<PAGE>
As Filed with the Securities and Exchange Commission on January 28, 2000
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________
CALLAWAY GOLF COMPANY
(Exact name of Registrant as specified in its charter)
2285 Rutherford Road
Carlsbad, California 92008-8815
(Address of principal executive offices)
Delaware 95-3797580
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1995 EMPLOYEE STOCK INCENTIVE PLAN
(Full title of the plan)
_____________
Ely Callaway
Chairman and Chief Executive Officer
2285 Rutherford Road
Carlsbad, California 92008-8815
(760) 931-1771
(Name, address, and telephone number,
including area code, of agent for service)
_____________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to be Price Per Offering Registration
to be Registered Registered (1) Share (2) Price (2) Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,500,000 $14.03 $21,045,000 $5,555.88
$.01 par value
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement shall cover, in addition
to the number of shares of Common Stock stated above, such indeterminate
number of additional shares of Common Stock as may be issued under such
plan as a result of adjustment provisions thereunder.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(h), based on the average of the high and low prices of Callaway
Golf Company Common Stock as reported on January 27, 2000 on the New
York Stock Exchange.
<PAGE>
INTRODUCTION
------------
This Registration Statement on Form S-8 is filed by Callaway Golf Company
(the "Company") relating to an additional 1,500,000 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), issuable to
employees of the Company under the Callaway Golf Company 1995 Employee Stock
Incentive Plan (the "Plan").
The Company previously registered an aggregate of 5,600,000 shares of
Common Stock for issuance under the Plan under (i) Registration Statement No.
333-242 (1,000,000 shares), (ii) Registration Statement No. 333-24207 (2,000,000
shares), (iii) Registration Statement No. 333-39093 (600,000 shares), (iv)
Registration Statement No. 333-61889 (1,600,000 shares), and (v) Post-effective
Amendment No. 2 to Registration Statement No. 333-61889 (400,000 shares).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
--------------------------------------------------
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have previously been filed by the Company
with the Commission, are hereby incorporated into this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999;
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999;
(e) The Company's Current Report on Form 8-K dated December 30, 1998;
(f) The Company's Current Report on Form 8-K dated February 12, 1999;
(g) The Company's Current Report on Form 8-K dated July 1, 1999;
(h) The Company's Current Report on Form 8-K dated August 17, 1999;
(i) The Company's Preliminary Proxy Statement on Schedule 14A filed
March 22, 1999.
(j) The Company's Definitive Proxy Statement on Schedule 14A filed
April 1, 1999.
(k) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 (Registration No.
2
<PAGE>
33-53732), including any amendment or report filed for the
purpose of updating such description; and
(l) The description of the Company's Rights contained in the
Company's Registration Statement on Form 8-A filed on June 27,
1995, including any amendment or report filed for the purpose of
updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Registration Statement
and prior to the filing of a post-effective amendment that indicates that all
securities offered thereunder have been sold or that deregisters all securities
then remaining unsold will be deemed to be incorporated by reference into this
Registration Statement and to be a part of this Registration Statement from the
date of filing of such documents.
For purposes of this Registration Statement, any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated herein by reference modifies or supersedes such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECRUITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Brian P. Lynch, who has rendered an opinion as to the validity of the Common
Stock being registered by this Registration Statement, is an employee of the
Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law of the State of
Delaware empowers a Delaware corporation to indemnify present and former
directors, officers, employees and agents of the Company.
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by the Delaware General Corporation Law, a director of the
Company shall not be liable to the Company or its shareholders for monetary
damages for breach of the director's fiduciary duty as a director. Delaware
law provides that this provision in the Company's Certificate of Incorporation
shall not limit the liability of a director (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or knowing violation of
law, (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Bylaws provide that the Company, to the maximum extent
permitted by the Delaware General Corporation Law, shall indemnify any person
against expenses (including attorneys' fees), judgments, fines, and amounts paid
in settlements actually and reasonably incurred
3
<PAGE>
in connection with any threatened, pending or completed action, suit or
proceeding in which such person is or was a party or is threatened to be made a
party by reason of the fact that such person is or was a director or officer of
the Company, or is or was serving at the request of the Board of Directors of
the Company as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or was a director or officer of a
corporation which was a predecessor corporation of the Company or of another
enterprise at the request of such predecessor corporation. The Company is
required to indemnify a director or officer in connection with an action, suit
or proceeding (or part thereof) initiated by such director or officer only if
the initiation of such action, suit or proceeding (or part thereof) by the
director or officer was authorized by the Board of Directors of the Company.
