File No. 33-
As filed with the Securities and Exchange Commission
on March 10, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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DAKA INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 04-3024178
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
ONE CORPORATE PLACE, 55 FERNCROFT ROAD, DANVERS,MA 01923
(Address of Principal Executive Offices)
(508) 774-9115
(Registrant's Telephone Number)
DAKA INTERNATIONAL, INC.
1994 EQUITY INCENTIVE PLAN
(Full Title of the Plan)
------------------
William H. Baumhauer
Chairman and Chief Executive Officer
DAKA INTERNATIONAL, INC.
ONE CORPORATE PLACE
55 FERNCROFT ROAD
DANVERS, MASSACHUSETTS 01923-4001
(Name and Address of Agent for Service)
(508) 774-9115
(Telephone Number, Including Area Code, of Agent for Service)
-------------------
With Copies to:
ETTORE A. SANTUCCI, P.C. CHARLES W. REDEPENNING, JR.
Goodwin, Proctor & Hoar DAKA International, Inc.
Exchange Place One Corporate Place
Boston, MA 02109 55 Ferncroft Road
Danvers, MA 01923-4001
<PAGE>
PART I
Section 10(a) Prospectus
DAKA INTERNATIONAL, INC.
600,000 Shares of Common Stock
Offered in Connection with
DAKA INTERNATIONAL, INC.
1994 EQUITY INCENTIVE PLAN
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
The information set forth herein relates to an
aggregate of 600,000 shares of Common Stock, par value $0.01 per
share ("Common Stock"), of DAKA International, Inc. (the
"Company") which have been reserved for issuance upon the
exercise of options or the grant of other stock awards which are
offered to officers, employees, and independent directors of the
Company or its subsidiaries under the DAKA International, Inc.
1994 Equity Incentive Plan (the "Plan"). The information
contained herein also relates to such additional shares of
Common Stock as may be issuable under the Plan in the event of a
stock dividend, stock-split, split-up, recapitalization or other
similar event. See "Adjustments or Changes in Common Stock."
The Company's Common Stock is listed on the NASDAQ
National Market.
The date of this Plan Information Statement is March
10, 1995.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Securities and
Exchange Commission registration statements under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to
the shares described herein (the "Registration Statement"). For
further information, reference is made to the Registration
Statement, including the documents incorporated by reference
therein, which documents are also incorporated by reference in
the Prospectus under the Securities Act. Statements contained
herein concerning the provisions of certain documents are not
necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the
Registration Statement, each statement being qualified in all
respects by such reference.
The Company will provide without charge to each
participant in the Plan, on the written or oral request of such
person, a copy of (i) any or all of the documents which have
been or may be incorporated by reference in Item 3 of the
Registration Statement relating to the shares described herein,
other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents,
including, without limitation, the Company's annual report on
Form 10-K and the Company's quarterly reports for the current
fiscal year and (ii) any other documents required to be
delivered to participants pursuant to Rule 428(b) under the
Securities Act. Requests for such copies, as well as additional
information about the Plan and its administrators, should be
directed to the General Counsel of DAKA International, Inc., One
Corporate Place, 55 Ferncroft Road, Danvers, Massachusetts
01923-4001.
Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the statement
contained herein to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall
not be deemed to constitute a part of the information contained
herein, except as so modified or superseded.
<PAGE>
DESCRIPTION OF THE PLAN
The Plan
The Plan initially became effective as of August 25,
1994. The aggregate maximum number of shares for which options
and awards may be issued under the Plan is 600,000 shares of
Common Stock (of which no more than 150,000 shares shall be
available for issuance in the form of Restricted Stock awards,
Unrestricted Stock awards, or Performance Share awards, counted
cumulatively, during the term of the Plan), subject to
adjustments for changes in the Company's capitalization. No
more than 100,000 shares will be issued to any one individual
pursuant to stock options during any calendar year period. The
Plan permits the granting of a variety of stock incentive awards
based on Common Stock. Awards under the Plan include grants of
stock options (both incentive options and non-qualified
options), grants of restricted and unrestricted shares of Common
Stock, and grants of performance shares. Shares attributable to
certain expired or forfeited awards may be added back to the
pool of shares of Common Stock reserved under the Plan and will
be available for regrant. Awards under the Plan may be granted
at any time. However, awards of incentive stock options may
only be granted under the Plan through August 24, 2004.
The Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 and is not a
qualified plan under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
The description of the Plan contained in this Plan
Information Statement does not purport to be complete and
reference is made to the Plan and to the award agreements, in
such form as may be approved by the Committee from time to time
pursuant to the Plan, for a full statement of the terms and
provisions thereof.
Purpose
The purpose of the Plan is to encourage and enable
the officers, employees, and directors of the Company and its
subsidiaries, upon whose judgment, initiative, and efforts the
Company largely depends for the successful conduct of its
business, to acquire a proprietary interest in the Company.
Administration of the Plan
The Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the
"Committee"), which consists of two or more Directors who are
not employees of the Company or any subsidiary (the "Independent
Directors"). The members of the Committee are listed in the
Appendix to this Prospectus. All members of the Committee are
required to be and are "Disinterested Persons," as that term is
defined under the rules promulgated by the Securities and
Exchange Commission and "Outside Directors," as that term is
defined under Section 162(m) of the Code.
<PAGE>
Subject to the terms of the Plan, the Committee has the
power and authority to, among other things, select the
individuals to whom awards under the Plan will be granted; to
make any combination of awards to participants; to determine and
modify the terms and conditions, including restrictions, of each
award; to extend the period in which options may be exercised;
and to enter into written agreements evidencing the terms of
each award. The Committee's interpretations and decisions with
regard thereto are final and conclusive.
All funds received or held by the Company under this
Plan may be combined with other corporate funds and may be used
for any corporate purpose.
Eligibility
Persons eligible to participate in the Plan are those
full- or part-time officers and other employees of the Company
or its subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its
subsidiaries, as selected from time to time by the Committee in
its sole discretion. Independent Directors of the Company are
eligible to receive awards under the Plan on a limited basis.
Stock Options
The Plan permits the granting to Company employees of
(i) options to purchase Common Stock intended to qualify as
incentive stock options ("Incentive Options") under Section 422
of the Code and (ii) options that do not so qualify
("Non-Qualified Options"). The option exercise price of each
option granted to eligible Company employees is determined by
the Committee, but, except as otherwise provided below, may not
be less than 100% of the fair market value on the date of grant.
The term "fair market value" with respect to a given date is
generally defined as the closing price per share of Common Stock
on such date, as reflected on the NASDAQ National Market.
To qualify as Incentive Options, options must meet
additional federal tax requirements, including a maximum term of
ten years, a minimum exercise price equal to the fair market
value on the date of grant and a $100,000 limit on the value of
shares which may become exercisable for the first time in any
one year. In the case of certain large stockholders, the
minimum exercise price of Incentive Options must equal 110% of
fair market value on the date of grant and the maximum term is
limited to five years. To the extent any option does not
qualify as an Incentive Option, it will constitute a
Non-Qualified Option.
An employee may, with the Committee's consent, elect
to receive a Non-Qualified Option in lieu of cash bonus to which
he may become entitled during the following calendar year
pursuant to some other plan of the Company. Such an election
must be made on or before the date set by the Committee, which
date shall be no later than fifteen (15) days preceding January
1 of the calendar year in which the cash bonus would otherwise
be paid and such election must irrevocably waive receipt of all
or a portion of the cash bonus. Each employee making such an
election will be granted a Non-Qualified Option on the date the
waived cash bonus would have been paid. With respect to an
employee who is subject to Section 16 of the Securities Exchange
Act of 1934 (the "Exchange Act"), if the grant date is less than
six (6) months and one (1) day from the date of election, such
grant date will be delayed until the date which is six (6)
months and one (1) day from the date of election. With respect
to Non-Qualified Options granted in lieu of cash bonus, the
option exercise price will be determined by the Committee but
may not be less than 50% of the fair market value on the date of
grant. The number of shares of stock subject to the
Non-Qualified Option is determined by dividing the amount of the
waived cash bonus by the difference between the fair market
value of the stock on the date the option is granted and the
exercise price per option.
<PAGE>
The term of each option is fixed by the Committee. The
Committee also determines at what time or times each option
becomes vested and exercisable and, subject to the terms of the
Plan, the period of time, if any, after death, disability, or
termination of employment during which options may be exercised.
