CHASE CORPORATION
50 Braintree Hill Park
Braintree, Massachusetts 02184
Telephone (617) 848-2810
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the annual meeting of shareholders of
Chase Corporation will be held at 9:30 a.m., Tuesday, January 21, 1997 in
the second floor conference room at 50 Braintree Hill Office Park, Braintree,
Massachusetts 02184 for the following purposes:
(1) To elect the members of the Board of Directors of the corporation;
and
(2) To act upon an amendment to Chase Corporation 1995 Stock Option Plan
so as to increase the pool of shares alloxated to the plan by an
additional 20,000 shares; and
(3) To transact such business as may properly come before the meeting.
Only shareholders of record on the books of the corporation at the
close of business on November 29, 1996 are entitled to notice of and to vote
at the meeting.
The Board of Directors hopes that all shareholders who can
conveniently do so will personally attend the meeting.
By order of the Board of Directors,
GEORGE M. HUGHES
Clerk
December 16, 1996
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ACCOMPANYING
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CHASE CORPORATION
50 Braintree Hill Park
Braintree, Massachusetts 02184
Telephone (617) 848-2810
PROXY STATEMENT
December 16, 1996
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Chase Corporation (the "Company") for the annual meeting of
the Company's shareholders to be held on January 21, l997. The cost of
solicitation will be borne by the Company. In addition to solicitation by
mail, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in
person at the meeting. Unless the proxy is revoked, the shares represented
thereby will be voted as directed. If no specifications are made, proxies
will be voted to elect the directors nominated by the Board of Directors.
On November 29, l996, the Company had outstanding 3,809,630 shares of
Common Stock, $0.10 par value (the "Common Stock"), which is its only class
of voting stock. Shareholders of record at the close of business on
November 29, 1996 are entitled to vote at the meeting. With respect to all
matters that will come before the meeting, each shareholder may cast one
vote for each share registered in his or her name on the record date. A
majority in interest of the Company's Common Stock outstanding and entitled
to vote represented at the meeting in person or by proxy constitutes a
quorum for the transaction of business.
The approximate date on which this proxy statement and form of proxy
will be first sent or given to shareholders is December 16, l996. The
Company's annual report for fiscal l996 will be sent to shareholders on the
same date.
Principal Holders of Voting Securities
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of November 29, l996, by (i) all persons
known to the Company to be beneficial owners of more than 5% of the
Company's outstanding Common Stock and (ii) all officers and directors of
the Company as a group.
Number of Shares Percent of
Beneficial Owner(a) Beneficially Owned(b) Class
__________________ ____________________ _______
Edward L. Chase 1,551,772(c) 39.1%
39 Nichols Rd.
Cohasset, MA 02025
Peter R. Chase 403,891 10.2%
305 Grange Park
Bridgewater, MA 02324
All current officers and
directors as a group 2,086,959 52.6%
(8 persons)
_____________
(a) Information regarding ownership of the Company's Common Stock by
the directors of the Company is set forth on pages 2 and 3 under the
heading "Election of Directors."
(b) Includes shares subject to stock options exercisable within the
60-day period following November 29, 1996. See "Election of Directors."
(c) Includes 1,614 shares owned of record by Mr. Chase's spouse. Mr.
Chase has shared power to direct voting or disposition, or both, of such
shares. As to balance of the shares, Mr. Chase has sole voting and
investment power.
Arrangements Regarding the Election of Directors
The Company's by-laws provide that for so long as 10% of the Company's
outstanding voting stock is owned by Edward L. Chase or his spouse, issue,
or estate, or a trust for the benefit of his spouse and/or issue, then the
Nominating Committee will recommend to the Board of Directors that such
person or a lineal descendant of such person be elected to the Board of
Directors.
Election of Directors
Seven directors are to be elected at the annual meeting. The Board of
Directors recommends that the seven nominees named below be elected as
directors. The directors elected at the meeting will hold office until the
next annual meeting and until their successors are elected and qualified.
