuant to Section 3.2(d). Prior to the
exercise of an SAR for shares of Common Stock, including Restricted Stock,
the holder of such SAR shall have no rights as a stockholder of the Company
with respect to the shares of Common Stock subject to such SAR and shall
have rights as a stockholder of the Company in accordance with Section 5.9.
(c) METHOD OF EXERCISE. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
cancelled by reason of the exercise of the Tandem SAR and (iii) by
executing such documents as the Company may reasonably request. A Free-
Standing SAR may be exercised (i) by giving written notice to the Company
specifying the whole number of SARs which are being exercised and (ii) by
executing such documents as the Company may reasonably request.
2.3 TERMINATION OF EMPLOYMENT. (a) Disability. Subject to paragraph
(f) below and unless otherwise specified in the Agreement relating to an
option or SAR, as the case may be, if the employment with the Company of
the holder of an option or SAR terminates by reason of Disability, each
option and SAR held by such holder shall be fully exercisable and may
thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur
of (i) the date which is one year (or such other period as set forth in the
Agreement relating to such option or SAR) after such holder's Employment
Termination Date and (ii) the expiration date of the term of such option or
SAR.
(b) RETIREMENT. Subject to paragraph (f) below and unless otherwise
specified in the Agreement relating to an option or SAR, as the case may
be, if the employment with the Company of the holder of an option or SAR
terminates by reason of retirement on or after age 65 (or prior to age 65
with the consent of the Committee) each option and SAR held by such holder
shall be fully exercisable and may thereafter be exercised by such holder
(or such holder's legal representative or similar person) until and
including the earliest to occur of (i) the date which is one year (or such
other period as set forth in the Agreement relating to such option or SAR)
after such holder's Employment Termination Date and (ii) the expiration
date of the term of such option or SAR.
(c) DEATH. Subject to paragraph (f) below and unless otherwise
specified in the Agreement relating to an option or SAR, as the case may
be, if the employment with the Company of the holder of an option or SAR
terminates by reason of death, each option and SAR held by such holder
shall be fully exercisable and may thereafter be exercised by such holder's
executor, administrator, legal representative, beneficiary or similar
person, as the case may be, until and including the earliest to occur of
(i) the date which is one year (or such other period as set forth in the
Agreement relating to such option or SAR) after the date of death and (ii)
the expiration date of the term of such option or SAR; provided, however,
that, in the event that the date of death is less than six months prior to
such expiration date, such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, shall
have not less than six months from the date of death to so exercise such
option or SAR (except that, in the event that such option is an Incentive
Stock Option, such period of exercise shall not under any circumstance
extend beyond the tenth anniversary of the date of grant of such Incentive
Stock Option).
<PAGE>
(d) OTHER TERMINATION. If the employment with the Company of the
holder of an option or SAR is terminated by the Company for Cause, each
option and SAR held by such holder shall terminate automatically on such
holder's Employment Termination Date.
Subject to paragraph (f) below and unless specified in the
Agreement relating to an option or SAR, as the case may be, if the
employment with the Company of the holder of an option or SAR terminates
for any reason other than Disability, retirement on or after age 65 (or
prior to age 65 with the consent of the Committee) or death, or Cause, each
option and SAR held by such holder shall be exercisable only to the extent
that such option or SAR is exercisable on such holder's Employment
Termination Date and may thereafter be exercised by such holder (or such
holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is three months (or such other
period as set forth in the Agreement relating to such option or SAR) after
such holder's Employment Termination Date and (ii) the expiration date of
the term of such option or SAR.
(e) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Subject to paragraph
(f) below and unless otherwise specified in the Agreement relating to an
option or SAR, as the case may be, if the holder of an option or SAR dies
during the period set forth in Section 2.3(a) following termination of
employment by reason of Disability, or if the holder of an option or SAR
dies during the period set forth in Section 2.3(b) following termination of
employment by reason of retirement on or after age 65 (or prior to age 65
with the consent of the Committee), or if the holder of an option or SAR
dies during the period set forth in Section 2.3(d) following termination of
employment for any reason other than Disability or retirement on or after
age 65 (or prior to age 65 with the consent of the Committee) (or, in each
case, such other period as set forth in the Agreement relating to such
option or SAR), each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR, as the case may be,
is exercisable on the date of such holder's death and may thereafter be
exercised by the holder's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is one year (or such other period
as set forth in the Agreement relating to such option or SAR) after the
date of death and (ii) the expiration date of the term of such option or
SAR; provided, however, that, in the event that the date of death is less
than six months prior to such expiration date, such holder's executor,
administrator, legal representative, beneficiary or similar person, as the
case may be, shall have not less than six months from the date of death to
so exercise such option or SAR (except that, in the event that such option
is an Incentive Stock Option, such period of exercise shall not under any
circumstance extend beyond the tenth anniversary of the date of grant of
such Incentive Stock Option).