The Committee may accelerate the exercisability of any option at
any time. Non-Qualified Options granted in lieu of cash bonus
are exercisable immediately. All options will become
immediately exercisable upon the occurrence of a Change of
Control Event (defined below).
If an employee's employment terminates by reason of
death, any previously granted options become fully exercisable
and may be exercised within a period of 12 months after the
employee's death. In the case of an employee whose employment
terminates by reason of disability, options held by the employee
become fully exercisable and may be exercised within a period of
12 months after such termination. If an employee's employment
terminates by reason of retirement, options held by the employee
may be exercised, to the extent they are exercisable at the time
of the retirement, for 12 months after such termination. In the
case of a retired or disabled employee's death during such
12-month period, such period will be extended six months after
the employee's death. If an employee's employment with the
Company terminates for cause, all options held by that employee
under the Plan will terminate to the extent they have not been
exercised. If an employee's employment terminates for any
reason other than death, disability, retirement, or for cause,
an option (to the extent otherwise exercisable) may be exercised
at any time within three months after such termination. In any
event, the option is subject to earlier termination by its
terms.
At the discretion of the Committee, options granted
to Company employees under the Plan may include a so-called
"reload" feature pursuant to which an employee exercising an
option by delivery of shares of Common Stock may be
automatically granted an additional option to purchase that
number of shares equal to the number delivered to exercise the
original option.
<PAGE>
Stock Options For Independent Directors
Each Independent Director actually serving as
Director of the Company will automatically be granted on the
fifth (5th) business day after each annual meeting of
shareholders, beginning with the 1994 annual meeting, a
Non-Qualified Option to acquire 1,500 shares of stock. The
exercise price of such an option will be equal to the fair
market value of the stock on the date the option is granted.
All such options granted to Independent Directors
shall be exercisable beginning on the first anniversary of the
date upon which such option was granted. However, no option
granted to an Independent Director may be exercised more than
ten years from the date of grant. The rights of an Independent
Director in any options granted shall terminate six months after
such Director ceases to be a Director, or on the stated term of
the Option, if earlier. Options granted to an Independent
Director and outstanding on the date of his death may be
exercised for a period of six months from the date of death or
until the expiration of the stated term of the Option, if
earlier. If an Independent Director ceases to serve as a
Director for cause (as defined in the Plan), such Director's
rights in all options granted to him will terminate immediately.
General Provisions Pertaining To Stock Options
Stock options may be exercised in whole or in part.
Upon exercise, the option exercise price must be paid in full in
cash or by certified or bank check or other instrument
acceptable to the Committee or, if the Committee so determines,
by delivery of shares of Common Stock that have been held by the
optionee for at least six months. The exercise price may also
be delivered to the Company by a broker pursuant to an
irrevocable instruction to the broker from the optionee.
Performance Share Awards
The Plan permits the granting of shares of Common
Stock to employees of the Company or any subsidiary, subject to
such performance goals as the Committee may determine
("Performance Shares"). Such awards may be in lieu of or in
addition to awards of options, restricted stock or unrestricted
stock under the Plan. Upon the satisfaction of any performance
goals prescribed by the Committee, the participant shall receive
shares of Common Stock.
A recipient of Performance Shares will have the
rights of a shareholder only with respect to shares actually
received by the participant and not with respect to shares that
are subject to the satisfaction of performance goals. A
participant's rights in all Performance Shares shall
automatically terminate upon the participant's termination of
employment for any reason.
<PAGE>
Restricted Stock
The Committee may also make awards of restricted
shares of Common Stock to any employee of the Company or any
subsidiary, subject to such conditions and restrictions as the
Committee may determine ("Restricted Stock"). Such awards may
be in lieu of or in addition to awards of options or performance
shares under the Plan. Awards of Restricted Stock may be
subject to such conditions and restrictions as the Committee may
determine. These conditions and restrictions may include the
achievement of certain performance objectives and/or continued
employment with the Company through a specified period. Upon
the satisfaction of any conditions prescribed by the Committee,
the restrictions applicable to the Restricted Stock will lapse
and the shares will be deemed vested in the participant.
A recipient of shares of Restricted Stock will have
no rights with respect to such shares unless he accepts the
award within 30 days of its grant. To accept the award, a
recipient must execute a written instrument, in such form as the
Committee determines, setting forth the terms and conditions to
which the shares are subject. Such a written instrument may
require or permit the immediate payment, waiver, deferral, or
investment of dividends paid on the Restricted Stock. At this
time, the recipient must also make any required payments in
connection with the purchase of the Restricted Stock.
In the case of an award of Restricted Stock, a
certificate for the Restricted Stock granted will be issued in
the employee's name but, unless the Committee determines
otherwise, will be held by the Company for the benefit of the
employee. Subject to the restrictions imposed by the Committee,
the employee will have the rights of a shareholder with respect
to the voting of the Restricted Stock. Shares of Restricted
Stock may not be sold, assigned, or otherwise disposed of until
all applicable conditions have been satisfied.
If a participant who holds Restricted Stock
terminates employment for any reason other than death or
disability prior to the lapse or waiver of the restrictions, the
Company shall have the right to repurchase the shares or to
require their forfeiture in exchange for the amount, if any,
which the participant paid for them. Unless otherwise provided
in the instrument evidencing the Restricted Stock award, the
Company must exercise such right within 90 days following such
termination of employment. If a participant's employment
terminates due to death or disability, such participant will
become fully vested in his Restricted Stock at the time of such
termination to the extent such vesting is otherwise contingent
only on continued service with the Company. However, if vesting
is contingent on the attainment of pre-established performance
goals, vesting shall remain dependent on the attainment of such
goals.
Unrestricted Stock
The Committee may also grant (or sell at a purchase
price determined by the Committee) shares of Common Stock which
are free from any restrictions under the Plan ("Unrestricted
Stock") to any employee of the Company or any subsidiary in lieu
of any cash compensation to such employee.
<PAGE>
Transferability
In general, options and rights granted under the Plan
will not be transferable otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic
relations order under Section 414(p) of the Code. Options may
be exercised during the holder's lifetime only by the holder.
Issuance of Common Stock
Shares to be issued under the Plan will be made
directly by the Company and will be from authorized but unissued
Common Stock, from shares held in the Treasury of the Company,
or from any other proper source. No fees or commissions will be
charged in connection with the issuance of shares.
Change of Control
Upon the occurrence of certain Change of Control
Events, outstanding options will become immediately exercisable
in full. In addition, outstanding Restricted Stock awards and
Performance Share awards will be subject to any Change of
Control provisions prescribed by the Committee at the time of
grant.
A Change of Control Event includes (i) any person or
group, with certain exceptions, acquiring the beneficial
ownership of 50% or more of either the voting securities of the
Company or the then outstanding shares of Stock of the Company,
(ii) a change in the composition of a majority of the Company's
Board of Directors as it was composed on the date that the Plan
was approved by the shareholders unless the selection or
nomination of each of the new members was approved by a majority
of the members of the Company's Board of Directors who were
members on the date the Plan was approved by the shareholders,
or (iii) approval by the Company's shareholders of a
consolidation or merger where the shareholders of the Company
would not beneficially own at least 80% of the voting shares of
the corporation issuing cash or securities, any plan for the
liquidation or dissolution of the Company, or the sale of all or
substantially all of the Company's assets.
Deferrals; Nature of Company's Obligations Under the Plan
The Committee may, in its discretion, require or
permit participants to make elections to defer receipt of
benefits under the Plan. In such event, the Committee may
provide for the accrual of interest or dividends on benefits
deferred under the Plan on such terms as the Committee may
determine.
<PAGE>
Unless the Committee expressly determines otherwise,
participants in the Plan will have rights no greater than those
of a general creditor of the Company. Generally, Plan
participants will have the rights of a shareholder, such as
voting and dividend rights, only with respect to shares actually
issued in the name of the participant and not with respect to
shares subject to awards which have not been exercised or for
which Common Stock has not yet been issued.
Adjustments or Changes in Common Stock
The Committee will make appropriate adjustments in
the number and kind (and the exercise or purchase price, if
applicable) of shares of Common Stock remaining available for
issuance under the Plan or subject to outstanding awards to
reflect stock dividends, stock splits, split-ups,
recapitalizations, and similar events. In the event of a
merger, liquidation or similar event, the Committee in its
discretion may provide for substitution or adjustments or may
accelerate or, upon payment or other consideration for the
vested portion of any award as the Committee, in its sole
discretion, deems equitable in the circumstances, terminate such
awards.
