<PAGE> 1
1997 Second Quarter
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
COMMISSION FILE NO. 0-18706
BLACK BOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-3086563
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 Park Drive
Lawrence, Pennsylvania 15055
(Address of principal executive offices)
412-746-5500
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ___
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO ___
The number of shares outstanding of the Registrant's common stock, $.001 par
value, as of November 1, 1996 was 16,450,481 shares.
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, March 31,
ASSETS 1996 1996
------------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,232 $ 1,924
Accounts receivable, net of allowance for doubtful
accounts of $2,608 and $2,407, respectively 36,813 34,804
Inventories, net 22,913 18,781
Other current assets 7,343 7,333
-------- --------
Total current assets 69,301 62,842
Property, plant and equipment, net of accumulated depreciation
of $10,425 and $9,623, respectively 12,213 12,299
Intangibles, net of accumulated amortization of $19,284 AND
$17,396, respectively 77,070 78,958
Other assets 1,540 1,445
-------- --------
Total assets $160,124 $155,544
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 8,421 $ 8,184
Accounts payable 14,752 12,580
Accrued expenses 10,335 10,081
Accrued income taxes 3,689 1,948
-------- --------
Total current liabilities 37,197 32,793
Long-term debt 30,540 41,142
Other liabilities 13,834 14,468
Stockholders' equity:
Common stock authorized 20,000,000; par value $.001; issued
and outstanding 16,365,152 and 16,302,254, respectively 16 16
Additional paid-in capital 26,747 25,904
Retained earnings 53,240 42,209
Cumulative foreign currency translation adjustments (1,450) (988)
-------- --------
Total stockholders' equity 78,553 67,141
-------- --------
Total liabilities and stockholders' equity $160,124 $155,544
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 3
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three month period ended Six month period ended
September 30, September 30,
1996 1995 1996 1995
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues $56,165 $46,457 $109,020 $90,938
Cost of sales 26,059 21,176 50,477 40,573
------- ------- -------- -------
Gross profit 30,106 25,281 58,543 50,365
Selling, general and
administrative expenses 18,086 15,543 35,281 31,095
Intangibles amortization 945 893 1,890 1,834
------- ------- -------- -------
Operating income 11,075 8,845 21,372 17,436
Interest expense, net 1,047 1,419 2,178 3,005
Other income, net (22) (182) (150) (171)
------- ------- -------- -------
Income before income taxes 10,050 7,608 19,344 14,602
Provision for income taxes 4,225 3,346 8,313 6,423
------- ------- -------- -------
Net income $ 5,825 $ 4,262 $ 11,031 $ 8,179
======= ======= ======== =======
Earnings per share $ 0.34 $ 0.26 $ 0.64 $ 0.49
======= ======= ======== =======
Weighted average common and
common equivalent shares 17,293 16,689 17,161 16,691
======= ======= ======== =======
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid-in Retained Translation
Shares Amount Capital Earnings Adjustment Total
---------- ------ ------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1995 16,061,557 $16 $23,169 $23,931 $ (1) $47,115
Net income for the year
ended March 31, 1996 -- -- 18,278 -- 18,278
Exercise of options 240,697 -- 2,057 -- -- 2,057
Tax benefit from exercised options -- -- 678 -- -- 678
Foreign currency translation --
adjustments -- -- -- -- (987) (987)
---------- --- ------- ------- ------- -------
Balance at March 31, 1996 16,302,254 16 25,904 42,209 (988) 67,141
Net income for the six month
period ended September 30, 1996 -- -- -- 11,031 -- 11,031
Exercise of options 62,898 -- 576 -- -- 576
Tax benefit from exercised options -- -- 267 -- -- 267
Foreign currency translation --
adjustments -- -- -- -- (462) (462)
---------- --- ------- ------- ------- -------
Balance at September 30, 1996 16,365,152 $16 $26,747 $53,240 $(1,450) $78,553
========== === ======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
BLACK BOX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six month period ended
September 30,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,031 $ 8,179
Adjustments to reconcile net income to cash provided
by operating activities:
Intangibles amortization 1,890 1,834
Depreciation 1,127 1,012
Joint venture income (46) (110)
Changes in working capital items:
Account receivable, net (2,009) (1,491)
Inventories, net (4,113) (291)
Other current assets (81) (1,961)
Accounts payable 2,172 3,037
Accrued expenses 1,629 (3,542)
-------- --------
Cash provided by operating activities 11,600 6,667
-------- --------
Cash flows from investing activities:
Capital expenditures (1,041) (1,539)
Dividend from joint venture -- 54
-------- --------
Cash used in investing activities (1,041) (1,539)
-------- --------
Cash flows from financing activities:
Repayment of borrowings (39,141) (23,969)
Proceeds from borrowings 28,776 18,852
Proceeds from exercise of options 576 550
-------- --------
Cash (used in)/provided by financing activities (9,789) (4,567)
-------- --------
Foreign currency translation adjustment (462) 4
-------- --------
Increase in cash and cash equivalents 308 565
Cash and cash equivalents at beginning of period 1,924 2,546
-------- --------
Cash and cash equivalents at end of period $ 2,232 $ 3,111
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
NOTE 1 - BASIS OF PRESENTATION
The Financial Statements presented herein and these notes are
unaudited. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the Company
believes that all adjustments necessary for a fair presentation have been made,
interim periods are not necessarily indicative of the results of operations for
a full year. As such, these financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's most
recent Form 10-K which was filed for the fiscal year ended March 31, 1996.
NOTE 2 - FISCAL YEARS AND INTERIM PERIODS
The Company has a 52 or 53 week fiscal year that ends on the Sunday
nearest March 31. Each fiscal quarter consists of 13 weeks. The last quarter is
adjusted for those years which have 53 weeks. The ending dates for the periods
ended September 30, 1996, March 31, 1996 and September 30, 1995 were actually
September 29, 1996, March 31, 1996 and October 1, 1995, respectively.