The Company's Bylaws further provide that the Company shall pay the
expenses (including attorney's fees) incurred by a director or officer of the
Company entitled to indemnification in defending any such action, suit or
proceeding in advance of its final disposition provided such director or officer
undertakes to repay all amounts advanced if it should ultimately be determined
that the director or officer is not entitled to such indemnification.
The Company's Bylaws provide that the foregoing indemnification rights shall
not be deemed exclusive of any other rights to which the indemnified party may
be entitled.
The Company has entered into Indemnification Agreements with its outside
directors. These Indemnification Agreements require the Company to indemnify
each outside director if he or she is or was a party or other participant in any
suit or proceeding individually or in the right of the Company or any subsidiary
of the Company, by reason of (a) the fact that such outside director is or was a
director of the Company or any subsidiary, (b) any action or inaction on the
part of such outside director while a director of the Company or any subsidiary,
and/or (c) the fact that such outside director is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation
or other enterprise. The indemnification extends to all expenses, liabilities,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the outside director in connection with such action, suit or proceeding if
the outside director acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that his or her conduct was unlawful. The Indemnification Agreements require
that, to the extent that the outside director has been successful on the merits
or otherwise in defense of any such action, suit or proceeding, the Company
indemnify such outside director against expenses actually and reasonably
incurred by him or her in connection therewith. The Company must further
advance, within 30 days of a written request, all expenses incurred by the
outside director in connection with the investigation, defense, settlement or
appeal of any such action or proceeding; provided, however, that the outside
director must repay such amounts advanced if it is ultimately determined that he
or she is not entitled to be indemnified by the Company. Under the
Indemnification Agreements, the outside directors are permitted to petition the
court to seek recovery of amounts due under the Indemnification Agreements and
to recover the expenses of seeking such recovery if he or she is successful.
The Indemnification Agreements also provide that the Company will indemnify
the outside directors to the fullest extent permitted by law. Absent the
Indemnification Agreements, indemnification that might be made available to
outside directors could be changed by amendments to the Company's Certificate of
Incorporation or Bylaws. Benefits under the Indemnification Agreements are not
available, however, to indemnify an outside director (a) with respect to
4
<PAGE>
proceedings or claims initiated by the outside director that are not by way of
defense (unless authorized by the Board of Directors); (b) with respect to
liability for transactions from which the outside director derived an improper
personal benefit; (c) if the outside director is determined to have committed
acts of active and deliberate dishonesty; (d) for expenses or liabilities that
have been paid to the outside director under an insurance policy maintained by
the Company or otherwise by any other means; or (e) for an accounting of profits
realized from the purchase and sale of securities within the meaning of Section
16(b) of the Securities Exchange Act of 1934.
In addition to the foregoing, the Company's Bylaws provide that the Company
shall have the power, to the maximum extent permitted by the Delaware General
Corporation Law, to indemnify any person (other than directors and officers) who
is or was an employee or agent of the Company, who is or was serving at the
request of the Company as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or who was an employee or
agent of a corporation which was a predecessor corporation of the Company or of
another enterprise at the request of such predecessor corporation, against
expenses (including attorneys' fees), judgments, fines, amounts paid in
settlement actually and reasonably incurred in connection with any threatened,
pending or completed action, suit, or proceeding, in which such person was or is
a party or is threatened to be made a party by reason of the fact that such
person is or was an employee or agent of the Company.