Tax Withholding
Plan participants are responsible for the payment of
any federal, state, or local taxes which the Company is required
by law to withhold from the value of any award. The Company may
deduct any such taxes from any payment otherwise due to the
participant. Participants may elect to have such tax
obligations satisfied either by authorizing the Company to
withhold shares of Common Stock to be issued pursuant to an
award under the Plan or by transferring to the Company shares of
Common Stock having a value equal to the amount of such taxes.
Such an election is subject to certain limitations for
participants subject to the requirements of Section 16(b) of the
Exchange Act.
Amendments and Termination
The Board of Directors may at any time amend or
discontinue the Plan and the Committee may at any time amend or
cancel outstanding awards (or provide substitute awards at the
same or a reduced exercise or purchase price) for the purpose of
satisfying changes in the law or for any other lawful purpose.
Any amendment that would increase the aggregate number of shares
of Common Stock that may be issued, materially increase the
benefits accruing to Plan participants, or materially modify the
requirements regarding eligibility to participate under the Plan
will be subject to approval by the Company's shareholders. In
any event, no such action may be taken which adversely affects
any rights under outstanding awards without the holder's consent.
<PAGE>
Liens
There is no provision under the Plan or pursuant to
any contract in connection therewith that would permit any
person to create a lien on a participant's interest held under
the Plan.
Restrictions on Reoffer or Resale of Common Stock
Any person may sell, pledge, transfer, hypothecate or
otherwise dispose of his shares of Common Stock acquired
pursuant to options or awards granted under the Plan in any
manner lawfully permitted under federal and state securities
laws so long as the conditions associated with such options or
awards have been met.
The Registration Statement relating to the shares
described herein does not apply to reoffers or resales by
"affiliates" of the Company of shares of Common Stock acquired
by them pursuant to options or awards granted under the Plan.
Rule 405 under the Securities Act provides that an "affiliate"
of the Company is "a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is
under common control with" the Company. Affiliates must effect
such reoffers or resales either pursuant to an exemption from
registration under the Securities Act (such as an exemption
obtained through compliance with Rule 144) or pursuant to a
separate prospectus covering such reoffer or resale. Persons
who are not affiliates of the Company generally are entitled to
make such reoffers or resales without restriction.
In addition, every person who is directly or
indirectly the beneficial owner of more than ten percent of the
outstanding shares of Common Stock, every director and every
person who is an officer (within the meaning of Rule 16a-1) of
the Company or, in certain circumstances, a subsidiary of the
Company (a "Section 16(b) Person"), is subject to Sections 16(a)
and 16(b) of the Exchange Act, which provide for, respectively,
(i) the reporting to the Securities and Exchange Commission of
purchases and sales of the equity and derivative securities of
the Company, including purchases pursuant to the exercise of
stock options and (ii) the recovery of the difference between
the prices of any purchase and sale or any sale and purchase of
an equity or derivative security of the Company within a
six-month period, without regard to offsetting losses. The
rules are applied mechanically to maximize recoverable "profits"
and may result in liability even though the overall trading
actually resulted in a loss.
To avoid short-swing profits liabilities, each
Section 16(b) Person who participates in the Plan should keep in
mind the following: (a) grants under the Plan will generally
qualify as exempt purchases if the shares are held for at least
six (6) months from the date of grants; (b) purchases (including
grants and exercises of options and grants of other awards)
under the Plan should be reported on the next Form 5 or an
earlier Form 4; (c) sales of Common Stock purchased under the
Plan should be reported on Form 4 within ten days after the end
of the month in which the Common Stock is sold; and (d) any
election of cash settlement of Common Stock to satisfy the tax
withholding consequences should be made either during the
quarterly window period or at least six months in advance.
Please note that the foregoing is not meant to be a
comprehensive description of the Section 16 rules.
The "inside information" provisions of the federal
securities laws impose further restrictions on resales by any
employee, whether or not the employee is an affiliate or an
officer or a Director of the Company or any of its subsidiaries.
<PAGE>
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the current principal
Federal income tax consequences of transactions under the Plan.
It does not describe all Federal tax consequences under the
Plan, nor does it describe state or local tax consequences.
Incentive Options
Under the Code, an employee will not realize taxable
income by reason of the grant or the exercise of an incentive
stock option. If an employee exercises an incentive stock
option and does not dispose of the shares until the later of (a)
two years from the date the option was granted or (b) one year
from the date shares were transferred to the employee, the
entire gain, if any, realized upon disposition of such shares
will be taxable to the employee as long-term capital gain, and
the Company will not be entitled to any deduction. If an
employee disposes of the shares within such one-year or two-year
period in a manner so as to violate the holding period
requirements (a "disqualifying disposition"), the employee
generally will realize ordinary income in the year of
disposition, and, provided the Company complies with applicable
withholding requirements, the Company will receive a
corresponding deduction, in an amount equal to the excess of (1)
the lesser of (x) the amount, if any, realized on the
disposition and (y) the fair market value of the shares on the
date the option was exercised over (2) the option price. Any
additional gain realized on the disposition will be long-term or
short-term capital gain and any loss will be long-term or
short-term capital loss depending upon the holding period of the
stock. The employee will be considered to have disposed of a
share if he sells, exchanges, makes a gift of or transfers legal
title to the share (except by pledge or by transfer on death).
If the disposition is by gift and violates the holding period
requirements, the amount of the employee's ordinary income (and
the Company's deduction) is equal to the fair market value of
the shares on the date of exercise less the option price. If
the disposition is by sale or exchange, the employee's tax basis
will equal the amount paid for the shares plus any ordinary
income realized as a result of the disqualifying distribution.
The exercise of an incentive stock option may subject the
employee to the alternative minimum tax.
An employee who surrenders shares of Common Stock in
payment of the exercise price of his incentive stock option
generally will not, under proposed Treasury Regulations,
recognize gain or loss on his surrender of such shares. The
surrender of shares previously acquired upon exercise of an
incentive stock option in payment of the exercise price of
another incentive stock option is, however, a "disposition" of
such stock. If the incentive stock option holding period
requirements described above have not been satisfied with
respect to such stock, such disposition will be a disqualifying
disposition that may cause the employee to recognize ordinary
income as discussed above.
Under proposed Treasury Regulations, all of the
shares received by an employee upon exercise of an incentive
stock option by surrendering shares of Common Stock will be
subject to the incentive stock option holding period
requirements. Of those shares, a number of shares (the
"Exchange Shares") equal to the number of shares of Common Stock
surrendered by the employee will have the same tax basis for
capital gains purposes (increased by any ordinary income
recognized as a result of any disqualifying disposition of the
surrendered shares if they were incentive stock option shares)
and the same capital gains holding period as the shares
surrendered. For purposes of determining ordinary income upon a
subsequent disqualifying disposition of the Exchange Shares, the
amount paid for such shares will be deemed to be the fair market
value of the shares surrendered. The balance of the shares
received by the employee will have a tax basis (and a deemed
purchase price) of zero and a capital gains holding period
beginning on the date of exercise. The incentive stock option
holding period for all shares will be the same as if the option
had been exercised for cash.
<PAGE>
An incentive stock option that is exercised by an
employee more than three months after an employee's employment
terminates will be treated as a nonqualified option for federal
income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in
the case of an employee who dies, the three-month employment
rule does not apply.
Non-Qualified Options
There are no federal income tax consequences to
either the optionee or the Company on the grant of a
non-qualified option. On the exercise of a non-qualified
option, the optionee (except as described below) has taxable
ordinary income equal to the excess of the fair market value of
the shares of Common Stock received on the exercise date over
the option price of the shares. The optionee's tax basis for
the Common Stock acquired upon exercise of a non-qualified
option is increased by the amount of such taxable income. The
Company will be entitled to a federal income tax deduction in an
amount equal to such excess, provided the Company complies with
applicable withholding rules. Upon the sale of the Common Stock
acquired by exercise of a non-qualified option, optionees will
realize long-term or short-term capital gain or loss depending
upon their holding period for such stock.