It is intended that proxies in the accompanying forms be voted in favor of
electing as directors the persons named in the table below. If any nominee
should become unavailable for election, the persons voting the accompanying
proxy may in their discretion vote for a substitute. The Board of Directors
is not presently aware of any reason that would prevent any nominee from
serving as a director if elected.
The affirmative vote by the holders of a majority of the securities
present, or represented, and entitled to vote at the meeting is necessary
to elect the nominees for election as directors. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the
effect of negative votes. Broker non-votes will not be counted as present
or represented for this purpose. A "broker non-vote" occurs when a
registered broker holding a customer's shares in the name of the broker has
not received voting instructions on a matter from the customer, is barred
by applicable rules from exercising discretionary authority to vote on the
matter and so indicates on the proxy.
<TABLE>
<CAPTION>
No. of Common
Shares Owned
Business Experience Has Been Beneficially on Percent
During Past Five Years a Director November 29, of
Name Age and other Directorships Since 1996 (a) Class
<S> <C> <S> <C> <C> <C>
Edward L. Chase(c) 75 President Emeritus of the 1971 1,551,772(b) 39.1
Company since 1988;
President,Chief Operating
Officer, and Chief
Financial Officer of
the Company from 1971 to
September 1988; Treasurer
of the Company from 1984
to September 1988; from
1947 to September 1988,
Director and Treasurer
of Chase & Sons, Inc.
Peter R. Chase(c) 48 Chief Executive Officer 1993 403,891(g) 10.2
of the company since
September 1993 and
President of the Comp-
any since April 1992;
Chief Operating Officer of
the Company since September
1988.
Sarah Chase(c) 38 Partner, Ley & Young, P.C. N/A 1,870 ---
since 1993; Associate
Attorney, Ley & Young, P.C.
1990 - 1993
William H. Dykstra 68 Director of Reed and 1988 18,446(d) 0.5
Barton Corporation
since 1977; Senior
Vice President of
Finance from 1977
to January 1993.
Since 1993 is retired
but serves as an active
member on several boards.
George M. Hughes(e) 57 Through April 1996 Partner 1984 67,200(f) 1.7
at Palmer & Dodge. As of
May 1996 Founder and
Principal of Hughes &
Associates.
Ronald Levy 58 Vice President of Arthur 1994 9,500(h) 0.2
D. Little, Inc., a
management and technology
consulting company, since
1987 and a Director of its
Applied Technology
Consulting Practice since
1996.
Ernest E. Siegfriedt,Jr. 65 Independent business 1990 7,000(i) 0.2
consultant since 1988;
Vice President and
General Manager of the
Fasteners Division of
T.R.W., Inc., a
manufacturing company,
from 1976 to 1988.
</TABLE>
(a) The beneficial owners of these shares have sole voting power and
sole investment power over such shares, except as otherwise indicated. On
November 29, 1996, the officers and directors of the Company as a group
owned beneficially 2,086,959 shares (52.6%)of the Company's outstanding
Common Stock.
(b) Includes 5,000 shares that may be acquired within 60 days of
November 29, 1996 pursuant to the exercise of stock options
(c) Peter R. Chase, President and Chief Executive Officer of the
Company, is the son of Edward L. Chase.
(d) Includes 10,500 shares that may be acquired within 60 days of
November 29, l996 pursuant to the exercise of stock options.
(e) Mr. Hughes is general counsel to the Company.
(f) Includes 65,500 shares that may be acquired within 60 days of
November 29, 1996 pursuant to the exercise of stock options.
(g) Includes 59,200 shares that may be acquired within 60 days of
November 29, l996 pursuant to the exercise of stock options.
(h) Includes 5,000 shares that may be acquired within 60 days of
November 29, 1996 pursuant to the exercise of stock options.
(i) Includes 5,000 shares that may be acquired within 60 days of
November 29, 1996 pursuant to the exercise of stock options.
Meetings of the Board of Directors
The Company's Board of Directors held seven meetings during the fiscal
year ended August 31, 1996 and each director attended at least 75% of the
aggregate of all meetings of the Board of Directors and all meetings held
by committees of the Board on which they served.
Committees of the Board of Directors
The Board has standing audit, compensation and nominating committees.