The Company maintains directors and officers liability insurance covering
the directors and officers of the Company against claims arising out of the
performance of their duties as such.
ITEM 7. EXEMPTION FROM REGISTRATION.
Not Applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement are listed in the Index to
Exhibits immediately following the signature page(s).
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement;
5
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by a final
adjudication of such issue.
[The Remainder of this page is Blank]
6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Carlsbad, State of California, as of January 25,
2000.
CALLAWAY GOLF COMPANY
By: /s/ Ely Callaway
---------------------------------------
Ely Callaway
Founder, Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the date indicated.
<TABLE>
<CAPTION>
Signature Title Dated as of
- ------------------------------- ------------------------------- ------------------------
<S> <C> <C>
Founder, Chairman and
/s/ Ely Callaway Chief Executive Officer
____________________________ (Principal Executive Officer) January 25, 2000
Ely Callaway
Director, President, Acting
Principal Financial Officer
/s/ Charles J Yash and Acting Principal
____________________________ Accounting Officer January 25, 2000
Charles J. Yash
*
____________________________ Director January 25, 2000
William C. Baker
____________________________ Director January 25, 2000
Vernon E. Jordan, Jr.
*
____________________________ Director January 25, 2000
Yotaro Kobayashi
____________________________ Director January 25, 2000
Aulana L. Peters
*
____________________________ Director January 25, 2000
Richard Rosenfield
*
____________________________ Director January 25, 2000
William A. Schreyer
</TABLE>
* By: /s/ Charles J. Yash
____________________________
Charles J. Yash
Attorney-in-Fact
7
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- ----------- -----------
5.1 Opinion of Brian P. Lynch, Senior Corporate Counsel of Callaway
Golf Company, as to the legality of the securities being
registered.
23.1 Consent of Independent Accountants.
23.2 Consent of Brian P. Lynch (included in Exhibit 5.1).
24.1 Powers of Attorney.
99.1 1995 Employee Stock Incentive Plan (as amended and restated
November 18, 1999).
8
<PAGE>
Exhibit 5.1
-----------
January 25, 2000
Callaway Golf Company
2285 Rutherford Road
Carlsbad, California 92008-8815
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
I have prepared the Registration Statement on Form S-8 ("Registration
Statement") to be filed by Callaway Golf Company, a Delaware corporation ("the
Company"), with the Securities and Exchange Commission on or about the date
hereof in connection with the registration of an additional 1,500,000 shares
(the "Shares") of the Company's Common Stock, par value $.01 per share, which
may be issued to eligible employees under the Company's 1995 Employee Stock
Incentive Plan (the "Plan"). In connection with that registration, I have
reviewed the proceedings of the Board of Directors of the Company relating to
the registration and proposed issuance of the common stock, the Certificate of
Incorporation of the Company and the Bylaws of the Company.
In my examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I am opining herein as to the effect on the subject transaction only of the
General Corporation Law of the State of Delaware, and I express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or any other laws, or as to any matters of municipal law or
the laws of any other local agencies within the state.
Subject to the foregoing, upon completion of the proceedings being taken or
contemplated by the Company to be taken prior to the issuance and sale of the
Shares pursuant to the Plan, and upon completion of the proceedings being taken
in order to permit such transactions to be carried out in accordance with the
applicable securities laws, the Shares, when issued and sold in the manner
referred to in the Plan and the Registration Statement, will be legally and
validly issued, fully-paid and non-assessable.
I hereby consent to filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ BRIAN P. LYNCH
------------------
Brian P. Lynch
Senior Corporate Counsel
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 26, 1999, except as to Note 16
which is as of February 12, 1999, relating to the financial statements, which
appears in the 1998 Annual Report to Shareholders of Callaway Golf Company,
which is incorporated by reference in Callaway Golf Company's Annual Report on
Form 10-K for the year ended December 31, 1998. We also consent to the
incorporation by reference of our report dated January 26, 1999 relating to the
financial statement schedule, which appears in such Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
San Diego, California
January 26, 2000
<PAGE>
Exhibit 24.1
------------
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, William C. Baker, a member of
the Board of Directors of Callaway Golf Company, a Delaware corporation (the
"Company"), with its principal executive offices in Carlsbad, California, do
hereby constitute, designate and appoint each of Charles J. Yash and Steven C.