Section 83 of the Code and the regulations thereunder
provide that the date for reporting and determining the amount
of ordinary income (and the Company's equivalent deduction) upon
exercise of a non-qualified option and for the commencement of
the holding period of the shares thereby acquired by an optionee
who is a Section 16(b) Person will be delayed until the date
that is the earlier of (i) six (6) months after the date of the
exercise and (ii) such time as the shares received upon exercise
could be sold at a gain without the optionee being subject to
such potential liability. Recent changes to the rules of the
Securities and Exchange Commission under Section 16(b) exempt
from application of Section 16(b) liability Common Stock
acquired pursuant to the exercise of an option granted under the
Plan, provided the stock underlying the option is not disposed
of during the six-month period following the date of grant. As
a result of these recent changes, the foregoing Section 83 rule
will not apply unless the optionee exercises a non-qualified
option within six months of the date of grant.
<PAGE>
An optionee who surrenders shares of Common Stock in
payment of the exercise price of a non-qualified option will not
recognize gain or loss on his surrender of such shares. (Such
an optionee will recognize ordinary income on the exercise of
the non-qualified option as described above.) Of the shares
received in such an exchange, that number of shares equal to the
number of shares surrendered will have the same tax basis and
capital gains holding period as the shares surrendered. The
balance of the shares received will have a tax basis equal to
their fair market value on the date of exercise, and the capital
gains holding period will begin on the date of exercise.
Restricted Stock
Under the Code, an employee normally will not realize
taxable income and the Company will not be entitled to a
deduction upon the grant of Restricted Stock. At the time the
shares are no longer subject to a substantial risk of forfeiture
(as defined in the Code) or become transferable, the employee
will realize taxable ordinary income in an amount equal to the
fair market value of such number of shares of Common Stock which
have become nonforfeitable or transferable and the Company will
be entitled to a deduction in the same amount, provided the
Company complies with applicable withholding requirements.
However, an employee may make an 83(b) Election and recognize
taxable ordinary income in the year the shares of Restricted
Stock are awarded in an amount equal to their fair market value
at the time of the award, determined without regard to the
restrictions. In that event, the Company will be entitled to a
deduction in such year in the same amount, provided the Company
complies with applicable withholding requirements, and any gain
or loss realized by the employee upon the subsequent disposition
of Common Stock will be capital gain or loss and will not result
in any further deduction to the Company. Any dividends with
respect to the shares of Restricted Stock that are paid or made
available to an employee who has not made an 83(b) Election
while the shares remain forfeitable are treated as additional
compensation taxable as ordinary income to the employee and
deductible by the Company when paid. If an 83(b) Election has
been made with respect to the restricted shares, the dividends
represent ordinary dividend income to the employee and are not
deductible by the Company. If the employee makes an 83(b)
Election and subsequently forfeits the shares, the employee is
not entitled to a deduction as a consequence of such forfeiture,
and the Company must include as ordinary income the amount it
previously deducted in the year of grant with respect to such
shares.
Unrestricted Stock
The recipient of Unrestricted Stock will generally be
subject to tax at ordinary income rates on the fair market of
the stock on the date that the stock is issued to the
participant. The Company generally will be entitled to a
deduction equal to the amount treated as compensation that is
taxable as ordinary income to the recipient, provided it
complies with applicable withholding requirements.
Performance Share Awards
There will be no federal income tax consequences to
either the employee or the Company on the grant of a performance
shares or during the period that such an award remains
outstanding. Upon exercise of such an award, the Common Stock
or cash received by the employee is taxable to the employee as
ordinary income and the Company is entitled to a corresponding
deduction, provided it complies with applicable withholding
requirements. Upon the sale of any Common Stock acquired by
exercise of a performance share award, the employee will realize
long-term or short-term capital gain or loss, depending upon the
holding period of such stock.
<PAGE>
Parachute Payments
The termination of restrictions on Restricted Stock
or the accelerated vesting of any option or performance share
award due to the occurrence of a Change of Control Event may
cause payments with respect to such Restricted Stock or
accelerated vesting of options or performance share awards to be
treated as "parachute payments" as defined in the Code. Any
such parachute payments may be non-deductible to the Company, in
whole or in part, and may subject the recipient to a
non-deductible 20% federal excise tax on all or portion of such
payment (in addition to other taxes ordinarily payable).
Recent Tax Law Changes
As a result of new Section 162(m) of the Code, the
Company's deduction for certain options and awards under the
Plan may be limited to the extent that a "covered employee"
(i.e., the Chief Executive Officer or other executive officer
whose compensation is required to be reported in the summary
compensation table of the Company's Proxy Statement) receives
compensation (other than performance-based compensation) in
excess of $1 million a year.
State and foreign tax consequences vary from
jurisdiction to jurisdiction, and each employee should consult
his own tax adviser as to the effect of these taxes, as well as
the effect of the federal income tax, in his own particular case.
<PAGE>
APPENDIX
TO
DAKA INTERNATIONAL, INC.
1994 EQUITY INCENTIVE PLAN
Plan Administrators
The Plan is currently being administered by the
Compensation Committee. The names and addresses of the members
of the Compensation Committee are as follows:
Erline Belton
c/o DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923-4001
Alan D. Schwartz
c/o DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923-4001
E.L. Cox
c/o DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923-4001
Eric C. Larson
c/o DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923-4001
Timothy A. Dugan
c/o DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923-4001
<PAGE>
<TABLE> CALCULATION OF REGISTRATION FEE
<CAPTION> Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value
$0.01
per share 600,000 $16.82 (2)<F2> $10,092,000 $3,480
shares(1)<F1>
----------------------------------------------------------------------
<FN>
<F1>(1) Plus such additional shares as may be issuable under the 1994
Equity Incentive Plan in the event of a stock dividend, stock
split, recapitalization or other similar event.
<F2>(2) This estimate is made pursuant to Rule 457(h)(1) of the Securities
Act of 1993, as amended (the "Securities Act"), solely for the
purposes of determining the aggregate offering price and the
registration fee and is based upon the average of the high and
low prices of the Common Stock as quoted on the National Association
of Securities Dealers Automatic Quotation/National Market System
on March 2, 1995.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
DAKA International, Inc. (the "Registrant") hereby
incorporates by reference the documents listed in (a) through
(c) below, which have previously been filed with the Securities
and Exchange Commission.
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
July 2, 1994;
(b)(1) The Registrant's definitive Proxy Statement mailed in connection with
its Annual Meeting of Stockholders held on December 7, 1994 pursuant
to Regulation 14A under the Securities Exchange Act of 1934 (the
"Exchange Act");
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994;
(3) The Registrant's Current Report on Form 8-K filed via EDGAR on
February 23, 1995.
(c) The Registrant's Registration Statement on Form S-4 (No. 33-24819) as
filed on October 7, 1988 and amended by Amendment No. 1, filed on
October 13, 1988.
In addition, all documents subsequently filed with
the Securities and Exchange Commission by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold
or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of
filing of such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares to be offered hereby will
be passed upon for the Registrant by Goodwin, Proctor & Hoar,
counsel to the Registrant.
<PAGE>
Item 6. Indemnification of Directors and Officer.
The Registrant is a Delaware corporation. Reference
is made to Section 145(a) and Section 145(b) of the Delaware
General Corporation Law, which enables a corporation to
indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines, and amounts paid
in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
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
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
A corporation may also indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that he or she was a director, officer,
employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him or her connection with
the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
<PAGE>
Section 145 further provides: that a Delaware
corporation is required to indemnify a director, officer,
employee or agent against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with any
action, suit or proceeding or in defense of any claim, issue or
matter therein as to which such person has been successful on
the merits or otherwise; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party my be entitled; and that
indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of such person's heirs,
executors and administrators. A Delaware corporation may
provide indemnification only as authorized in the specific case
upon a determinaiton that indemnification of the director,
officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct. Such
determination is to be made (i) by the board of directors by
vote of directors who were not party to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion or (iii) by
the stockholders.
The Certificate of Incorporation and By-laws of the
Registrant provide for indemnification of directors and
officers of the Registrant to the fullest extent permitted by
law, as now in effect or later amended. The By-laws also
provide that expenses incurred by an officer or director in
defending a civil or criminal action, suit or proceeding may be
paid by the Registrant in advance of final deposition upon
receipt of any undertaking by or on behalf of such person to
repay such amount if it ultimately is determined that he is not
entitled to be indemnified by the Registrant. The By-laws
further provide that such indemnification provisions are not
exclusive.