All members of the committees serve at the pleasure of the Board of
Directors. The functions and current membership of each committee are as
follows:
Audit Committee. The Audit Committee recommends to the Board of
Directors the engagement of the Company's independent accountants, reviews
the scope and extent of their audit of the Company's financial statements,
and reviews the annual financial statements with the independent
accountants and with management, and makes recommendations to the Board of
Directors regarding the Company's policies and procedures as to internal
accounting and financial controls. The members of the Audit Committee are
Messrs. Dykstra, Siegfriedt and Edward L. Chase. The Audit Committee held
two meetings during the fiscal year ended August 31, 1996.
Compensation Committee. The Compensation Committee advises the Board
of Directors on matters of management, organization, and succession,
recommends persons for appointments to key employee positions, and makes
recommendations to the Board of Directors regarding compensation for
officers and key employees. The members of the Compensation Committee are
Messrs. Levy, Siegfriedt and Hughes. The Compensation Committee held four
meetings during the fiscal year ended August 31, 1996.
Nominating Committee. The Nominating Committee recommends persons for
election as directors of the Company, and makes recommendations to the
Board of Directors regarding the structure and membership of the various
committees of the Board of Directors, including the Nominating Committee
itself. The Nominating Committee will consider nominees recommended by
shareholders if such recommendations are made in writing to the Nominating
Committee. The members of the Nominating Committee are Messrs. Hughes, Levy
and Dykstra. The Nominating Committee held one meeting during the fiscal
year ended August 31, 1996.
<TABLE>
<CAPTION>
Executive Compensation
Summary Compensation Table
Annual Compensation(l) Long Term Compensation
______________________________ ______________________________
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities
Stock Underlying LTIP All
Fiscal Award(s) Warrants/ Payout Other
Name & Principal Position Year Salary Bonus ($)(2) Options (#) ($) Comp(3)
________________________ ______ ______ ______ ______ ___________ ______ ______
<S> <C> <C> <C> <C> <S> <C> <C>
Peter R. Chase 1996 $245,200 $184,500 $506,250 - - $7,240
President and 1995 235,280 175,700 - 400,000(4) - 7,031
Chief Executive Officer 1994 225,260 154,770 - - - 6,758
Everett Chadwick, Jr 1996 114,600 86,250 - - - 3,399
Treasurer and 1995 110,070 82,240 - 50,000(4) - 3,289
Chief Financial Officer 1994 105,100 72,200 - - - 3,154
_____________
</TABLE>
(1) Annual compensation includes amounts earned in each fiscal year,
whether or not deferred. Compensation is deferred pursuant to the
provisions of the Chase Corporation Retirement Savings Plan. Aggregate
perquisite values do not exceed the lesser of $50,000 or 10% of the
reported base salary and bonus for each year. The Company does not have a
Long Term Incentive Plan (LTIP)or have a program to grant Stock Appreciation
Rights.
(2) As of August 31, 1996, Peter R. Chase, the Company's Chief Executive
Officer, held 150,000 shares of restricted stock having a value as of that date
of $825,000. The shares vest on the earlier to occur of September 6, 2004 or
the occurrence of a change in control as defined in the agreement between the
Company and Mr. Chase with respect to the shares. Dividends are payable upon
the shares when and as declared.
(3) The amounts represent the contribution by the Company on behalf of
the employees to the Chase Corporation Retirement Savings Plan.
(4) During fiscal 1995, the Company granted Peter R. Chase and Everett
Chadwick options for 400,000 and 50,000 shares exercisable at fair market value
as of the date of the grant and vesting ratably over 10 years.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Options Unexercised Options
@ fiscal year end @ fiscal year end
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable (1)
_____ ______________ __________ __________________ _______________
<S> <C> <C> <C> <C>
Peter R. Chase - - 132,500/357,500 $449,400/$759,700
Everett Chadwick, Jr. 27,500 $116,600 5,400/ 44,600 $ 11,500/$ 94,800
(1) Market value of securities at August 31, 1996 close minus the
exercise price.