McCracken, each of whom are executive officers of the Company, as my true and
lawful attorneys-in-fact, each with power of substitution, with full power to
act without the other and on behalf of and as attorney for me, for the purpose
of executing and filing with the Securities and Exchange Commission a
registration statement on Form S-8, and any and all amendments thereto, in
connection with the registration of an additional 1,500,000 shares of the
Company's Common Stock for the supplemental funding of the Company's 1995
Employee Stock Incentive Plan, and to do all such other acts and execute all
such other instruments which said attorney may deem necessary or desirable in
connection therewith.
I have executed this Limited Power of Attorney as of January 19, 2000.
/s/ William C. Baker
--------------------------
William C. Baker
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, Richard L. Rosenfield, a member
of the Board of Directors of Callaway Golf Company, a Delaware corporation (the
"Company"), with its principal executive offices in Carlsbad, California, do
hereby constitute, designate and appoint each of Charles J. Yash and Steven C.
McCracken, each of whom are executive officers of the Company, as my true and
lawful attorneys-in-fact, each with power of substitution, with full power to
act without the other and on behalf of and as attorney for me, for the purpose
of executing and filing with the Securities and Exchange Commission a
registration statement on Form S-8, and any and all amendments thereto, in
connection with the registration of an additional 1,500,000 shares of the
Company's Common Stock for the supplemental funding of the Company's 1995
Employee Stock Incentive Plan, and to do all such other acts and execute all
such other instruments which said attorney may deem necessary or desirable in
connection therewith.
I have executed this Limited Power of Attorney as of January 19, 2000.
/s/ Richard L. Rosenfield
--------------------------
Richard L. Rosenfield
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, William A. Schreyer, a member
of the Board of Directors of Callaway Golf Company, a Delaware corporation (the
"Company"), with its principal executive offices in Carlsbad, California, do
hereby constitute, designate and appoint each of Charles J. Yash and Steven C.
McCracken, each of whom are executive officers of the Company, as my true and
lawful attorneys-in-fact, each with power of substitution, with full power to
act without the other and on behalf of and as attorney for me, for the purpose
of executing and filing with the Securities and Exchange Commission a
registration statement on Form S-8, and any and all amendments thereto, in
connection with the registration of an additional 1,500,000 shares of the
Company's Common Stock for the supplemental funding of the Company's 1995
Employee Stock Incentive Plan, and to do all such other acts and execute all
such other instruments which said attorney may deem necessary or desirable in
connection therewith.
I have executed this Limited Power of Attorney as of January 19, 2000.
/s/ William A. Schreyer
--------------------------
William A. Schreyer
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that I, Yotaro Kobayashi, a member
of the Board of Directors of Callaway Golf Company, a Delaware corporation (the
"Company"), with its principal executive offices in Carlsbad, California, do
hereby constitute, designate and appoint each of Charles J. Yash and Steven C.
McCracken, each of whom are executive officers of the Company, as my true and
lawful attorneys-in-fact, each with power of substitution, with full power to
act without the other and on behalf of and as attorney for me, for the purpose
of executing and filing with the Securities and Exchange Commission a
registration statement on Form S-8, and any and all amendments thereto, in
connection with the registration of an additional 1,500,000 shares of the
Company's Common Stock for the supplemental funding of the Company's 1995
Employee Stock Incentive Plan, and to do all such other acts and execute all
such other instruments which said attorney may deem necessary or desirable in
connection therewith.
I have executed this Limited Power of Attorney as of January 19, 2000.