Additionally, the Registrant's Certificate eliminates
the personal liability of the Registrant's directors to the
Registrant or the stockholders of the Registrant to the fullest
extent permitted by the provisions of Section 102 of the
Delaware General Corporation Law, as the same may be amended and
supplemented.
Item 7. Exemption from Registration Claimed.
Not Applicable.
<PAGE>
Item 8. Exhibits.
(a) The following is a complete list of exhibits filed or incorporated by
reference as part of this registration statement.
Exhibit
-------
4.1 Certificate of Incorporation*
4.3 By-laws*
5.1 Opinions of Counsel, as to the legality of the securities being
registered.
10.1 The DAKA International, Inc. 1994 Equity Incentive Plan.
23.1(a) Consent of Counsel (included in Exhibit 5.1 hereto).
23.1(b) Consent of Independent Accountants.
24 Powers of Attorney (included in Part II of this registration
statement).
*Incorporated by reference to the Registrant's Registration Statement on
Form S-4 (No. 33-24819), as amended.
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; and
(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) herein do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the undersigned
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; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the terination
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 whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<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 Town of Danvers, the Commonwealth of Massachusetts, on March
9, 1995.
DAKA INTERNATIONAL, INC.
By:
---------------------------
William H. Baumhauer,
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed below by the
following persons in the capacities and on the date indicated.
Each person whose signature appears below constitutes
and appoints William H. Baumhauer and Allen R. Maxwell and each
of them, as her or his true and lawful attorney-in-fact and
agent, with full power of substitution, for her or him and in
her or his name, place and stead, in any and all capacities to
sign any or all amendments or post-effective amendments to this
registration statement, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or her or
his substitute, may lawfully do or cause to be done by virtue
hereof.
Signature Title Date
--------------------------- Chairman, Chief Executive March 9, 1995
William H. Baumhauer Officer and Director
(Principal Executive Officer)
--------------------------- President and Chief March 9, 1995
Allen R. Maxwell Operating Officer
--------------------------- Senior Vice President, March 9, 1995
Michael A. Woodhouse Chief Financial Officer
and Treasurer
--------------------------- Director March 9, 1995
E.L. Cox
--------------------------- Director March 9, 1995
Timothy A. Dugan
<PAGE>
--------------------------- Director March 9, 1995
Eric C. Larson
--------------------------- Director March 9, 1995
Erline Belton
--------------------------- Director March 9, 1995
Alan D. Schwartz
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(4.1) Certificate of Incorporation*
(4.2) By-laws*
(5.1) Opinion of Goodwin, Procter & Hoar as to the legality
of the securities being registered.
(10.1) The DAKA International, Inc. 1994 Equity Incentive Plan.
(23.1)(a) Consent of Counsel (included in Exhibit 5.1 hereto).
(23.1)(b) Consent of Deloitte & Touche, Independent Auditors.
(24) Powers of Attorney (included in Part II of this
registration statement).
*Incorporated by reference to the Registrant's Registration Statement on
Form S-4 (No. 33-24819), as amended.
GOODWIN, PROCTOR & HOAR
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
March 8, 1995
DAKA International, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, MA 01923
Re: DAKA International, Inc. 1994 Equity Incentive Plan
---------------------------------------------------
Ladies and Gentlemen:
This opinion is furnished in connection with the registration
pursuant to the Securities Act of 1933, as amended (the "Act"),
of 600,000 shares of Common Stock, par value $0.01 per share
(the "Shares"), of DAKA International, Inc. (the "Company")
which may be issued under the DAKA International, Inc. 1994
Equity Incentive Plan (the "Plan").
We have acted as counsel to the Company in connection with the
registration of the Shares under the Act. We have examined
the Plan; the Certificate of Incorporation and the By-Laws of
the Company, each as amended to date; such records of the
corporate proceedings of the Company as we deemed material;
the Registration Satement on a Form S-8 under the Act relating
to the Shares (the "Registration Statement"); and such other
certificates, records and documents as we considered necessary
for the purposes of this opinion.
We are attorneys admitted to practice in the Commonwealth of
Massachusetts. We express no opinion concerning the laws of
any jurisdictions other than the laws of the United States of
America and the Commonwealth of Massachusetts and the Delaware
General Corporation Law.
Based upon the foregoing, we are of the opinion that upon the
issuance and delivery of the Shares in accordance with the terms
of the Registration Statement and the Plan, the Shares will be
legally issued, fully paid and non-assessable shares of the Company's
Common Stock.
The foregoing assumes that all requisite steps will be taken to
comply with the requirements of the Act and applicable requirements
of state laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as part of the
above-referenced Registration Statement and to the use of our
name therein.
Very truly yours,
GOODWIN, PROCTOR & HOAR
DAKA INTERNATIONAL, INC.
1994 EQUITY INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN;
DEFINITIONS
The name of the plan is the DAKA International,
Inc. 1994 Equity Incentive Plan (the "Plan"). The purpose of
the Plan is to encourage and enable the officers, employees and
Directors of DAKA International, Inc. (the "Company") and its
Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its
business to acquire a proprietary interest in the Company. It
is anticipated that providing such persons with a direct stake
in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their
desire to remain with the Company.
The following terms shall be defined as set forth
below:
"Act" means the Securities Exchange Act of 1934, as
amended.
"Award" or "Awards," except where referring to a
particular category of grant under the Plan, shall include
Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock Awards, Unrestricted Stock Awards and Performance Share
Awards.
Board" means the Board of Directors of the Company.
"Cause" means the occurrence of one or more of
the following: (i) employee is convicted of, pleads guilty to,
or confesses to any felony or any act of fraud, misappropriation
or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the
Board in good faith in its sole discretion, (ii) employee
engages in a fraudulent act to the material damage or prejudice
of the Company or any Subsidiary or in conduct or activities
materially damaging to the property, business or reputation of
the Company or any Subsidiary, all as determined by the Board in
good faith in its sole discretion, (iii) any material act or
omission by employee involving malfeasance or negligence in the
performance of employee's duties to the Company or any
Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole
discretion, which has not been corrected by employee within 30
days after written notice from the Company of any such act or
omission, (iv) failure by employee to comply in any material
respect with the terms of his employment agreement, if any, or
any written policies or directives of the Board as determined by
the Board in good faith in its sole discretion, which has not
been corrected by employee within 30 days after written notice
from the Company of such failure, or (v) material breach by
employee of his noncompetition agreement with the Company, if
any, as determined by the Board in good faith in its sole
discretion.
<PAGE>
"Change of Control" is defined in Section 13.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor Code, and related rules, regulations
and interpretations.
"Committee" means the Committee of the Board
referred to in Section 2.
"Disability" means an employee's inability to
perform his normal required services for the Company and its
Subsidiaries for a period of six consecutive months by reason of
the employee's mental or physical disability, as determined by
the Committee in good faith in its sole discretion.
"Disinterested Person" means an Independent
Director who qualifies as such under Rule 16b-3(c)(2)(i)
promulgated under the Act, or any successor definition under
said Rule.
"Effective Date" means the date on which the Plan is
approved by stockholders as set forth in Section 15.
"Fair Market Value" on any given date means the
closing price per share of Stock on the NASDAQ National Market,
or the principal exchange on which the Stock is traded, on such
date (or if no such price is reported on such date, such price
as reported on the nearest preceding date on which such price is
reported).
"Incentive Stock Option" means any Stock Option
designated and qualified as an "incentive stock option" as
defined in Section 422 of the Code.
"Independent Director" means a member of the Board
who is not also an employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
"Option" or "Stock Option" means any option to
purchase shares of Stock granted pursuant to Section 5.
"Outside Director" means a member of the Board who
qualifies as such under Section 162(m) of the Code and the
regulations promulgated thereunder.
"Performance Share Award" means Awards granted
pursuant to Section 8.
"Restricted Stock Award" means Awards granted
pursuant to Section 6.
"Retirement" means the employee's termination of
employment with the Company and its Subsidiaries after
attainment of the age and/or service requirements to qualify for
early or normal retirement under the Company's qualified
retirement plan.
"Stock" means the Common Stock, par value $0.01 per
share, of the Company, subject to adjustments pursuant to
Section 3.
"Subsidiary" means any corporation or other entity
(other than the Company) in any unbroken chain of corporations
or other entities, beginning with the Company if each of the
corporations or entities (other than the last corporation or
entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total
combined voting power of all classes of stock or other interests
in one of the other corporations or entities in the chain.