</TABLE>
Compensation Committee Report on Executive Compensation
Recommendations on compensation for the Company's executive officers are
made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed entirely of independent
non-employee directors who have no interlocking directorships as defined by
the Securities and Exchange Commission. Committee decisions are reviewed
and approved by the full Board of Directors.
The Company's executive compensation program is designed to accomplish
the following objectives:
- Reward key executives at levels which are competitive with those of
similar comparative companies.
- Provide incentives which are directly linked to the achievement of
Company strategies, profits and enhanced shareholder values.
- Assure that the objectives for corporate and business unit performance
are established and measured.
- Attract and retain executives who have the capabilities needed to assure
proper growth and profitability.
For the fiscal year ended August 31, 1996, the Company, acting through
the Committee, employed three programs to compensate its senior management.
These included an annual base salary program, a stock option plan and a
contingent compensation program based on selected financial performance
measures. Following is a description of the manner in which each program
was administered during the year. It includes an explanation of the
rationale for the compensation paid to the Chief Executive Officer.
Annual Base Salary Program
Salary ranges are established for executive positions, including the
named executive officers, with range mid-points equal to the median salary
determined from appropriate comparative survey data provided by an
independent consultant prior to the beginning of each fiscal year. The
actual salary of each individual holding an executive position is
determined using the Company's salary administration program as a basis and
by taking into consideration the individual's qualifications, sustained
performance and level of responsibility, as evaluated by the Committee.
Annual adjustments in base salary are made after an analysis of the
foregoing factors and aforementioned survey data showing compensation
trends externally.
The base salary for Peter R. Chase was set by the Committee using the
same policies and criteria used for other executive officers of the
Company. His base salary for the fiscal year ended 1996 was set at the
median salary reflected in the aforementioned comparative survey data and
adjusted based on the Committee's evaluation of the criteria discussed
above. Corporate performance measures are used in determining bonuses
rather than base salary and accordingly were not considered by the
Committee in determining Mr. Chase's base salary.
Contingent Compensation Program
Each executive officer, including the named executive officers, was
eligible to earn additional contingent compensation under the Company's
management incentive plan equal to a designated percentage of annual base
salary. In the 1996 fiscal year, the target percentage was 30% of annual
base salary for each executive officer for achieving targeted operating
profit set with reference to the three prior years. Potential incentive
earnings could range from 0% to 100% of annual base salary, depending upon
the Company's actual performance during the year. The Company exceeded the
operating profit threshold established for payment of the targeted
incentive compensation in fiscal year 1996; therefore, in accordance with
the plan, incentive earnings for executive officers averaged 75% of annual
base salary in the last fiscal year. The incentive earnings for Peter R.
Chase is also determined pursuant to the Company's management incentive
plan. Pursuant to the formulas set forth in the plan, Mr. Chase's incentive
compensation for fiscal year 1996 equaled 75% of his annual base salary.
Stock Options
The Company has in effect a Plan which is designed in part to retain and
provide incentives to the Company's Chief Executive and Chief Financial
Officers. The Committee believes that these executives are in a position to
make the most significant contribution to the Company's future success. The
program is designed to recognize significant contributions and provide
longer-term incentives to increase shareholder value. Under the 1995 Stock
Option Plan options for 400,000 shares were granted to Peter R. Chase and
50,000 shares to Everett Chadwick. The size and structure of the awards were
determined by the Committee in conjunction with advice from William H.
Mercer, Incorporated acting as consultants to the Committee and advising it
as to industry norms and the accomplishment of the objectives of the
Company's compensation program's goals. To ensure that high levels of
performance occur over the long term, the options granted vest over a
period of 10 years. All of the options have been granted with an exercise
price equal to 100% of the fair market value of the Company's common stock on
the grant date. Any value received from a stock option grant depends entirely
on increases in the price of the Company's common stock.
Stock Awards
The Committee considered the amount of stock and options owned by the
Company's Chief Executive Officer and concluded that the ownership of additional
equity in the Company by the Executive would provide a longer term incentive to
add value for the Company's shareholders. The target amount of additional stock
was set at 250,000 shares of restricted stock of which 150,000 shares were
issued on September 7, 1995. The size and structure of the award were
determined in conjunction with advice from William H. Mercer, Incorporated
acting as consultants to the Committee.