NOTE 3 - INVENTORIES
Inventories are stated at the lower of cost or market (first-in,
first-out method) or market. The net inventory balances are as follows:
<TABLE>
<CAPTION>
September 30, March 31
1996 1996
---- ----
<S> <C> <C>
Raw materials $ 1,569 $ 1,440
Work-in-process 24 8
Finished goods 23,243 18,981
Inventory reserve (1,923) (1,648)
------- -------
Inventory, net $22,913 $18,781
======= =======
</TABLE>
NOTE 4 - ACCOUNTING FOR STOCK-BASED COMPENSATION
In the first quarter of Fiscal 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation". As allowable under SFAS No. 123, the Company has elected to
disclose in the notes to the financial statements the impact on net income and
net income per share as if the fair value based compensation cost had been
recognized. The Company will reflect this disclosure in the notes to the March
31, 1997 fiscal year end consolidated financial statements.
6
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (dollars in thousands)
GENERAL
The table below should be read in conjunction with the following
discussion (percentages are based on total revenues).
<TABLE>
<CAPTION>
Three month period Six month period ended
ended September 30 September 30
------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $56,165 $46,457 $109,020 $90,938
======= ======= ======== =======
Revenues:
North America 56.8% 62.5% 56.6% 61.5%
International 43.2 37.5 43.4 38.5
------- ------- -------- -------
Total 100.0 100.0 100.0 100.0
Cost of sales 46.4 45.6 46.3 44.6
------- ------- -------- -------
Gross profit 53.6 54.4 53.7 55.4
Selling, general and
administrative expenses 32.2 33.4 32.4 34.2
------- ------- -------- -------
Operating income
before amortization 21.4 21.0 21.3 21.2
Intangibles amortization 1.7 2.0 1.7 2.0
------- ------- -------- -------
Operating income 19.7% 19.0% 19.6% 19.2%
======= ======= ======== =======
</TABLE>
RESULTS OF OPERATIONS
Revenues for the three and six month periods ended September 30, 1996
increased 20.9% and 19.9% respectively over the comparable periods for the prior
year, reflecting strong growth worldwide. For the three month period ended
September 30, 1996 ("Second Quarter 1997"), revenues from International
operations increased 39.3% over prior year and for the six month period ended
September 30, 1996 increased 35.1% over prior year. If exchange rates had
remained constant from the three month period ended September 30, 1995 ("Second
Quarter 1996"), International revenues would have increased 47.1%. For the six
month period ended September 30, 1996, International revenues would have
increased 45.9% had exchange rates remained constant from the same period last
year. On a percentage basis and at constant exchange rates, all international
subsidiaries experienced double digit revenue growth over the comparable period
from last year. Revenues from North America in Second Quarter 1997, increased
9.9% over Second Quarter 1996 revenues. For the six month period ended September
30, 1996, North American revenue was increased 10.4% over revenues for the same
period last year. International and North American revenue growth for the
quarter and year to date was driven primarily by the introduction of new
products.
7
<PAGE> 8
Gross profit margin for the three and six month periods ended
September 30, 1996 was 53.6% and 53.7% respectively, compared to 54.4% and
55.4% for the same periods last year. The dollar increase was primarily due to
increased volumes. The decrease in gross profit margin is due to the revaluing
of intercompany receivable amounts denominated in currencies other than the
U.S. dollar, primarily resulting from the strengthening of the U.S. dollar
against the Japanese Yen.
Selling, general and administrative ("S,G&A") expense as a percentage
of revenue for the three and six month periods ended September 30, 1996 was
32.2% and 32.4%, respectively, compared to 33.4% and 34.2% for the same periods
last year. The dollar increase relates to additional marketing and personnel
costs. S,G&A decreased as a percentage of revenues as the Company was able to
leverage its existing support structure and improve the focus of its marketing
expenditures.
Operating income for the three and six month periods ended September
30, 1996 increased over the same periods for last year as a result of higher
revenues and gross profit, partially offset by higher S,G&A expenses.
Net interest expense for the three and six month periods ended
September 30, 1996 increased over the same periods for last year as a result of
lower average borrowings and lower average interest rates. Amortization expense
has remained constant from prior year, decreasing as a percentage of revenues.
The Company's estimated annual effective income tax rate is 42.5%,
which is higher than the U.S. statutory rate of 35.0% primarily due to state
income taxes and the unfavorable impact of non-deductible intangibles
amortization. The effective tax rate for the three and six month periods ended
September 30, 1996 differ from the annual effective rate as the Company revised
its' estimate in Second Quarter Fiscal 1997, and is amortizing the adjustment
to the first quarter tax provision to the three remaining quarters of the
fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to meet all of its cash requirements through
cash flow from operations. During first six months of Fiscal 1997, cash flow
from operations after investing activities of $10,559 enabled the Company to
reduce debt by $10,365. As of September 30, 1996, the Company had $2,232 in
cash and cash equivalents, working capital of $32,104 and long-term debt of
$30,540.
The Company's long-term debt at September 30, 1996 was comprised of
$14,400 under the Mellon Credit Agreement, $16,000 of Senior Notes, and $140 of
various other loans. The weighted average interest rate on all indebtedness of
the Company as of September 30, 1996 was approximately 8.3% compared to 8.4% as
of September 30, 1995. In addition, at June 30, 1996, the Company had $24,300
of additional funds available under the Mellon Credit Agreement.
8
<PAGE> 9
The Company has entered into, on a selective basis, forward exchange
contracts to reduce foreign currency exposure related to certain intercompany
inventory transactions. At September 30, 1996, the open foreign exchange
contracts were exclusively in Yen. The value of such open contracts was
approximately $3,100. The effect of these contracts on net income for the three
and six month periods ended September 30, 1996 was not material.
The Company believes that its cash flow from operations and existing
credit facilities will be sufficient to satisfy its liquidity needs for the
foreseeable future. This statement is made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, as there
are important factors that could cause the actual results to differ materially
from those in the forward-looking statement. Such factors include significant
changes in worldwide competition or the occurrence of significant downward
economic conditions in several of the large countries in which the Company
operates.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 11, 1996, the Company held its annual meeting of
stockholders. The four matters voted upon at the annual meeting were: (i) the
election of directors; (ii) the ratification of the appointment of Arthur
Andersen LLP as independent public accountants for the fiscal year ending March
31, 1997; (iii) the amendment to the 1992 Stock Option Plan to increase the
number of shares authorized under the plan; and (iv) the amendment to Director
Stock Option Plan to increase the number of shares authorized under the plan.