"Unrestricted Stock Award" means Awards granted
pursuant to Section 7.
<PAGE>
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE
AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS
(a) Committee. The Plan shall be administered
by two or more Outside Directors appointed from time to time to
serve as the Compensation Committee of the Board. Each member
of the Committee shall also be a Disinterested Person. No
member of the Board shall be liable for any action or
determination under the Plan made in good faith.
(b) Powers of Committee. The Committee shall have
the power and authority to grant Awards consistent with the
terms of the Plan, including the power and authority:
(i) to select the officers and other employees of
the Company and its Subsidiaries to whom Awards may from time to
time be granted;
(ii) to determine the time or times of grant, and
the extent, if any, of Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock Awards, Unrestricted Stock
Awards and Performance Share Awards, or any combination of the
foregoing, granted to any one or more participants;
(iii) to determine the number of shares of Stock to
be covered by any Award;
(iv) to determine and modify the terms and
conditions, including restrictions, not inconsistent with the
terms of the Plan, of any Award, which terms and conditions may
differ among individual Awards and participants, and to approve
the form of written instruments evidencing the Awards;
(v) to accelerate the exercisability or vesting of
all or any portion of any Award, with or without conditions;
(vi) subject to the provisions of Section 5(a)(ii),
to extend the period in which Stock Options may be exercised;
(vii) to determine whether, to what extent, and
under what circumstances Stock and other amounts payable with
respect to an Award shall be deferred either automatically or at
the election of the participant and whether and to what extent
the Company shall pay or credit amounts constituting interest
(at rates determined by the Committee) or dividends or deemed
dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for
its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the Plan and any Award
(including related written instruments); to make all
determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the
Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee
shall be binding on all persons, including the Company and Plan
participants.
<PAGE>
SECTION 3. STOCK ISSUABLE UNDER THE PLAN;
RECAPITALIZATIONS; MERGERS; SUBSTITUTE AWARDS
(a) Stock Issuable. The maximum number of
shares of Stock reserved and available for issuance under the
Plan shall be 600,000 shares, of which no more than 150,000
shares shall be available for issuance in the form of Restricted
Stock Awards, Unrestricted Stock Awards or Performance Share
Awards, counted cumulatively, during the term of the Plan. For
purposes of the foregoing limitations, the shares of Stock
underlying any Awards which are forfeited, cancelled, reacquired
by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added
back to the shares of Stock available for issuance under the
Plan. No more than 100,000 Stock Options may be granted to any
one individual participant during any calendar year period. The
shares available for issuance under the Plan may be authorized
but unissued shares of Stock or shares of Stock reacquired by
the Company.
(b) Recapitalizations. If, through or as a result
of any merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other
securities, the Committee shall make an appropriate or
proportionate adjustment in (i) the maximum number and kind of
shares reserved for issuance under the Plan and in the form of
Restricted Stock Awards, Unrestricted Stock Awards or
Performance Share Awards, (ii) the maximum number of Stock
Options that can be granted to any one individual participant,
(iii) the number and kind of shares or other securities subject
to any then outstanding Awards under the Plan, and (iv) the
price for each share subject to any then outstanding Stock
Options under the Plan, without changing the aggregate exercise
price as to which such Stock Options remain exercisable. The
adjustment by the Committee shall be final, binding and
conclusive. No fractional shares of Stock shall be issued under
the Plan resulting from any such adjustment, but the Committee
in its discretion may make a cash payment in lieu of fractional
shares.
(c) Mergers. In the event a consolidation or merger
or sale of all or substantially all of the assets of the Company
in which outstanding shares of Stock are exchanged for
securities, cash or other property of any other corporation or
business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming
the obligations of the Company, may, in its discretion, take any
one or more of the following actions, as to outstanding Stock
Options: (i) provide that such Stock Options shall be assumed,
or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the optionees, provide that all unexercised
Stock Options will terminate immediately prior to the
consummation of such transaction unless exercised by the
optionee within a specified period following the date of such
notice, and/or (iii) in the event of a business combination
under the terms of which holders of the Stock of the Company
will receive upon consummation thereof a payment for each share
surrendered in the business combination (the "Merger Price"),
make or provide for a cash payment to the optionees equal to the
difference between (A) the Merger Price times the number of
shares of Stock subject to such outstanding Stock Options (to
the extent then exercisable at prices not in excess of the
Merger Price) and (B) the aggregate exercise price of all such
outstanding options in exchange for the termination of such
options.
<PAGE>
(d) Substitute Awards. The Committee may grant
Awards under the Plan in substitution for stock and stock based
awards held by employees of another corporation who concurrently
become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation.
The Committee may direct that the substitute awards be granted
on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or
part-time officers and other employees of the Company and its
Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its
Subsidiaries and who are selected from time to time by the
Committee, in its sole discretion. Independent Directors are
also eligible to participate in the Plan but only to the extent
provided in Section 5(c) below.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be
in such form as the Committee may from time to time approve.
Stock Options granted under the Plan may be either
Incentive Stock Options or Non-Qualified Stock Options. To the
extent that any Option does not qualify as an Incentive Stock
Option, it shall constitute a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the
Plan after August 24, 2004.
(a) Stock Options Granted to Employees. The
Committee in its discretion may grant Stock Options to eligible
employees of the Company or any Subsidiary. Stock Options
granted to employees pursuant to this Section 5(a) shall be
subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share
for the Stock covered by a Stock Option granted pursuant to this
Section 5(a) shall be determined by the Committee at the time of
grant but shall not be less than 100% of the Fair Market Value
on the date of grant. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under Section
424(d) of the Code) more than 10% of the combined voting power
of all classes of stock of the Company or any Subsidiary or
parent corporation and an Incentive Stock Option is granted to
such employee, the option price of such Incentive Stock Option
shall be not less than 110% of the Fair Market Value on the
grant date.
(ii) Grant of Discount Options in Lieu of Cash
Bonus. Upon the request of an eligible employee and with the
consent of the Committee, such employee may elect each calendar
year to receive a Non-Qualified Stock Option in lieu of cash
bonus to which he may become entitled during the following
calendar year pursuant to any other plan of the Company, but
only if such employee makes an irrevocable election to waive
receipt of all or a portion of such cash bonus. Such election
shall be made on or before the date set by the Committee which
date shall be no later than 15 days preceding January 1 of the
calendar year in which the cash bonus would otherwise be paid.
A Non-Qualified Stock Option shall be granted to each employee
who made such an irrevocable election on the date the waived
cash bonus would otherwise be paid; provided, however, that with
respect to an employee who is subject to Section 16 of the Act,
if such grant date is not at least six months and one day from
the date of the election, the grant shall be delayed until the
date which is six months and one day from the date of the
election (or the next following business day, if such date is
not a business day). The exercise price per share shall be
determined by the Committee but shall not be less than 50% of
the Fair Market Value of the Stock on the date the Stock Option
is granted. The number of shares of Stock subject to the Stock
Option shall be determined by dividing the amount of the waived
cash bonus by the difference between the Fair Market Value of
the Stock on the date the Stock Option is granted and the
exercise price per Stock Option. The Stock Option shall be
granted for whole number of shares so determined; the value of
any fractional share shall be paid in cash. An employee may
revoke his election under this Section 5(a)(ii) on a prospective
basis at any time; provided, however, that with respect to an
employee who is subject to Section 16 of the Act, such
revocation shall only be effective six months and one day
following the date of such revocation.
<PAGE>
(iii) Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock Option
shall be exercisable more than ten years after the date the
option is granted. If an employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation and
an Incentive Stock Option is granted to such employee, the term
of such option shall be no more than five years from the date of
grant.
(iv) Exercisability; Rights of a Stockholder.