The Committee, in carrying out its responsibilities, met several times in
the fiscal year and reviewed performance progress during the years as well as
information provided by independent compensation consultants.
By the Chase Corporation Compensation Committee,
Ronald Levy (Chairman)
George M. Hughes
Ernest E. Siegfriedt, Jr.
401(k) Plan. The Company has a deferred compensation plan and an excess
plan adopted pursuant to Section 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"). Any qualified employee who has attained age 21 and
has been employed by the Company for at least six months may contribute a
portion of their salary to the plan and the Company will match, at the rate
of 50% on the dollar, such contribution up to an amount equal to three
percent of such employee's yearly salary. Amounts contributed to the plan are
invested and income taxes on the amounts contributed and on the investment
yield are deferred until such amounts are paid to the employee upon their
departure from the Company. Both the 401(k) plan and the pension plan
described below were amended, effective January 1, 1989, to comply with
pertinent legislation.
Deferred Compensation; Termination of Employment Arrangements and
Amendment to Certain Arrangements.
The Company has a deferred compensation agreement with a former
officer, Edward L. Chase, who owns approximately 40% of the Company's
outstanding Common Stock. The agreement provides for various
post-retirement health and life insurance benefits and annual payments of
$200,000 through August 31, 1998.
In addition, the Company entered into an agreement with Peter R. Chase
pursuant to which the Company will continue to pay Mr. Chase the equivalent
of his annual compensation for two years following the termination of his
employment if such termination arises in connection with a change in
control of the Company. Any payments made to Mr. Chase after the first year
following his termination will be offset to the extent that he receives any
other compensation, through new employment or otherwise.
Pension Plan. The Company has a defined benefit Pension Plan that
covers substantially all of its employees who have attained the age of 21
and have completed six months of service. Benefits are determined based on
final average base earnings (excluding bonuses, overtime, and other
extraordinary amounts), covered compensation, and total years of service
with the Company (up to a maximum of forty years). Compensation covered by
the plan is annual compensation, less payments on account of overtime,
bonuses, or commissions, to a maximum of $150,000. Benefits are payable
upon the retirement of a participant at age 65, or upon the fifth
anniversary of employment, if later, or earlier if the participant is at
least 55 years old and has completed at least five years of service. The
plan offers the option for a participant to receive a lump sum distribution
upon attainment of age 65 and five years of employment even if the employee
elects to remain actively employed. Benefits may be paid in a variety of
forms, including a lump sum, at the election of the participant. The
following table shows estimates of annual benefits payable under the qualified
plan and non-qualified excess plan upon retirement at age 65 or upon the fifth
anniversary of employment, if later, of participants in the specified
compensation and years-of-service classifications before an offset of 0.6% of
covered compensation at the time of retirement times the number of years of
service (up to a maximum of 35 years). The compensation covered by the plan for
the named executive officers in the Summary Compensation Table is the salary in
that table.
<TABLE>
<CAPTION>
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
<C> <C> <C> <C> <C>
$ 50,000 $ 7,500 $15,000 $22,500 $28,250
100,000 15,000 30,000 45,000 56,500
150,000 22,500 45,000 67,500 84,750
200,000 * 30,000 60,000 90,000 113,000
250,000 * 37,500 75,000 112,500 141,250
300,000 * 45,000 90,000 135,000 169,500
350,000 * 52,500 105,000 157,500 197,750
400,000 * 60,000 120,000 180,000 226,000
</TABLE>
*As required by Section 415 of the IRC, qualified plan payments may not provide
annual benefits exceeding a maximum amount, currently $120,000. For the
associate who is covered under the excess plans, amounts above this maximum will
be paid under the terms of the excess plans up to the amounts shown in the
table above. Pursuant to Section 401(a)(17) of the IRC, annual compensation
in excess of $150,000 (for 1996) cannot be taken into account in determining
qualified plan benefits.