(f) TERMINATION OF EMPLOYMENT - INCENTIVE STOCK OPTIONS. Unless
otherwise specified in the Agreement relating to the option, if the
employment with the Company of a holder of an incentive stock option
terminates by reason of Permanent and Total Disability (as defined in
Section 22(e)(3) of the Code), each incentive stock option held by such
optionee shall become fully exercisable and may thereafter be exercised by
such optionee (or such optionee's legal representative or similar person)
until and including the earliest to occur of (i) the date which is one year
(or such shorter period as set forth in the Agreement relating to such
option) after such optionee's Employment Termination Date by reason of
Permanent and Total Disability and (ii) the expiration date of the term of
such option.
<PAGE>
Unless otherwise specified in the Agreement relating to the
option, if the employment with the Company of a holder of an incentive
stock option terminates by reason of death, each incentive stock option
held by such optionee shall become fully exercisable and may thereafter be
exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of
(i) the date which is one year (or such shorter period as set forth in the
Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
If the employment with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each
Incentive Stock Option held by such optionee shall terminate automatically
on the effective date of such optionee's termination of employment. If the
employment with the Company of a holder of an incentive stock option
terminates for any reason other than Permanent and Total Disability or
death or Cause, each incentive stock option held by such optionee shall be
exercisable only to the extent such option is exercisable on the effective
date of such optionee's termination of employment and may thereafter be
exercised by such holder (or such holder's legal representative or similar
person) until and including the earliest to occur of (i) the date which is
three months after such optionee's Employment Termination Date and (ii) the
expiration date of the term of such option.
If the holder of an incentive stock option dies during the
period set forth in the first paragraph of the Section 2.3(f) following
termination of employment by reason of Permanent and Total Disability (or
such shorter period as set forth in the Agreement relating to such option),
or if the holder of an incentive stock option dies during the period set
forth in the third paragraph of this Section 2.3(f) following termination
of employment for any reason other than Permanent and Total Disability or
death or Cause, each incentive stock option held by such optionee shall be
exercisable only to the extent such option is exercisable on the date of
the optionee's death and may thereafter be exercised by the optionee's
executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is
one year (or such shorter period as set forth in the Agreement relating to
such option) after the date of death and (ii) the expiration date of the
term of such option.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock
Awards to such eligible persons as may be selected by the Committee. The
Agreement relating to a Stock Award shall specify whether the Stock Award
is a Restricted Stock Award or Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable.
(a) NUMBER OF SHARES AND OTHER TERMS. The number of shares of
Common Stock subject to a Restricted Stock Award or Bonus Stock Award and
the Performance Measures (if any) and Restriction Period applicable to a
Restricted Stock Award shall be determined by the Committee.
(b) VESTING AND FORFEITURE. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in
its discretion, and subject to the provisions of this Plan, for the vesting
of the shares of Common Stock subject to such award (i) if specified
Performance Measures are satisfied or met during the specified Restriction
Period or (ii) if the holder of such award remains continuously in the
employment of the Company during the specified Restricted Period and for
the forfeiture of the shares of Common Stock subject to such award (x) if
specified Performance Measures are not satisfied or met during the
specified Restriction Period or (y) if the holder of such award does not
remain continuously in the employment of the Company during the specified
Restriction Period.
<PAGE>
Bonus Stock Awards shall not be subject to any Performance Measures
or Restriction Periods.
(c) SHARE CERTIFICATES. During the Restriction Period, a
certificate or certificates representing a Restricted Stock Award shall be
registered in the holder's name and may bear a legend, in addition to any
legend which may be required pursuant to Section 5.6, indicating that the
ownership of the shares of Common Stock represented by such certificate is
subject to the restrictions, terms and conditions of this Plan and the
Agreement relating to the Restricted Stock Award. All such certificates
shall be deposited with the Company, together with stock powers or other
instruments of assignment (including a power of attorney), each endorsed in
blank with a guarantee of signature if deemed necessary or appropriate,
which would permit transfer to the Company of all or a portion of the
shares of Common Stock subject to the Restricted Stock Award in the event
such award is forfeited in whole or in part. Upon termination of any
applicable Restriction Period (and the satisfaction or attainment of
applicable Performance Measures), or upon the grant of a Bonus Stock Award,
in each case subject to the Company's right to require payment of any taxes
in accordance with Section 5.5, a certificate or certificates evidencing
ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) RIGHTS WITH RESPECT TO RESTRICTED STOCK AWARDS. Unless
otherwise set forth in the Agreement relating to a Restricted Stock Award,
and subject to the terms and conditions of a Restricted Stock Award, the
holder of such award shall have all rights as a stockholder of the Company,
including, but not limited to, voting rights, the right to receive
dividends and the right to participate in any capital adjustment applicable
to all holders of Common Stock; provided, however, that a distribution with
respect to shares of Common Stock, other than a regular cash dividend,
shall be deposited with the Company and shall be subject to the same
restrictions as the shares of Common Stock with respect to which such
distribution was made.