/s/ Yotaro Kobayashi
--------------------------
Yotaro Kobayashi
<PAGE>
Exhibit 99.1
------------
CALLAWAY GOLF COMPANY
1995 EMPLOYEE STOCK INCENTIVE PLAN
(As Amended and Restated November 18, 1999)
1. Purposes of the Plan
The purpose of this 1995 Employee Stock Incentive Plan (the "Plan") of
Callaway Golf Company, a Delaware corporation (the "Company"), is to provide for
grants of stock options and other stock-based incentive awards to broad classes
of employees of the Company and its Subsidiaries, thereby helping to retain and
motivate such employees, and to encourage the judgment, initiative and efforts
of such employees by further aligning their interests with those of the
shareholders of the Company.
2. Plan Awards
To carry out the purposes of the Plan, the Company will from time to time
enter into various arrangements with persons eligible to participate therein and
confer various benefits upon them. The following such arrangements or benefits
are authorized under the Plan if their terms and conditions are not inconsistent
with the provisions of the Plan: Stock Options, Restricted Stock, Sales of
Securities, Stock Bonuses, Performance Shares, Performance Units, Stock
Appreciation Rights, Phantom Stock, Dividend Equivalents and Other Stock-Based
Benefits. Such arrangements and benefits pursuant to the Plan are sometimes
herein referred to as "Awards." The authorized categories of benefits for which
Awards may be granted are defined as follows:
Stock Options: A Stock Option is a right granted under the Plan to
purchase a specified number of shares of Common Stock at such exercise price, at
such times, and on such other terms and conditions as are specified in the
Award. A Stock Option may but need not (a) provide for the payment of some or
all of the option exercise price in cash or by promissory note or by delivery of
previously owned shares (including the technique known as "pyramiding") or other
property or by withholding some of the shares that are being purchased; (b)
include arrangements to facilitate the grantee's ability to borrow funds for
payment of the exercise price; or (c) be an Incentive Stock Option.
Restricted Stock: Restricted Stock is Common Stock sold under the
Plan (other than through the exercise of a Stock Option) at a substantial
discount from its Fair Market Value or at its par value, but subject during
specified periods of time to such restrictions on its transferability and
repurchase rights as are expressed in the Award and as may constitute a
substantial condition of forfeiture while in effect.
Sales of Securities: A Sale of Securities is a sale under the Plan of
unrestricted shares of Common Stock or of debt or other securities that are
convertible
<PAGE>
into shares of Common Stock upon such terms and conditions as may be established
in the terms of the Award.
Stock Bonuses: A Stock Bonus is the issuance or delivery of
unrestricted or restricted shares of Common Stock under the Plan as a bonus for
services rendered or for any other valid consideration under applicable law.
Performance Shares: A Performance Share is an Award that represents a
fixed number of shares of Common Stock that vest at a specified time or over a
period of time in accordance with performance criteria established in connection
with the granting of the Award. Such criteria may measure the performance of
the grantee, of the business unit in which the grantee is employed, or of the
Company, or a combination of any of the foregoing. The vested portion of the
Award is payable to the grantee either in the shares it represents or in cash in
an amount equal to the Fair Market Value of those shares on the date of vesting,
or a combination thereof, as specified in the Award.
Performance Units: A Performance Unit is an Award that represents a
fixed amount of cash that vests at a specified time or over a period of time in
accordance with performance criteria established in connection with the granting
of the Award. Such criteria may measure the performance of the grantee, of the
business unit in which the grantee is employed, or of the Company, or a
combination of any of the foregoing. The vested portion of the Award is payable
to the grantee either in cash or in shares valued at their Fair Market Value on
the date of vesting, or a combination thereof, as specified in the Award.
Stock Appreciation Rights: A Stock Appreciation Right is a right
granted under the Plan to receive a payment that is measured with reference to
the amount by which the Fair Market Value of a specified number of shares of
Common Stock appreciates from a specified date, such as the date of grant of the
Award, to the date of exercise. Payment of a Stock Appreciation Right may be
made in cash or in shares valued at their Fair Market Value on the date of
exercise, or a combination thereof, as specified in the Award. A Stock
Appreciation Right may but need not be granted in tandem with a Stock Option and
require the surrender of that Stock Option or a portion thereof in connection
with the exercise of the Stock Appreciation Right.