Each of the Company's nominees for director was re-elected at the
annual meeting. The total number of votes cast in the election of directors was
13,762,917. There were no broker non-votes in the election of directors.
The appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending March 31, 1996 was approved by the
following vote:
<TABLE>
<CAPTION>
Shares Shares
voted voted Shares Broker
for against abstaining non-votes
--- ------- ---------- ---------
<S> <C> <C> <C>
13,757,192 1,875 3,850 0
</TABLE>
The amendment to the 1992 Stock Option Plan to increase the number of
shares authorized under the plan was approved by the following vote:
9
<PAGE> 10
<TABLE>
<CAPTION>
Shares Shares
voted voted Shares Broker
for against abstaining non-votes
--- ------- ---------- ---------
<S> <C> <C> <C>
11,759,897 1,853,181 10,430 0
</TABLE>
The amendment to the 1992 Director Stock Option Plan to increase the
number of shares authorized under the plan was approved by the following vote:
<TABLE>
<CAPTION>
Shares Shares
voted voted Shares Broker
for against abstaining non-votes
--- ------- ---------- ---------
<S> <C> <C> <C>
10,479,625 3,138,803 5,080 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 1992 Stock Option Plan (as amended on 8/12/96)
10.2 1992 Directors Stock Option Plan (as amended on 8/12/96)
27.0 Financial Data Schedules
(b) Reports on Form 8-K.
None.
10
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACK BOX CORPORATION
By: /s/ FREDERICK C. YOUNG
----------------------------
Frederick C. Young
Chief Operating Officer
November 7, 1996
11
<PAGE> 1
Exhibit 10.1
BLACK BOX CORPORATION
1992 STOCK OPTION PLAN
(AS AMENDED THROUGH AUGUST 12, 1996)
I. PURPOSES
BLACK BOX CORPORATION (the "Company") desires to afford certain of its
key employees and the key employees of any subsidiary corporation or parent
corporation of the Company now existing or hereafter formed or acquired who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such key employees
an increased interest in and a greater concern for the welfare of the Company
and its subsidiaries.
The Company, by means of this 1992 Stock Option Plan as originally
approved on November 11, 1992, and as further amended on May 10,1994, August 9,
1994, August 7, 1995 and August 12, 1996 (the "Plan"), seeks to retain the
services of persons now holding key positions and to secure the services of
persons capable of filling such positions.
The stock options ("Options") and stock appreciation rights ("Rights")
offered pursuant to the Plan are a matter of separate inducement and are not in
lieu of any salary or other compensation for the services of any key employee.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements for Incentive Options ("Non-Qualified Options"), but the
Company makes no warranty as to the qualification of any Option as an Incentive
Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company which may be
purchased or acquired pursuant to the exercise of Options or Rights granted
under the Plan shall not exceed, in the aggregate, 2,450,000 shares of the
authorized common stock, $.001 par value per share, of the Company (the
"Shares"), such number subject to adjustment as provided in Article XII hereof.
Shares that are the subject of Rights and related Options shall be counted only
once in determining whether the maximum number of Shares that may be purchased
or awarded under the Plan has been exceeded.
Shares acquired under the Plan may be either authorized but unissued
Shares or Shares of issued stock held in the Company's treasury, or both, at
the discretion of the Company. If and to the extent that Options or Rights
granted under the Plan expire or terminate without having been exercised, the
Shares covered by such expired or terminated Options or Rights shall again
become available for award under the Plan.
Except as provided in Articles XIX and XXII and subject to Article II,
the Company may, from time to time during the period beginning on the date on
which the Company consummates an underwritten initial public offering of Shares
(the "Effective Date") and ending on November 30, 2002 (the "Termination
Date"), grant to certain key employees of the Company, or of any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, Incentive Options and/or Non-Qualified Options and/or
Rights under the terms hereinafter set forth.
Provisions of the Plan that pertain to Options or Rights granted to an
employee shall apply to Options, Rights or a combination thereof.
As used in the Plan, the term "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
<PAGE> 2
III. ADMINISTRATION
The board of directors of the Company (the "Board of Directors") shall
designate from among its members an option committee, which may be the
Compensation Committee of the Board of Directors (the "Committee"), to
administer the Plan. The Committee shall consist of no fewer than two members
of the Board of Directors, each of whom shall be a "disinterested person"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). A majority of the members of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board of Directors,
and any vacancy on the Committee at any time may be filled by resolution
adopted by the Board of Directors.
Subject to the express provisions of the Plan the Committee shall have
authority, in its discretion, to determine the employees to whom Options or
Rights shall be granted, the time when such Options or Rights shall be granted,
the number of Shares which shall be subject to each Option or Right, the
purchase price or exercise price of each Option or Right, the period(s) during
which such Options or Rights shall become exercisable (whether in whole or in
part) and the other terms and provisions thereof (which need not be identical).
Subject to the express provisions of the Plan, the Committee also
shall have authority to construe the Plan and the Options and Rights granted
thereunder, to amend the Plan and the Options and Rights granted thereunder, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Options (which need not be identical)
and Rights (which need not be identical) granted thereunder and to make all
other determinations necessary or advisable for administering the Plan. The
Committee also shall have the authority to require, in its discretion, as a
condition of the granting of any such Option or Right, that the employee agree
(i) not to sell or otherwise dispose of Shares acquired pursuant to the
exercise of such Option or Right for a period of six (6) months following the
date of the acquisition of such Option or Right and (ii) that in the event of
termination of employment of such employee, other than as a result of dismissal
without cause, such employee will not, for a period to be fixed at the time of
the grant of the Option or Right, enter into any other employment or
participate directly or indirectly in any other business or enterprise which is
competitive with the business of the Company or any subsidiary corporation or
parent corporation of the Company, or enter into any employment in which such
employee will be called upon to utilize special knowledge obtained through
employment with the Company or any subsidiary corporation or parent corporation
thereof. In no event will an employee who is subject to the reporting
requirements of Section 16(a) of the Exchange Act be entitled to sell or
otherwise dispose of any Shares acquired pursuant to exercise of any such
Options or Rights for a period of six (6) months from the date of the
acquisition of such Options or Rights.