3.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY, RETIREMENT AND DEATH.
Unless otherwise set forth in the Agreement relating to a Restricted Stock
Award, if the employment with the Company of the holder of such award
terminates by reason of Disability, retirement on or after age 65 (or prior
to age 65 with the consent of the Committee) or death, the Restriction
Period shall terminate as of such holder's Employment Termination Date and
all Performance Measures, if any, applicable to such award shall be deemed
to have been satisfied at the maximum level.
(b) OTHER TERMINATION. Unless otherwise set forth in the Agreement
relating to a Restricted Stock Award, if the employment with the Company of
the holder of a Restricted Stock Award terminates for any reason other than
Disability, retirement on or after age 65 (or prior to age 65 with the
consent of the Committee) or death, the portion of such award which is
subject to a Restriction Period on such holder's Employment Termination
Date shall be forfeited and such portion shall be cancelled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this
Plan, as the Committee shall deem advisable.
(a) NUMBER OF PERFORMANCE SHARES AND PERFORMANCE MEASURES. The
number of Performance Shares subject to any award and the Performance
Measures and Performance Period applicable to such award shall be
determined by the Committee.
<PAGE>
(b) VESTING AND FORFEITURE. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in
its discretion, and subject to the provisions of this Plan, for the vesting
of such award, if specified Performance Measures are satisfied or met
during the specified Performance Period, and for the forfeiture of such
award, if specified Performance Measures are not satisfied or met during
the specified Performance Period.
(c) SETTLEMENT OF VESTED PERFORMANCE SHARE AWARDS. The Agreement
relating to a Performance Share Award (i) shall specify whether such award
may be settled in shares of Common Stock (including shares of Restricted
Stock) or cash or a combination thereof and (ii) may specify whether the
holder thereof shall be entitled to receive, on a current or deferred
basis, dividend equivalents, and, if determined by the Committee, interest
on any deferred dividend equivalents, with respect to the number of shares
of Common Stock subject to such award. If a Performance Share Award is
settled in shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with
Section 3.2(c) and the holder of such Restricted Stock shall have such
rights of a stockholder of the Company as determined pursuant to Section
3.2(d). Prior to the settlement of a Performance Share Award in shares of
Common Stock, including Restricted Stock, the holder of such award shall
have no rights as a stockholder of the Company with respect to the shares
of Common Stock subject to such award.
4.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY, RETIREMENT AND DEATH.
Unless otherwise set forth in the Agreement relating to a Performance Share
Award, if the employment with the Company of the holder of such award
terminates by reason of Disability, retirement on or after age 65 (or prior
to age 65 with the consent of the Committee) or death, all Performance
Measures applicable to such award shall be deemed to have been satisfied at
the maximum level (if none of the Performance Measures are required to be
satisfied prior to the date of such termination of employment) or a level
proportionate with the actual performance, determined on a weighted average
basis during the portion of the Performance Period that shall have expired
prior to such termination of employment (if any of the Performance Measures
are required to be satisfied prior to the date of such termination of
employment), and the Performance Period applicable to such award shall
thereupon terminate.
(b) OTHER TERMINATION. Unless otherwise set forth in the Agreement
relating to a Performance Share Award, if the employment with the Company
of the holder of a Performance Share Award terminates for any reason other
than Disability, retirement on or after age 65 or death, the portion of
such award which is subject to a Performance Period on such holder's
Employment Termination Date shall be forfeited and such portion shall be
cancelled by the Company.
V. GENERAL
5.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the
affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the 1999 annual meeting of stockholders,
shall become effective on the date of such approval. This Plan shall
terminate 10 years after its effective date unless terminated earlier by
the Board. Termination of this Plan shall not affect the terms or
conditions of any award granted prior to termination.
Awards hereunder may be made at any time prior to the termination of
this Plan, provided that no award may be made later than 10 years after the
effective date of this Plan. In the event that this Plan is not approved
by the stockholders of the Company, this Plan and any awards hereunder
shall be void and of no force or effect.
<PAGE>
5.2 AMENDMENTS. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation including Rule 16b-3 under the Exchange
Act and Section 162(m) of the Code; provided, however, that no amendment
shall be made without stockholder approval if such amendment would (a)
increase the maximum number of shares of Common Stock available for
issuance under this Plan (subject to Section 5.7), (b) reduce the minimum
purchase price in the case of an option or the base price in the case of an
SAR, (c) effect any change inconsistent with Section 422 of the Code or
(d) extend the term of this Plan. No amendment may impair the rights of a
holder of an outstanding award without the consent of such holder.
5.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award.