Phantom Stock: Phantom Stock is a cash bonus granted under the Plan
measured by the Fair Market Value of a specified number of shares of Common
Stock on a specified date, or measured by the excess of such Fair Market Value
over a specified minimum, which may but need not include a Dividend Equivalent.
Dividend Equivalents: A Dividend Equivalent is a right granted under
the Plan to receive an amount in cash equivalent to the dividends that are paid,
if any, on a specified number of shares of Common Stock during a certain period
of time.
2
<PAGE>
Other Stock-Based Benefits: An Other Stock-Based Benefit is any
arrangement granted under the Plan not otherwise described above that (a) by its
terms might involve the issuance or sale of Common Stock or (b) involves a
benefit that is measured, in whole or in part, by the value, appreciation,
dividend yield or other features attributable to a specified number of shares of
Common Stock.
An Award may consist of one such arrangement or benefit or two or more
of them in tandem or in the alternative. Subject to the provisions of the Plan,
any Award granted pursuant to the Plan may contain such additional terms and
provisions as those administering the Plan for the Company may consider
appropriate. Among other things, any such Award may but need not also provide
for (i) the satisfaction of any applicable tax withholding obligation by the
retention of shares to which the grantee would otherwise be entitled or by the
grantee's delivery of previously owned shares or other property and (ii)
acceleration of vesting, lapse of restrictions, cash settlement or other
adjustment to the terms of the Award in the event of a merger, sale of assets or
change of control of the Company.
3. Stock Subject to the Plan
The kind and maximum number of shares of stock that may be sold or issued
under the Plan, whether upon exercise of Stock Options or in settlement of other
Awards, shall be 7,100,000 shares of Common Stock (this number reflects all
stock splits through November 18, 1999, and is subject to further adjustments
set forth hereinbelow). If the outstanding shares of stock of the class then
subject to the Plan are increased or decreased, or are changed into or are
exchanged for a different number or kind of shares or securities or other forms
of consideration, as a result of one or more recapitalizations, restructurings,
reclassifications, stock splits, reverse stock splits, stock dividends or the
like, appropriate adjustments shall be made in the number and/or kind of shares
or securities or other forms of consideration which may thereafter be sold or
issued under the Plan and for which Awards (including Incentive Stock Options)
may thereafter be granted and for which outstanding Awards previously granted
under the Plan may thereafter be exercised or settled.
If, on or before termination of the Plan, any shares of Common Stock subject
to an Award shall not be issued or transferred and shall cease to be issuable or
transferable for any reason, or if such shares shall have been reacquired by the
Company pursuant to restrictions imposed on such shares under the Plan or the
terms of an Award, the shares not so issued or transferred and the shares so
reacquired shall no longer be charged against the limitation provided for in
this Section 3 and may be again made the subject of Awards under the Plan. The
shares of stock sold or issued under the Plan may be obtained from the Company's
authorized but unissued shares, from reacquired or treasury shares, or from
outstanding shares acquired in the market or from private sources.
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4. Administration of the Plan
(a) The Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the discretion of the Board, a committee appointed thereby
(the "Committee"). Subject to the provisions of the Plan, the Board, or the
Committee, shall have full and final authority in its discretion to select the
eligible persons to whom Awards shall be granted hereunder, to grant such
Awards, to determine the terms and provisions of such Awards and the number of
shares to be sold or issued pursuant thereto. The Board (and the Committee)
shall also be empowered with full and final authority to adopt, amend, and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. The Board or the Committee, as the case may be, may
delegate to Company officers or others its authority with respect to any Awards
that may be granted to eligible persons under the Plan, subject to applicable
legal requirements. The interpretation and construction by the Board or the
Committee of any term or provision of the Plan or of any Award granted
thereunder shall be final and binding upon all participants in the Plan.