The determination of the Committee on matters referred to in this
Article III shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any award of Options or Rights granted
hereunder.
IV. ELIGIBILITY
Options and Rights may be granted only to salaried key employees of
the Company or of any subsidiary corporation or parent corporation of the
Company, except as hereinafter provided, and shall not be granted to any
officer or director who is not also a salaried key employee or to any member of
the Committee. Any person who shall have retired from active employment by the
Company or a subsidiary corporation or parent corporation thereof, although
such person shall have entered into a consulting contract with the Company or a
subsidiary corporation or parent corporation thereof, shall not be eligible to
receive an Option or a Right.
-2-
<PAGE> 3
The Plan does not create a right in any employee to participate in the
Plan, nor does it create a right in any employee to have any Options or Rights
granted to him or her.
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Non-Qualified Option
granted hereunder shall be such amount as the Committee shall deem appropriate.
The price for each Share purchasable under any Incentive Option
granted hereunder shall be such amount as the Committee shall, in its best
judgment, determine to be not less than one hundred percent (100%) of the fair
market value per Share at the date the Option is granted; provided, however,
that in the case of an Incentive Option granted to a person who, at the time
such Option is granted, owns shares of the Company or any subsidiary
corporation or parent corporation of the Company which possesses more than ten
percent (10%) of the total combined voting power of all classes of shares of
the Company or of any subsidiary corporation or parent corporation of the
Company, the purchase price for each Share shall be such amount as the
Committee in its best judgment shall determine to be not less than one hundred
ten percent (110%) of the fair market value per Share at the date the Option is
granted. In determining stock ownership of an employee for any purposes under
the Plan, the rules of Section 424(d) of the Code shall be applied, and the
Committee may rely on representations of fact made to it by the employee and
believed by it to be true.
If the Shares are listed on a national securities exchange in the
United States (which, for purposes of this Article V, shall be deemed to
include any last sale reported over-the-counter market), on any date on which
the fair market value per Share is to be determined, the fair market value per
Share shall be deemed to be the average of the high and low quotations at which
such Shares are sold on such national securities exchange on the date such
Option is granted. If the Shares are listed on a national securities exchange
in the United States on such date, but the Shares are not traded on such date,
or such national securities exchange is not open for business on such date, the
fair market value per Share shall be determined as of the closest preceding
date on which such exchange shall have been open for business and the Shares
shall have been traded. If the Shares are listed on more than one national
securities exchange in the United States on the date on which the fair market
value per Share is to be determined, the Committee shall determine which
national securities exchange shall be used for the purpose of determining the
fair market value per Share.
If a public market exists for the Shares on any date on which the fair
market value per Share is to be determined but the Shares are not listed on a
national securities exchange in the United States, the fair market value per
Share shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market for the Shares on such date. If there
are no bid and asked quotations for the Shares on such date, the fair market
value per Share shall be deemed to be the mean between the closing bid and
asked quotations in the over-the-counter market for the Shares on the closest
date preceding such date for which such quotations are available.
If no public market exists for the Shares on any date on which the
fair market value per Share is to be determined, the Committee shall, in its
sole discretion and best judgment, determine the fair market value of a Share.
For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash or by certified check; provided,
however, that in lieu of cash, the holder of an Option may, if and to the
extent the terms of such Option so provide and to the extent permitted by
applicable law, exercise an Option (i) in whole or in part, by delivering to
the Company shares of common stock of the Company (in proper form for transfer
and accompanied by all
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requisite stock transfer tax stamps or cash in lieu thereof) owned by such
holder having a fair market value equal to the exercise price applicable to
that portion of the Option being exercised by the delivery of such Shares or
(ii) in part, by delivering to the Company an executed promissory note on such
terms and conditions as the Committee shall determine, at the time of grant, in
its sole discretion; provided, however, that the principal amount of such note
shall not exceed eighty percent (80%) (or such lesser percentage as would be
permitted by applicable margin regulations) of the aggregate purchase price of
the Shares then being purchased pursuant to the exercise of such Option. The
fair market value of the stock so delivered shall be determined as of the date
immediately preceding the date on which the Option is exercised, or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
VI. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors shall determine.
VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such amounts and
during such period or periods as the Committee shall determine at the date of
the grant of such Option; provided, however, that an Incentive Option shall not
be exercisable after the expiration of ten (10) years from the date such Option
is granted; and provided further that, in the case of an Incentive Option
granted to a person who, at the time such Option is granted, owns stock of the
Company or any subsidiary corporation or parent corporation of the Company
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any subsidiary corporation or parent
corporation of the Company, such Option shall not be exercisable after the
expiration of five (5) years from the date such Option is granted.
Except to the extent otherwise provided under the Code, to the extent
that the aggregate fair market value of stock for which Incentive Options are
exercisable for the first time by an employee during any calendar year (under
all stock option plans of the Company and of any parent corporation or
subsidiary corporation of the Company) exceeds one hundred thousand dollars
($100,000), such Options shall be treated as Non-Qualified Options. For
purposes of this limitation, (i) the fair market value of stock is determined
as of the time the Option is granted, and (ii) the limitation will be applied
by taking into account Options in the order in which they were granted.
Subject to the provisions of Article XVIII, the Committee shall have
the right to accelerate, in whole or in part, from time to time, conditionally
or unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a
fraction of a Share.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and specifying a business day not more than fifteen (15) days from the date
such notice is given for the payment of the purchase price against delivery of
the Shares being purchased. Subject to the terms of Articles XIV, XVI, and
XVII, the Company shall cause certificates for the Shares so purchased to be
delivered to the optionee at the principal business office of the Company,
against payment of the full purchase price, on the date specified in the notice
of exercise.
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IX. STOCK APPRECIATION RIGHTS
In the discretion of the Committee, a Right may be granted (i) alone,
(ii) simultaneously with the grant of an Option (either Incentive or
Non-Qualified) and in conjunction therewith or in the alternative thereto or
(iii) subsequent to the grant of a Non-Qualified Option and in conjunction
therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of grant of such Right. A Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as
the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Right, by its terms,
shall be exercisable only when the fair market value of the Shares subject to
the Right and related Option exceeds the exercise price thereof.