Mr. Chase and Mr. Chadwick have approximately 25 and 8 years of service,
respectively.
Compensation of Directors. Directors who are not employees of the Company
are paid an annual retainer of $6,000 plus a fee of $750 for each Board
meeting they attend ($1,250 if they attend a committee meeting on the same
day). Non-employee directors who are committee members receive a fee of
$750 per committee meeting they attend that is not held on the same day as
a directors meeting, with the Chairman receiving a fee of $1,000. Non-employee
directors also are eligible to receive stock options. As authorized under the
terms and provision of the company's 1995 Stock Option Plan, each director,
exclusive of the Chief Executive Officer has received an option to purchase
12,500 shares which would be fully vested by January 15, 2000.
Performance Graph
The following line graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return on the Common Stock for
the last five fiscal years with the cumulative total return on the Standard
& Poor's 500 Stock Index ("the S&P 500 Index"), and a composite peer index,
weighted by market equity capitalization on companies with the Chase
Corporation Standard Industrial Classification (S.I.C.) code (the "Peer
Group Index"). The companies included in the Peer Group Index are American
Biltrite, Inc., Lamson & Sessions Co., Plymouth Rubber Company Inc.,
MacDermid Inc., Bairnco Corp., and Flamemaster Corp. Cumulative total
returns are calculated assuming that $100 was invested 8/31/91 in each of
the Common Stock, the S&P 500 and the Peer Group Index, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
Chase Corporation
Comparison of 1991/1996 Cumulative Total Return Performance(a)
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Chase 100.0 99.2 103.0 194.9 303.7 391.7
S&P 500 100.0 107.8 124.0 130.6 158.0 187.4
Peer Group 100.0 116.0 141.6 217.5 221.9 271.2
(a) Cumulative total returns are calculated assuming dividend reinvestment at
August 31.
</TABLE>
PROPOSAL TO INCREASE SHARES UNDER EMPLOYEE STOCK OPTION PLAN
At the December 3, 1996 Board Of Directors meeting it was voted to
add 20,000 shares to the Company's Stock Option Plan so that a total of
20,000 shares would be reserved for the grant of options under the Plan.
A copy of the plan as it is proposed to be amended is attached hereto as
Exhibit A. The directors believe that the increase in shares is necessary
to provide flexibility in making equity incentives available to persons
making significant contributions to the Company. The affirmative vote of
a majority of the shares of common stock represented at the annual meeting
in person or by proxy will he required to increase the number of shares
to be reserved under the plan.
The directors recommend a vote FOR the proposal.
Auditors
The Board of Directors has selected the firm of Livingston & Haynes, P.C.
which served as auditors for the Company for the most recently completed
fiscal year of the Company, to serve as auditors for the Company for the
fiscal year ending August 31, 1997. Representatives of Livingston & Haynes,
P.C. are expected to be present at the meeting of shareholders with an
opportunity to make a statement if they desire to do so. Such
representatives will be available to respond to appropriate questions.
Proposals of Security Holders for 1998 Annual meeting
Proposals of security holders intended to be present at the 1998 annual
meeting of the Company's shareholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting
not later than August 15, 1997.
Miscellaneous
The management does not know of any business that 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 judgement
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 from time to time until a
quorum is obtained.
By order of the Board of Directors
George M. Hughes
Clerk
EXHIBIT A
CHASE CORPORATION
1995 Stock Option Plan, as amended
This 1995 Stock Option Plan ("the plan") provides for ownership of
Common Stock, $.lO par value (the "Stock") of Chase Corporation (the
"Company") by officers, employees and directors so as to provide additional
incentives to promote the success of the Company through the grant of
Incentive Stock Options and Non-statutory Stock Options (as such terms are
defined in Section 3(a) below (collectively, "Options").