Stock Options shall become vested and exercisable at such time
or times, whether or not in installments, as shall be determined
by the Committee at or after the grant date. The Committee may
at any time accelerate the exercisability of all or any portion
of any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
(v) Method of Exercise. Stock Options may be
exercised in whole or in part, by giving written notice of
exercise to the Company, specifying the number of shares to be
purchased. Payment of the purchase price may be made by one or
more of the following methods:
(A) In cash, by certified or bank check or other
instrument acceptable to the Committee;
(B) In the form of shares of Stock that are not
then subject to restrictions under any Company plan and that
have been held by the optionee for at least six months, if
permitted by the Committee in its discretion. Such surrendered
shares shall be valued at Fair Market Value on the exercise
date; or
(C) By the optionee delivering to the Company a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash
or a check payable and acceptable to the Company to pay the
purchase price; provided that in the event the optionee chooses
to pay the purchase price as so provided, the optionee and the
broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee
shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to
collection. The delivery of certificates representing the
shares of Stock to be purchased pursuant to the exercise of a
Stock Option will be contingent upon receipt from the optionee
(or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other
requirements contained in the Stock Option or applicable
provisions of laws.
(vi) Non-transferability of Options. Except as
otherwise permitted by the Committee, no Stock Option shall be
transferable by the optionee otherwise than by will or by the
laws of descent and distribution and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the
optionee.
(vii) Termination by Reason of Death. Any Stock
Option held by an optionee whose employment by the Company and
its Subsidiaries is terminated by reason of death shall become
fully exercisable and may thereafter be exercised by the legal
representative or legatee of the optionee, for a period of
twelve months (or such longer period as the Committee shall
specify at any time) from the date of death, or until the
expiration of the stated term of the Option, if earlier.
(viii) Termination by Reason of Disability.
(A) Any Stock Option held by an optionee whose
employment by the Company and its Subsidiaries is terminated by
reason of Disability shall become fully exercisable and may
thereafter be exercised, for a period of twelve months (or such
longer period as the Committee shall specify at any time) from
the date of such termination of employment, or until the
expiration of the stated term of the Option, if earlier.
(B) The Committee shall have sole authority and
discretion to determine whether a participant's employment has
been terminated by reason of Disability.
<PAGE>
(C) Except as otherwise provided by the Committee
at any time, the death of an optionee during the period provided
in this Section 5(a)(viii) for the exercise of a Stock Option
shall extend such period for twelve months from the date of
death, subject to termination on the expiration of the stated
term of the Option, if earlier.
(ix) Termination by Reason of Retirement.
(A) Any Stock Option held by an optionee whose
employment by the Company and its Subsidiaries is terminated by
reason of Retirement may thereafter be exercised, to the extent
it was exercisable at the time of such termination, for a period
of twelve months (or such other period as the Committee shall
specify at any time) from the date of such termination of
employment, or until the expiration of the stated term of the
Option, if earlier.
(B) Except as otherwise provided by the Committee
at any time, the death of an optionee during a period provided
in this Section 5(a)(ix) for the exercise of a Stock Option
shall extend such period for twelve months from the date of
death, subject to termination on the expiration of the stated
term of the Option, if earlier.
(x) Termination for Cause. If any optionee's
employment by the Company and its Subsidiaries is terminated for
Cause, any Stock Option held by such optionee, including any
Stock Option that is exercisable at the time of such
termination, shall immediately terminate and be of no further
force and effect; provided, however, that the Committee may, in
its sole discretion, provide that such Stock Option can be
exercised for a period of up to 30 days from the date of
termination of employment or until the expiration of the stated
term of the Option, if earlier.
(xi) Other Termination. Unless otherwise
determined by the Committee, if an optionee's employment by the
Company and its Subsidiaries terminates for any reason other
than death, Disability, Retirement, or for Cause, any Stock
Option held by such optionee may thereafter be exercised, to the
extent it was exercisable on the date of termination of
employment, for three months (or such longer period as the
Committee shall specify at any time) from the date of
termination of employment or until the expiration of the stated
term of the Option, if earlier.
(xii) Annual Limit on Incentive Stock Options. To
the extent required for "incentive stock option" treatment under
Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its Subsidiaries become
exercisable for the first time by an optionee during any
calendar year shall not exceed $100,000. To the extent that any
Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.
(xiii) Form of Settlement. Shares of Stock issued
upon exercise of a Stock Option shall be free of all
restrictions under the Plan, except as otherwise provided in the
Plan.
(b) Reload Options. At the discretion of the
Committee, Options granted under Section 5(a) may include a
so-called "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of
Stock in accordance with Section 5(a)(v)(B) hereof would
automatically be granted an additional Option (with an exercise
price equal to the Fair Market Value of the Stock on the date
the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other
terms as the Committee may provide) to purchase that number of
shares of Stock equal to the number delivered to exercise the
original Option.
(c) Stock Options Granted to Independent
Directors.
(i) Automatic Grant of Options. Each
Independent Director who is serving as Director of the Company
on the fifth business day after each annual meeting of
shareholders, beginning with the 1994 annual meeting, shall
automatically be granted on such day a Non-Qualified Stock
Option to acquire 1,500 shares of Stock. The exercise price per
share for the Stock covered by a Stock Option granted hereunder
shall be equal to the Fair Market Value of the Stock on the date
the Stock Option is granted.
(ii) Exercise; Termination; Non-transferability.
(A) All Options granted under Section 5(c)
shall be exercisable after one year. No Option issued under
this Section 5(c) shall be exercisable after the expiration of
ten years from the date upon which such Option is granted.
(B) The rights of an Independent Director in an
Option granted under Section 5(c) shall terminate six months
after such Director ceases to be a Director of the Company or
the specified expiration date, if earlier; provided, however,
that if the Independent Director ceases to be a Director for
Cause, the rights shall terminate immediately on the date on
which he ceases to be a Director.
(C) No Stock Option granted under this Section
5(c) shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution, and such
Options shall be exercisable during the optionee's lifetime only
by the optionee. Any Option granted to an Independent Director
and outstanding on the date of his death may be exercised by the
legal representative or legatee of the optionee for a period of
six months from the date of death or until the expiration of the
stated term of the option, if earlier.
(D) Options granted under this Section 5(c)
may be exercised only by written notice to the Company
specifying the number of shares to be purchased. Payment of the
full purchase price of the shares to be purchased may be made by
one or more of the methods specified in Section 5(a)(v). An
optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as
to unexercised Stock Options.
(iii) Limited to Independent Directors. The
provisions of this Section 5(c) shall apply only to Options
granted or to be granted to Independent Directors, and shall not
be deemed to modify, limit or otherwise apply to any other
provision of this Plan or to any Option issued under this Plan
to a participant who is not an Independent Director of the
Company. To the extent inconsistent with the provisions of any
other Section of this Plan, the provisions of this Section 5(c)
shall govern the rights and obligations of the Company and
Independent Directors respecting Options granted or to be
granted to Independent Directors. The provisions of this
Section 5(c) which affect the price, date of exercisability,
option period or amount of shares of Stock under an Option shall
not be amended more than once in any six-month period, other
than to comport with changes in the Code or ERISA.
<PAGE>
SECTION 6. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The
Committee may grant Restricted Stock Awards to any employee of
the Company or any Subsidiary. A Restricted Stock Award is an
Award entitling the recipient to acquire, at no cost or for a
purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock"). Conditions
may be based on continuing employment and/or achievement of
pre-established performance goals and objectives.
(b) Acceptance of Award. A participant who is
granted a Restricted Stock Award shall have no rights with
respect to such Award unless the participant shall have accepted
the Award within 30 days (or such shorter date as the Committee
may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other
instrument or form of payment acceptable to the Committee in an
amount equal to the specified purchase price, if any, of the
shares covered by the Award and by executing and delivering to
the Company a written instrument that sets forth the terms and
conditions of the Restricted Stock Award in such form as the
Committee shall determine.
(c) Rights as a Stockholder. Upon complying with
Section 6(b) above, a participant shall have the rights of a
stockholder with respect to the voting of the Restricted Stock,
subject to such conditions contained in the written instrument
evidencing the Restricted Stock Award. Unless the Committee
shall otherwise determine, certificates evidencing the
Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section
6(e) below.
(d) Restrictions. Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or
disposed of except as specifically provided herein or in the
written instrument evidencing the Restricted Stock Award. In
the event of termination of employment by the Company and its
Subsidiaries for any reason other than death or Disability, the
Company shall have the right, at the discretion of the
Committee, to repurchase Restricted Stock with respect to which
conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired at
no cost, from the participant or the participant's legal
representative. The Company must exercise such right of
repurchase or forfeiture not later than the 90th day following
such termination of employment (unless otherwise specified in
the written instrument evidencing the Restricted Stock Award).