Upon exercise of a Right granted simultaneously with or subsequent to
an Option and in the alternative thereto, the number of Shares for which the
related Option shall be exercisable shall be reduced by the number of Shares
for which the Right shall have been exercised. The number of Shares for which a
Right shall be exercisable shall be reduced upon any exercise of a related
Option by the number of Shares for which such Option shall have been exercised.
Any Right shall be exercisable upon such additional terms and
conditions as may from time to time be prescribed by the Committee.
A Right shall entitle the holder upon exercise thereof to receive from
the Company, upon a written request filed with the Secretary of the Company at
its principal offices (the "Request"), a number of Shares (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Committee in its sole discretion), an amount of cash, or any
combination of Shares and cash, as specified in the Request (but subject to the
approval of the Committee in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment), having an
aggregate fair market value equal to the product of (i) the excess of the fair
market value, on the day of such Request, of one Share over the exercise price
per share specified in such Right or its related Option, multiplied by (ii) the
number of Shares for which such Right shall be exercised.
Any election by a holder of a Right to receive cash in full or partial
settlement of such Right, and any exercise of such Right for cash, may be made
only by a Request filed with the Corporate Secretary of the Company during the
period beginning on the third business day following the date of release for
publication by the Company of quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date. Within
thirty (30) days of the receipt by the Company of a Request to receive cash in
full or partial settlement of a Right or to exercise such Right for cash, the
Committee shall, in its sole discretion, either consent to or disapprove, in
whole or in part, such Request. A Request to receive cash in full or partial
settlement of a Right or to exercise a Right for cash may provide that, in the
event the Committee shall disapprove such Request, such Request shall be deemed
to be an exercise of such Right for Shares.
If the Committee disapproves in whole or in part any election by a
holder to receive cash in full or partial settlement of a Right or to exercise
such Right for cash, such disapproval shall not affect such holder's right to
exercise such Right at a later date, to the extent that such Right shall be
otherwise exercisable, or to elect the form of payment at a later date,
provided that an election to receive cash upon such later exercise shall be
subject to the approval of the Committee. Additionally, such disapproval shall
not affect such holder's right to exercise any related Option or Options
granted to such holder under the Plan.
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<PAGE> 6
A holder of a Right shall not be entitled to request or receive cash
in full or partial payment of such Right unless such Right shall have been held
for six (6) months from the date of acquisition to the date of cash settlement
thereof; provided, however, that such prohibition shall not apply if the holder
of such Right is not subject to the reporting requirements of Section 16(a) of
the Exchange Act. In no event will a holder of a Right who is subject to the
reporting requirements of Section 16(a) of the Exchange Act be entitled to make
such a request or receive cash in full or partial payment of such Right until
the Company shall have satisfied the informational requirements of Rule
16b-3(e)(1) promulgated under the Exchange Act for the specified one year
period.
A Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the Right exceeds the exercise price thereof on such
date.
For all purposes of this Article IX, the fair market value of Shares
shall be determined in accordance with the principles set forth in the Article
V.
X. NON-TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
Neither an Option nor a Right granted hereunder shall be transferable,
whether by operation of law or otherwise, other than by will or the laws of
descent and distribution, and any Option or Right granted hereunder shall be
exercisable during the lifetime of the holder only by such holder. Except to
the extent provided above, Options and Rights may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process.
XI. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with the Company and
all subsidiary corporations and parent corporations of the Company, an Option
or Right previously granted to the employee, unless otherwise specified by the
Committee in the Option or Right, shall, to the extent not theretofore
exercised, terminate and become null and void, provided that:
(a) if the employee shall die while in the employ of such
corporation or during either the three (3) month or one (1) year
period, whichever is applicable, specified in clause (b) below and at
a time when such employee was entitled to exercise an Option or Right
as herein provided, the legal representative of such employee, or such
person who acquired such Option or Right by bequest or inheritance or
by reason of the death of the employee, may, not later than one (1)
year from the date of death, exercise such Option or Right, to the
extent not theretofore exercised, in respect of any or all of such
number of Shares as specified by the Committee in such Option or
Right; and
(b) if the employment of an employee to whom such Option or
Right shall have been granted shall terminate by reason of the
employee's retirement (at such age or upon such conditions as shall be
specified by the Board of Directors), disability (as described in
Section 22(e)(3) of the Code) or dismissal by the employer other than
for cause (as defined below), and while such employee is entitled to
exercise such Option or Right as herein provided, such employee shall
have the right to exercise such Option or Right so granted, to the
extent not theretofore exercised, in respect of any or all of such
number of Shares as specified by the Committee in such Option or
Right, at any time up to and including (i) three (3) months after the
date of such termination of employment in the case of termination by
reason of retirement or dismissal other than for cause and (ii) one
(1) year after the date of termination of employment in the case of
termination by reason of disability.
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If an employee voluntarily terminates his or her employment, or is
discharged for cause, any Option or Right granted hereunder shall, unless
otherwise specified by the Committee in the Option or Right, forthwith
terminate with respect to any unexercised portion thereof.
If an Option or Right granted hereunder shall be exercised by the
legal representative of a deceased or disabled employee or former employee, or
by a person who acquired an Option or Right granted hereunder by bequest or
inheritance or by reason of death of any employee or former employee, written
notice of such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal representative or
other person to exercise such Option or Right.