No award shall be valid until an Agreement is executed by the Company and
the recipient of such award and, upon execution by each party and delivery
of the Agreement to the Company, such award shall be effective as of the
effective date set forth in the Agreement.
5.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES.
No option, SAR or Performance Share shall be transferable other than (i) by
will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company or (ii) as otherwise
permitted under Rule 16b-3 under the Exchange Act as set forth in the
Agreement relating to such award. Each option, SAR or Performance Share
may be exercised or settled during the participant's lifetime only by the
holder or the holder's legal representative or similar person. Except as
permitted by the second preceding sentence, no option, SAR or Performance
Share may be sold, transferred, assigned, pledged, hypothecated, encumbered
or otherwise disposed of (whether by operation of law or otherwise) or be
subject to execution, attachment or similar process. Upon any attempt to
so sell, transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of any option, SAR or Performance Share, such award and all rights
thereunder shall immediately become null and void.
5.5 TAX WITHHOLDING AND OTHER SETTLEMENTS IN LIEU OF TAXES. The Company
shall have the right to require, prior to the issuance or delivery of any
shares of Common Stock or the payment of any cash pursuant to an award made
hereunder, payment by the holder of such award of any Federal, state, local
or other taxes which may be required to be withheld or paid in connection
with such award. An Agreement may provide that (i) the Company shall
withhold whole shares of Common Stock which would otherwise be delivered to
a holder, having an aggregate Fair Market Value determined as of the date
the obligation to withhold or pay taxes arises in connection with an award
(the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation
or (ii) the holder may satisfy any such obligation by any of the following
means: (A) a cash payment to the Company, (B) delivery to the Company of
previously owned whole shares of Common Stock (which the holder has held
for at least six months prior to the delivery of such shares and for which
the holder has good title, free and clear of all liens and encumbrances)
having an aggregate Fair Market Value, determined as of the Tax Date, equal
to the amount necessary to satisfy any such obligation, (C) authorizing the
Company to withhold whole shares of Common Stock which would otherwise be
delivered having an aggregate Fair Market Value, determined as of the Tax
Date, or withhold an amount of cash which would otherwise be payable to a
holder, equal to the amount necessary to satisfy any such obligation, (D)
in the case of the exercise of an option, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted an irrevocable
notice of exercise or (E) any combination of (A), (B) and (C), in each case
to the extent set forth in the Agreement relating to the award; provided,
however, that the Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (B)-(E) and that in the case of a
holder who is subject to Section 16 of the Exchange Act, the Company may
require that the method of satisfying such an obligation be in compliance
with Section 16 and the rules and regulations thereunder. An Agreement may
<PAGE>
provide for shares of Common Stock to be delivered or withheld having an
aggregate Fair Market Value in excess of the minimum amount required to be
withheld, but not in excess of the amount determined by applying the
holder's maximum marginal tax rate. Any fraction of a share of Common
Stock which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the
holder.
5.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject
to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock
subject to such award upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with,
the delivery of shares thereunder, such shares shall not be delivered
unless such listing, registration, qualification, consent, approval or
other action shall have been effected or obtained, free of any conditions
not acceptable to the Company. The Company may require that certificates
evidencing shares of Common Stock delivered pursuant to any award made
hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
5.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock
other than a regular cash dividend, the number and class of securities
available under this Plan, the number and class of securities subject to
each outstanding option and the purchase price per security, the terms of
each outstanding SAR, the number and class of securities subject to each
outstanding Stock Award, and the terms of each outstanding Performance
Share shall be appropriately adjusted by the Committee, such adjustments to
be made in the case of outstanding options and SARs without an increase in
the aggregate purchase price or base price. The decision of the Committee
regarding any such adjustment shall be final, binding and conclusive. If
any such adjustment would result in a fractional security being (i)
available under this Plan, such fractional security shall be disregarded,
or (ii) subject to an award under this Plan, the Company shall pay the
holder of such award, in connection with the first vesting, exercise or
settlement of such award, in whole or in part, occurring after such
adjustment, an amount in cash determined by multiplying (i) the fraction of
such security (rounded to the nearest hundredth) by (ii) the excess, if
any, of (A) the Fair Market Value on the vesting, exercise or settlement
date over (B) the exercise or base price, if any, of such award.
5.8 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by
the Company, any Subsidiary or any affiliate of the Company or affect in
any manner the right of the Company, any Subsidiary or any affiliate of the
Company to terminate the employment of any person at any time without
liability hereunder.
5.9 RIGHTS AS STOCKHOLDER. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or
other equity security of the Company which is subject to an award hereunder
unless and until such person becomes a stockholder of record with respect
to such shares of Common Stock or equity security.
5.10 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto,
to the extent not otherwise governed by the Code or the laws of the United
States, shall be governed by the laws of the State of Delaware and
construed in accordance therewith without giving effect to principles of
conflicts of laws.