1. Administration of the Plan.
The administration of the Plan shall be under the general
supervision of the Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee"). Within the limits of the Plan, the
Directors or Compensation Committee shall determine the individuals to whom,
and the times at which, Options shall be granted, the type of Option to be
granted, the duration of each Option, the price and method of payment for
each Option, and time or times within which (during its term) all or portions
of each Option may be exercised. The Compensation Committee may establish
such rules as it deems necessary for the proper administration of the Plan,
make such determination and interpretations with respect to the Plan and
Options granted under it as may he necessary or desirable and include such
further provisions or conditions in Options granted under the Plan as it
deems advisable.
2. Shares Subject to the Plan.
(a) Number and Type of Shares. The aggregate number of shares of
Stock of the Company which may be optionee under the Plan is 532,500 shares.
In the event that the Compensation Committee in its discretion determines that
any stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change affects the Stock such that
adjustment is required in order to preserve the benefits or potential benefits
of the Plan or any Option granted under the Plan, the maximum aggregate number
and kind of shares or securities of the Company as to which Options may be
granted under the Plan and as to which Options then outstanding shall be
exercisable, and the option price of such Options, shall be appropriately
adjusted by the Compensation Committee (whose determination shall be
conclusive) so that the proportionate number of shares or other securities as
to which Options may be granted and the proportionate interest of holders of
outstanding Options shall be maintained as before the occurrence of such
event.
(b) Effect of Certain Transactions.In the event of a consolidation
or merger of the Company with another corporation, or the sale or exchange
of all or substantially all of the assets of the Company, or a
reorganization or liquidation of the Company, each holder of an
outstanding Option shall be entitled to receive upon exercise and payment
in accordance with the terms of the Option the same shares, securities or
property as he would have been entitled to receive upon the occurrence of
such event if he had been, immediately prior to such event, the holder of
the number of shares of Stock purchasable under his Option; provided,
however, that in lieu of the foregoing the Board of Directors of the
Company (the "Board") may upon written notice to each holder of an
outstanding Option provide that such Option shall terminate on a date not
less than 20 days after the date of such notice unless theretofore
exercised. In connection with such notice, the Board may in its discretion
accelerate or waive any deferred exercise period.
(c) Reservation of Shares. The Company shall at all times
while the plan is in force reserve such number of shares of Stock
as will be sufficient to satisfy the requirements of the Plan.
Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
3. Grant of Options: Eligible Persons.
(a) Types of Options. Options shall be granted under the plan
either as incentive stock options ("Incentive Stock Options"), as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
as Options which do not meet the requirements of Section 422 ("Non-statutory
Stock Options"). Options may be granted by the Directors, within the
limits set forth in Sections 1 and 2 of the Plan, to all employees of the
Companyor any parent corporation or subsidiary corporation of the Company
(as defined in Sections 424(e) and (f),
respectively, of the Code).
(b) Date of Grant. The date of grant for each Option shall be the
date on which it is approved, or such later date as the Directors may
specify. No Options shall be granted hereunder after ten years from the
date on which the Plan was approved by the Board.
4. Form of Options.
Options granted hereunder shall be evidenced by a writing delivered
to the optionee specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Compensation Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and
regulatory laws and accounting principles. The form of such Options may
vary among optionee.
5. Option Price.
In the case of Incentive Stock Options, the price at which shares may
from time to time be optionee shall be determined by the Compensation
Committee, provided that such price shall not be less than the fair market
value of the Stock on the date of granting as determined in good faith by
the Compensation Committee; and provided further that no Incentive Stock
Option shall be granted to any individual who is ineligible to be granted
an Incentive Stock Option because his ownership of stock of the Company or
its parent or subsidiary corporations exceeds the limitations set forth in
Section 422(b)(6) of the Code unless such Option price is at least 110% of
the fair market value of the Stock on the date of grant.
In the ease of Non-statutory Stock Options, the price at which shares may
from time to time he optionee shall be determined by the Compensation
Committee.
The Compensation Committee may in its discretion permit the
option price to be paid in whole or in part by a note or in installments
or with shares of Stock of the Company or such other lawful consideration
as the Compensation Committee may determine.