For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to an employee who is party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company or
a subsidiary corporation or parent corporation of the Company, which agreement
or plan contains a definition of "for cause" or "cause" (or words of like
import) for purposes of termination of employment thereunder by the Company or
such subsidiary corporation or parent corporation of the Company, "for cause"
or "cause" as defined in the most recent of such agreements or plans, or (ii)
in all other cases, (a) the willful commission by an employee of a criminal or
other act that causes substantial economic damage to the Company or a
subsidiary corporation or parent corporation of the Company or substantial
injury to the business reputation of the Company or a subsidiary corporation or
parent corporation of the Company; (b) the commission by an employee of an act
of fraud in the performance of such employee's duties on behalf of the Company
or a subsidiary corporation or parent corporation of the Company; or (c) the
continuing willful failure of an employee to perform the duties of such
employee to the Company or a subsidiary corporation or parent corporation of
the Company (other than such failure resulting from the employee's incapacity
due to physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the employee by the Board of Directors
or the Committee. For purposes of the Plan, no act, or failure to act, on the
employee's part shall be considered "willful" unless done or omitted to be done
by the employee not in good faith and without reasonable belief that the
employee's action or omission was in the best interest of the Company or a
subsidiary corporation or parent corporation of the Company.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for
purposes of Section 422(a) of the Code. If an individual is on military, sick
leave or other bona fide leave of absence, such individual shall be considered
an "employee" for purposes of the exercise of an Option or Right and shall be
entitled to exercise such Option or Right during such leave if the period of
such leave does not exceed 90 days, or, if longer, so long as the individual's
right to reemployment with the corporation granting the option (or a related
corporation) is guaranteed either by statute or by contract. If the period of
leave exceeds ninety (90) days, the employment relationship shall be deemed to
have terminated on the ninety-first (91st) day of such leave, unless the
individual's right to reemployment is guaranteed by statute or contract.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an employee from employment by the Company to employment by
a subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of an employee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another
subsidiary corporation or parent corporation of the Company. Furthermore,
solely for purposes of determining the rights and obligations under any
outstanding Options or Rights theretofore granted, in the event that the
Company ceases to own, directly or indirectly, stock possessing 50% or more of
the total combined voting power of all classes of stock of a subsidiary company
by virtue of a recapitalization, stock dividend, stock split, split-up,
spin-off, combination of shares or other like change in capital structure of
the Company, the Committee may determine that employment by such former
subsidiary (or any parent or subsidiary company of such subsidiary) shall
continue to be deemed to be employment by the Company for purposes of the Plan.
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<PAGE> 8
In the event of the complete liquidation or dissolution of a
subsidiary corporation, or in the event that the Company ceases to own,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock of such corporation, any unexercised
Options or Rights theretofore granted to any person employed by such subsidiary
corporation will be deemed canceled unless such person is employed by the
Company or by any parent corporation or another subsidiary corporation after
the occurrence of such event. In the event an Option or Right is to be canceled
pursuant to the provisions of the previous sentence, notice of such
cancellation will be given to each employee holding unexercised Options or
Rights and such holder will have the right to exercise such Options or Rights
in full (without regard to any limitation set forth or imposed pursuant to
Article VII) during the 30 day period following notice of such cancellation.
Notwithstanding anything to the contrary contained in this Article XI,
in no event, however, shall any person be entitled to exercise any Option or
Right after the expiration of the period of exercisability of such Option or
Right as specified therein.
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares,
issuance of rights to subscribe for Shares, or other like change in capital
structure of the Company, the Committee shall make such adjustment to each
outstanding Option and Right that it, in its sole discretion, deems
appropriate. The term "Shares" after any such change shall refer to the
securities, cash and/or property then receivable upon exercise of an Option or
Right. In addition, in the event of any such change, the Committee shall make
any further adjustments as may be appropriate to the maximum number of Shares
which may be acquired under the Plan pursuant to the exercise of Options and
Rights, the maximum number of Shares which may be so acquired by one employee
and the number of Shares and prices per Share subject to outstanding Options
and Rights as shall be equitable to prevent dilution or enlargement of rights
under such Options or Rights, and the determination of the Committee as to
these matters shall be conclusive. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Option and any related Right shall
comply with the rules of Section 424(a) of the Code and (ii) in no event shall
any adjustment be made which would render any Incentive Option granted
hereunder to be other than an "incentive stock option" for purposes of Section
422 of the Code.
In the event of a "change in control" of the Company, all then
outstanding Options and Rights shall immediately become exercisable. For
purposes of the Plan, a "change in control" of the Company occurs if: (a) any
"Person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than Odyssey Partners, L.P. and its affiliates (which, for purposes
of this Article XII only, is deemed to include E.R. Yost) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly of securities of the Company representing (i) 50% or more of the
combined voting power of the Company's then-outstanding securities; or (ii) 25%
or more but less than 50% of the combined voting power of the Company's
then-outstanding securities if such transaction(s) giving rise to such
beneficial ownership are not approved by the Company's Board of Directors; or
(b) at any time a majority of the members of the Board of Directors has been
elected or designated by any Person, other than Odyssey Partners, L.P. and its
affiliates (which, for purposes of this Article XII only, is deemed to include
E.R. Yost); or (c) the Board of Directors shall approve a sale of all or
substantially all of the assets of the Company or any merger, consolidation,
issuance of securities or purchase of assets, in all cases other than to or
with Odyssey Partners, L.P. or its affiliates (which, for purposes of this
Article XII only, is deemed to include E.R. Yost), the result of which would be
the occurrence of any event described in clause (a) or (b) above.
The Committee, in its discretion, may determine that, upon the
occurrence of a transaction described in the preceding paragraph, each Option
or Right outstanding hereunder shall terminate within a specified number of
days after notice to the holder, and such holder shall receive, with respect to
each Share subject to such Option or Right, cash in an amount equal to the
excess of the fair market value of such Shares immediately prior to the
occurrence of such transaction over the exercise price per share of such Option
or Right. The provisions contained in the preceding sentence shall be
inapplicable to an Option or Right granted within six (6) months before the
occurrence of a transaction described above if the holder of such Option or
Right is subject to the reporting requirements of Section 16(a) of the Exchange
Act.
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XIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the employment
of any holder of Options or Rights and it shall not impose any obligation on
the part of any holder of Options or Rights to remain in the employ of the
Company or of any subsidiary corporation or parent corporation thereof.
XIV. PURCHASE FOR INVESTMENT
Except for hereinafter provided, the Committee may require an
employee, as a condition upon exercise of any Option or Right granted
hereunder, to execute and deliver to the Company (a) stock powers with respect
to Shares underlying a particular Option or Right and required to be held by a
custodian, and (b) a written statement, in form satisfactory to the Committee
in which the employee represents and warrants that Shares are being acquired
for such person's own account for investment only and not with a view to the
resale or distribution thereof. The employee shall, at the request of the
Committee, be required to represent and warrant in writing that any subsequent
resale or distribution of Shares by the Employee shall be made only pursuant to
either (i) a Registration Statement on an appropriate form under the Securities
Act of 1933, as amended (the "Securities Act"), which Registration Statement
has become effective and is current with regard to the Shares being sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the employee shall, prior to any offer of
sale or sale of such Shares, obtain a prior favorable written opinion of
counsel, in form and substance satisfactory to counsel for the Company, as to
the application of such exemption thereto. The foregoing restriction shall not
apply to (i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof is
current or (ii) re-offerings of Shares by affiliates of the Company (as defined
in Rule 405 or any successor rule or regulation promulgated under the
Securities Act) if the Shares being re-offered are registered under the
Securities Act and a prospectus in respect thereof is current.