(b) Pursuant to the authority described above, the Board or the Committee
may adopt such amendments to, and rules and regulations governing, the Plan as
may be considered advisable for purposes of compliance with applicable federal
or state securities laws. The Board of Directors has established the following
rules applicable to all Awards made pursuant to the Plan: No Award granted
hereunder (other than an Award expressly granting unrestricted shares) may be
transferred by the grantee except (i) by will or the laws of descent and
distribution, (ii) upon dissolution of marriage pursuant to a qualified domestic
relations order or division of community or marital property or (iii) with the
express written approval of the Board or Committee in its sole discretion. No
such permitted transfer shall, by itself, affect any vesting restrictions that
then apply to the Award.
(c) The Company may assist any person to whom an Award is granted hereunder
in the payment of the purchase price or other amounts payable in connection with
the receipt or exercise of that Award, by lending such amounts to such person on
such terms and at such rates of interest and upon such security (if any) as
shall be approved by the Board or the Committee.
5. Persons Eligible to Participate
Any person who is an employee, consultant or advisor of the Company or any
of its Subsidiaries and who is not an Officer of the Company may be eligible to
be considered for the grant of Awards under the Plan, as determined by the Board
or the Committee in its discretion.
6. Plan Effectiveness and Duration
The Plan shall become effective as of the date designated by the Board.
Unless previously terminated by the Board, the Plan shall expire ten years after
its
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effective date, but such expiration shall not affect any Award previously made
or granted that is then outstanding.
7. Amendment and Termination
The Board may amend, alter or discontinue the Plan or an agreement
evidencing an Award granted under the Plan, but no amendment or alteration shall
be made that would affect any Award previously made or granted that is then
outstanding, without the grantee's consent; provided, however, that no such
consent shall be required if the Board determines in its sole discretion that
such amendment or alteration is not reasonably likely to significantly diminish
the benefits provided under such Award or that any such diminishment has been
adequately compensated. Notwithstanding the foregoing, if an amendment to the
Plan would affect the ability of any Stock Options granted under the Plan to
comply with Section 422 or other applicable provisions of the Internal Revenue
Code (the "Code"), and if the Committee determines that it is necessary or
desirable for any Stock Options theretofore or thereafter granted that are
intended to comply with any such provision to so comply, or otherwise is
required under any applicable law, rule or regulation, the amendment shall be
approved by the Company's shareholders to the extent required for such Stock
Options to continue to comply with Section 422 of the Code, or other applicable
provisions of or rules under the Code.
8. Certain Definitions
The authorized categories of benefits for which Awards may be granted under
the Plan are defined in Section 2 above. In addition, the following terms used
in the Plan shall have the following meanings:
Common Stock: Common Stock is the Company's common stock, as
constituted on the effective date of the Plan, and as thereafter adjusted as a
result of any one or more events requiring adjustment of outstanding Awards
under Section 3 above.
Fair Market Value: The Fair Market Value of shares of stock shall be
calculated (a) during such time as the Company is not a publicly-traded company,
by the Board based on its good faith determination, and (b) at such times as the
Company is publicly-traded, on the basis of the closing price of stock of that
class on the day in question (or, if such day is not a trading day in the U.S.
securities markets, on the nearest preceding trading day), as reported with
respect to the principal market (or the composite of the markets, if more than
one) in which such shares are then traded; or, if no such closing prices are
reported, on the basis of the mean between the high bid and low asked prices
that day on the principal market or national quotation system on which such
shares are then quoted; or, if not so quoted, as furnished by a professional
securities dealer making a market in such shares selected by the Board or the
Committee; or if no such dealer is available, then the Fair Market Value shall
be determined in good faith by the Board.
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Incentive Stock Option: An Incentive Stock Option is a Stock Option
that qualifies as an "incentive stock option" as defined under Section 422 (or
any applicable successor provisions) of the Code and that includes an express
provision that it is intended to be an Incentive Stock Option.
Subsidiary: A Subsidiary of the Company is any corporation,
partnership or other entity in which the Company directly or indirectly owns 50%
or more of the total combined power to cast votes in the election of directors,
trustees, managing partners or similar officials.
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