(e) Vesting of Restricted Stock. The Committee at
the time of grant shall specify the date or dates and/or the
attainment of pre-established performance goals, objectives and
other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals,
objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." A participant whose employment is
terminated for reason of death or Disability shall become fully
vested in his Restricted Stock on his termination date to the
extent such vesting is otherwise contingent only on continued
service with the Company. Where vesting is contingent on
attainment of pre-established performance goals, the vesting of
Restricted Stock in the case of death or Disability shall remain
dependent on the attainment of such goals and shall be
determined as of such date or dates specified by the Committee.
(f) Waiver, Deferral and Reinvestment of Dividends.
The written instrument evidencing the Restricted Stock Award may
require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
<PAGE>
SECTION 7. UNRESTRICTED STOCK AWARDS
The Committee may, in its sole discretion, grant
(or sell at a purchase price determined by the Committee) an
Unrestricted Stock Award to any employee of the Company or any
Subsidiary pursuant to which such employee may receive shares of
Stock free of any restrictions under the Plan in lieu of any
cash compensation to such employee.
SECTION 8. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A
Performance Share Award is an award entitling the recipient to
acquire shares of Stock upon the attainment of specified
performance goals. The Committee may make Performance Share
Awards independent of or in connection with the granting of any
other Award under the Plan. Performance Share Awards may be
granted under the Plan to any employees of the Company or any
Subsidiary, including those who qualify for awards under other
performance plans of the Company. The Committee in its sole
discretion shall determine whether and to whom Performance Share
Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be
measured, and all other limitations and conditions applicable to
the awarded Performance Shares; provided, however, that the
Committee may rely on the performance goals and other standards
applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the
Plan.
(b) Restrictions on Transfer. Performance Share
Awards and all rights with respect to such Awards may not be
sold, assigned, transferred, pledged or otherwise encumbered.
(c) Rights as a Shareholder. A participant
receiving a Performance Share Award shall have the rights of a
shareholder only as to shares actually received by the
participant under the Plan and not with respect to shares
subject to the Award but not actually received by the
participant. A participant shall be entitled to receive a stock
certificate evidencing the acquisition of shares of Stock under
a Performance Share Award only upon satisfaction of all
conditions specified in the written instrument evidencing the
Performance Share Award (or in a performance plan adopted by the
Committee).
(d) Termination. Except as may otherwise be
provided by the Committee at any time prior to termination of
employment, a participant's rights in all Performance Share
Awards shall automatically terminate upon the participant's
termination of employment by the Company and its Subsidiaries for
any reason.
(e) Acceleration, Waiver, Etc. At any time prior to
the participant's termination of employment by the Company and
its Subsidiaries, the Committee may in its sole discretion
accelerate, waive or, subject to Section 11, amend any or all of
the goals, restrictions or conditions imposed under any
Performance Share Award.
<PAGE>
SECTION 9. TAX WITHHOLDING
(a) Payment by Participant. Each participant
shall, no later than the date as of which the value of an Award
or of any Stock or other amounts received thereunder first
becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of,
any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such income. The Company and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to the participant.
(b) Payment in Stock. A participant may elect to
have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with
an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the withholding amount due, or
(ii) transferring to the Company shares of Stock owned by the
participant with an aggregate Fair Market Value (as of the date
the withholding is effected) that would satisfy the withholding
amount due. With respect to any participant who is subject to
Section 16 of the Act, the following additional restrictions
shall apply:
(A) the election to satisfy tax withholding
obligations relating to an Award in the manner permitted by this
Section 9(b) shall be made either (1) during the period
beginning on the third business day following the date of
release of quarterly or annual summary statements of sales and
earnings of the Company and ending on the twelfth business day
following such date, or (2) at least six months prior to the
date as of which the receipt of such an Award first becomes a
taxable event for Federal income tax purposes;
(B) such election shall be irrevocable;
(C) such election shall be subject to the consent
or disapproval of the Committee; and
(D) the Stock withheld to satisfy tax withholding
must pertain to an Award which has been held by the participant
for at least six months from the date of grant of the Award.
<PAGE>
SECTION 10. TRANSFER, LEAVE OF ABSENCE, ETC
For purposes of the Plan, the following events
shall not be deemed a termination of employment:
(a) a transfer to the employment of the Company from
a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or
(b) an approved leave of absence for military
service or sickness, or for any other purpose approved by the
Company, if the employee's right to re-employment is guaranteed
either by a statute or by contract or under the policy pursuant
to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 11. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue
the Plan and the Committee may, at any time, amend or cancel any
outstanding Award (or provide substitute Awards at the same or
reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended
Award if it were then initially granted under this Plan) for the
purpose of satisfying changes in law or for any other lawful
purpose, but no such action shall adversely affect rights under
any outstanding Award without the holder's consent. If and to
the extent required by the Act to ensure that Awards granted
under the Plan are exempt under Rule 16b-3 promulgated under the
Act, Plan amendments shall be subject to approval by the
Company's stockholders.
SECTION 12. STATUS OF PLAN
With respect to the portion of any Award which
has not been exercised and any payments in cash, Stock or other
consideration not received by a participant, a participant shall
have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion,
the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock
or make payments with respect to Awards hereunder, provided that
the existence of such trusts or other arrangements is consistent
with the foregoing sentence.
<PAGE>
SECTION 13. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as
defined in this Section 13:
(a) Each outstanding Stock Option shall
automatically become fully exercisable notwithstanding any
provision to the contrary herein.
(b) Each Restricted Stock Award and Performance
Share Award shall be subject to such terms, if any, with respect
to a Change of Control as have been provided by the Committee in
connection with such Award.
(c) "Change of Control" shall mean the
occurrence of any one of the following events:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Act (other than the Company, any
of its Subsidiaries, or any trustee, fiduciary or other person
or entity holding securities under any employee benefit plan or
trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in
Rule 12b-2 under the Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company
representing 50% or more of either (A) the combined voting power
of the Company's then outstanding securities having the right to
vote in an election of the Company's Board of Directors ("Voting
Securities") or (B) the then outstanding shares of Stock of the
Company (in either such case other than as a result of an
acquisition of securities directly from the Company); or
<PAGE>
(ii) persons who, as of the Effective Date,
constitute the Company's Board of Directors (the "Incumbent
Directors") cease for any reason, including, without limitation,
as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board,
provided that any person becoming a director of the Company
subsequent to the Effective Date whose election or nomination
for election was approved by a vote of at least a majority of
the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve
(A) any consolidation or merger of the Company or any Subsidiary
where the shareholders of the Company, immediately prior to the
consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate 80% or more of the voting
shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation,
if any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged
by any party as a single plan) of all or substantially all of
the assets of the Company or (C) any plan or proposal for the
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control"
shall not be deemed to have occurred for purposes of the
foregoing clause (i) solely as the result of an acquisition of
securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding,
increases (x) the proportionate number of shares of Stock
beneficially owned by any person to 50% or more of the shares of
Stock then outstanding or (y) the proportionate voting power
represented by the Voting Securities beneficially owned by any
person to 50% or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if any
person referred to in clause (x) or (y) of this sentence shall
thereafter become the beneficial owner of any additional shares
of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a
"Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).
SECTION 14. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal
Requirements. The Committee may require each person acquiring
Stock pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an
Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The
Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it
deems appropriate.
(b) Delivery of Stock Certificates. Delivery of
stock certificates to participants under this Plan shall be
deemed effected for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the
participant, at the participant's last known address on file
with the Company.
(c) Other Compensation Arrangements; No Employment
Rights. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements,
including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption
of this Plan and the grant of Awards do not confer upon any
employee any right to continued employment with the Company or
any Subsidiary.
<PAGE>
SECTION 15. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval
by the holders of a majority of the shares of Stock of the
Company present or represented and entitled to vote at a meeting
of stockholders. Subject to such approval by the stockholders
and to the requirement that no Stock may be issued hereunder
prior to such approval, Stock Options and other Awards may be
granted hereunder on and after adoption of this Plan by the
Board.
SECTION 16. GOVERNING LAW
This Plan shall be governed by the law of the
Commonwealth of Massachusetts except to the extent such law is
preempted by federal law.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of DAKA International, Inc. on Form S-8 of our report
dated August 26, 1994 appearing in the Annual Report on Form 10-K
of DAKA International, Inc. for the period ended July 2, 1994.
Deloitte & Touche LLP
Boston, Massachusetts
March 7, 1995