XV. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Upon any exercise of an Option or Right which may be granted hereunder
and, in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option or Right and shall be delivered to or upon the
order of such person.
The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of the Plan and any agreement
between the Company and the optionee or grantee with respect to such Shares, or
(iii) permit the Company to determine the occurrence of a disqualifying
disposition, as described in Section 421(b) of the Code, of Shares transferred
upon exercise of an Incentive Option granted under the Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance of transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration Statement has
been filed by the Company for its own corporate purposes (and the Company so
states) in which event the recipient of the Shares shall bear only fees and
expenses as are attributable solely to the inclusion of the Shares he or she
received in the Registration Statement.
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All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XVI. WITHHOLDING TAXES
The Company may require an employee exercising a Right or
Non-Qualified Option granted hereunder, or disposing of Shares acquired
pursuant to the exercise of an Incentive Option in a disqualifying disposition
(within the meaning of Section 421(b) of the Code), to reimburse the
corporation that employs such employee for any taxes required by any government
to be withheld or otherwise deducted and paid by such corporation in respect of
the issuance or disposition of such Shares. In lieu thereof, the corporation
that employs such employee shall have the right to withhold the amount of such
taxes from any other sums due or to become due from such corporation to the
employee upon such terms and conditions as the Committee shall prescribe. The
corporation that employs such employee may, in its discretion, hold the stock
certificate to which such employee is entitled upon the exercise of an Option
as security for the payment of such withholding tax liability, until cash
sufficient to pay that liability has been accumulated. In addition, at any time
that the Company becomes subject to a withholding obligation under applicable
law with respect to the exercise of a Right or Non-Qualified Option (the "Tax
Date"), except as set forth below, a holder of a Right or Non-Qualified Option
may elect to satisfy, in whole or in part, the holder's related personal tax
liabilities (an "Election") by (i) directing the Company to withhold from
Shares issuable in the related exercise either a specified number of Shares or
Shares having a specified value (in each case not in excess of the related
personal tax liabilities), (ii) tendering Shares previously issued pursuant to
the exercise of an Option or Right or other Shares of the Company's common
stock owned by the holder or (iii) combining any or all of the foregoing
options in any fashion. An Election shall be irrevocable. The withheld Shares
and other Shares tendered in payment shall be valued at their fair market value
(determined in accordance with the principles set forth in Article V of the
Plan) on the Tax Date. The Committee may disapprove of any Election, suspend or
terminate the right to make Elections or provide that the right to make
Elections shall not apply to particular Shares or exercises. The Committee may
prescribe additional rules, in its discretion, to permit a holder of an Option
or Right who is subject to the reporting requirements of Section 16(a) of the
Exchange Act to effect such tax withholding in compliance with the Rules
promulgated under Section 16 of the Exchange Act and the positions of the staff
of the Securities and Exchange Commission expressed in no-action or
interpretative letters exempting such tax withholding transactions from
liability under Section 16(b) of the Exchange Act. The Committee may also
impose any additional conditions or restrictions on the right to make an
Election as it shall deem appropriate.
XVII. LISTING OF SHARES AND RELATED MATTERS
The Committee may delay any award, issuance or delivery of Shares if
it determines that listing, registration or qualification of Shares or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, until such listing, registration, qualification, consent
or approval shall have been effected or obtained, or otherwise provided for,
free of any conditions not acceptable to the Committee.
XVIII. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be, may, from
time to time, amend the Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will (i) increase the
total number of Shares reserved for Options under the Plan (other than an
increase resulting from an adjustment provided for in Article XII), (ii) reduce
the exercise price of any Incentive Option granted hereunder below the price
required by Article V, (iii) modify the provisions of the Plan relating to
eligibility, or (iv) materially increase the benefits accruing to participants
under the Plan. The Board of Directors or the Committee, as the case may be,
shall be authorized to amend the Plan and the Options granted thereunder to
permit the Incentive Options granted thereunder to qualify as incentive stock
options within the meaning of Section 422 of the Code. The rights and
obligations under any Option or Right granted before amendment of the Plan or
any
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<PAGE> 11
unexercised portion of such Option or Right shall not be adversely affected by
amendment of the Plan, Option or Right without the consent of the holder of
such Option or Right.
`
XIX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options and Rights
may not be granted while the Plan is suspended or after it is terminated.
Rights and obligations under any Option or Right granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option or Right was
granted. The power of the Committee to construe and administer any Options or
Rights granted prior to the termination or suspension of the Plan under Article
III nevertheless shall continue after such termination or during such
suspension.
XX. GOVERNING LAW
The Plan, such Options and Rights as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time obtaining.
XXI. PARTIAL INVALIDITY
The invalidity or illegibility of any provision hereof shall not be
deemed to affect the validity of any other provision.
XXII. EFFECTIVE DATE
This Plan became effective at 5:30 P.M., New York City Time, on the
Effective Date.
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<PAGE> 1
Exhibit 10.2
BLACK BOX CORPORATION
1992 DIRECTOR STOCK OPTION PLAN
(AS AMENDED THROUGH AUGUST 12, 1996)
I. PURPOSES
BLACK BOX CORPORATION (the "Company") desires to afford certain of its
directors, and certain directors of any subsidiary corporation or parent
corporation of the Company now existing or hereafter formed or acquired an
opportunity to acquire a proprietary interest in the Company, and thus to
create in such directors an increased interest in and a greater concern for the
welfare of the Company and its subsidiaries.
The Company, by means of this 1992 Director Stock Option Plan (the
"Plan"), seeks to retain the services of certain persons now serving as
directors and to secure the services of persons capable of filling such
positions.
The stock options ("Options") and stock appreciation rights ("Rights")
offered pursuant to the Plan are a matter of separate inducement and are not in
lieu of any salary or other compensation for the services of any director.