6. Term of Option and Dates of Exercise.
(a) Exercisability. The Compensation Committee shall determine
the term of all Options, the time or times that Options are
exercisable and whether they are exercisable in installments;
provided, however, that the term of each non-statutory stock option
granted under the Plan shall not exceed a period of eleven years
from the date of its grant and the term of each Incentive Stock
Option granted under the Plan shall not exceed a period of ten years
from the date of its grant, provided that no Incentive Stock Option
shall be granted to any individual who is ineligible to be granted
such Option because his ownership of stock of the Company or its
parent or subsidiary corporations exceeds the limitations set forth
in Section 422(b)(6) of the Code unless the term of his Incentive
Stock Option does not exceed a period of five years from the date of
its grant. in the absence of such determination, the Options shall
be exercisable at any time or from time to time, in whole or in
part, during a period of ten years from the date of its grant or, in
the case of an Incentive Stock Option, the maximum term of such
Option.
(b) Effect of DisabIlIty. Death or Termination of
Employment.
The Compensation Committee shall determine the effect
on an Option of the disability, death, retirement or other
termination of employment of an optionee and the extent to which,
and during the period which, the optionee's estate, legal
representative, guardian, or beneficiary on death may exercise
rights thereunder. Any beneficiary on death shall be designated
by the optionee, in the manner determined by the Compensation
Committee, to exercise rights of the optionee in the case of the
optionee's death.
(c) Other Conditions. The Compensation Committee may impose
such conditions with respect to the exercise of Options,
including conditions relating to applicable federal or state
securities laws, as it considers necessary or advisable,
(d) Withholding. The optionee shall pay to the Company, or
make provision satisfactory to the Compensation committee for
payment of, any taxes required by law to be withheld in respect
of any Options under the Plan no later than the date of the event
creating the tax liability. In the Compensation Committee's
discretion, such tax obligations may be paid in whole or in part
in shares of Stock, including shares retained from the exercise
of the Option creating the tax obligation, valued at the fair
market value of the Stock on the date of delivery to the Company
as determined in good faith by the Compensation Committee. The
Company and any parent corporation or subsidiary corporation of
the Company (as defined in Sections 424(e) and (f), respectively,
of the Code) may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the
optionee.
(e) Amendment of Options. The Compensation Committee may
amend, modify or terminate any outstanding Option, including
substituting therefor another Option of the same or different
type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Non-statutory Stock Option,
provided that the optionee's consent to such action shall be
required unless the Compensation Committee determines that the
action, taking into account any related action, would not
materially and adversely affect the optionee.
7. Non-transferability.
Options granted under the Plan shall not be transferable by
the bolder thereof otherwise than by will or the laws of descent and
distribution, and shall be exercisable, during the holder's lifetime,
only by him or her.
8. No Right to Employment.
No persons shall have any claim or right to be granted an
Option and the grant of an Option shall not be construed as giving an
optionee the right to continued employment. The Company expressly
reserves the right at any time to dismiss an optionee free from any
liability or claim under the Plan, except as specifically provided in
the applicable Option.
9. No Rights as Shareholder.
Subject to the provisions of the applicable Option, no
optionee or any person claiming through an optionee shall have any
rights as a shareholder with respect to any shares of Stock to be
distributed under the Plan until he or she becomes the holder thereof.
10. Amendment or Termination.
The Board may amend or terminate the Plan at any time,
provided that no amendment shall be made without shareholder approval
if such approval is necessary to comply with any applicable tax or
regulatory requirement, including any requirement for exemptive relief
under Section 16(b) of the Securities Exchange Act of 1934, or any
successor provision.
11. Shareholder Approval.
The Plan is subject to approval by the shareholders of the Company
by the affirmative vote of the holders of a majority of the shares of capital
stock of the Company entitled to vote thereon and present or represented
at a meeting duly held in accordance with the laws of the Commonwealth of
Massachusetts, or by any other action that would be given the same effect
under the laws of such jurisdiction, which action in either case shall be
taken within twelve (12) months from the date the Plan was adopted by the
Board. In the event such approval is not obtained, all Options granted
under the Plan shall be void and without effect.
12. Governing Law.
The provisions of the Plan shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts.
(As amended by the Board of Directors through December 3, 1996)