The Options granted under the Plan are intended to be options that do
not meet the requirements for incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number of shares of common stock of the Company which may be
purchased or acquired pursuant to the exercise of Options or Rights granted
under the Plan shall not exceed, in the aggregate, 75,000 shares of the
authorized common stock, $.001 par value per share, of the Company (the
"Shares"), such number subject to adjustment as provided in Article XII hereof.
Shares that are the subject of Rights and related Options shall be counted only
once in determining whether the maximum number of Shares that may be purchased
or awarded under the Plan has been exceeded.
Shares acquired under the Plan may be either authorized but unissued
Shares or Shares of issued stock held in the Company's treasury, or both, at
the discretion of the Company. If and to the extent that Options or Rights
granted under the Plan expire or terminate without having been exercised, the
Shares covered by such expired or terminated Options or Rights shall again
become available for award under the Plan.
Except as provided in Articles XIX and XXII and subject to Article II,
the Company may, from time to time during the period beginning on the date on
which the Company consummates an underwritten initial public offering of Shares
(the "Effective Date") and ending on November 30, 2002 (the "Termination
Date"), grant to certain directors of the Company, or of any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, Options and/or Rights under the terms hereinafter set
forth.
Provisions of the Plan that pertain to Options or Rights granted to a
director shall apply to Options, Rights or a combination thereof.
As used in the Plan, the term "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The board of directors of the Company (the "Board of Directors") shall
designate from among its members a director stock option committee, (the
"Committee") to administer the Plan. The Committee shall
<PAGE> 2
consist of no fewer than two members of the Board of Directors, each of whom
shall be a "disinterested person" within the meaning of Rule 16b-3 (or any
successor rule or regulation) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). A majority of the members of the
Committee shall constitute a quorum, and the act of a majority of the members
of the Committee shall be the act of the Committee. Any member of the Committee
may be removed at any time either with or without cause by resolution adopted
by the Board of Directors, and any vacancy on the Committee at any time may be
filled by resolution adopted by the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine the directors to whom Options
or Rights shall be granted, the time when such Options or Rights shall be
granted, the number of Shares which shall be subject to each Option or Right,
the purchase price or exercise price of each Option or Right, the period(s)
during which such Options or Rights shall become exercisable (whether in whole
or in part) and the other terms and provisions thereof (which need not be
identical).
Subject to the express provisions of the Plan, the Committee also
shall have authority to construe the Plan and the Options and Rights granted
thereunder, to amend the Plan and the Options and Rights granted thereunder, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the Options (which need not be identical)
and Rights (which need not be identical) granted thereunder and to make all
other determinations necessary or advisable for administering the Plan. The
Committee also shall have the authority to require, in its discretion, as a
condition of the granting of any such Option or Right, that the director agree
(i) not to sell or otherwise dispose of Shares acquired pursuant to the
exercise of such Option or Right for a period of six (6) months following the
date of the acquisition of such Option or Right and (ii) that in the event of
termination of service of such director, other than as a result of removal
without cause, such director will not, for a period to be fixed at the time of
the grant of the Option or Right, enter into any other employment or
participate directly or indirectly in any other business or enterprise which is
competitive with the business of the Company or any subsidiary corporation or
parent corporation of the Company, or enter into any employment in which such
director will be called upon to utilize special knowledge obtained through
service as a director of the Company or any subsidiary corporation or parent
corporation thereof. In no event will a director who is subject to the
reporting requirements of Section 16(a) of the Exchange Act be entitled to sell
or otherwise dispose of any Shares acquired pursuant to exercise of any such
Options or Rights for a period of six (6) months from the date of the
acquisition of such Options or Rights.
The determination of the Committee on matters referred to in this
Article III shall be conclusive.
The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any award of Options or Rights granted
hereunder.
IV. ELIGIBILITY
Options and Rights may be granted only to non-employee directors of
the Company or of any subsidiary corporation or parent corporation of the
Company, except as hereinafter provided, and shall not be granted to any member
of the Committee. Any person who shall cease to serve on the Board of Directors
of the Company or a subsidiary corporation or parent corporation thereof,
although such person shall have entered into a consulting contract with the
Company or a subsidiary corporation or parent corporation thereof, shall not be
eligible to receive an Option or a Right.
The Plan does not create a right in any director to participate in the
Plan, nor does it create a right in any director to have any Options or Rights
granted to him or her.
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<PAGE> 3
V. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted
hereunder shall be such amount as the Committee shall deem appropriate.
If the Shares are listed on a national securities exchange in the
United States (which, for purposes of this Article V, shall be deemed to
include any last sale reported over-the-counter market), on any date on which
the fair market value per Share shall be deemed to be the average of the high
and low quotations at which such Shares are sold on such national securities
exchange on the date such Option is granted. If the Shares are listed on a
national securities exchange in the United States on such date, but the Shares
are not traded on such date, or such national securities exchange is not open
for business on such date, the fair market value per Share shall be determined
as of the closest preceding date on which such exchange shall have been open
for business and the Shares shall have been traded. If the Shares are listed on
more than one national securities exchange in the United States on the date on
which the fair market value per Share is to be determined, the Committee shall
determine which national securities exchange shall be used for the purpose of
determining the fair market value per Share.
If a public market exists for the Shares on any date on which the fair
market value per Share is to be determined but the Shares are not listed on a
national securities exchange in the United States, the fair market value per
Share shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market for the Shares on such date. If there
are no bid and asked quotations for the Shares on such date, the fair market
value per Share shall be deemed to be the mean between the closing bid and
asked quotations in the over-the-counter market for the Shares on the closest
date preceding such date for which such quotations are available.
If no public market exists for the Shares on any date on which the
fair market value per Share is to be determined, the Committee shall, in its
sole discretion and best judgment, determine the fair market value of a Share.
For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.
Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash or by certified check; provided,
however, that in lieu of cash, the holder of an Option may, if and to the
extent the terms of such Option so provide and to the extent permitted by
applicable law, exercise an Option (a) in whole or in part, by delivering to
the Company shares of common stock of the Company (in proper form for transfer
and accompanied by all requisite stock transfer tax stamps or cash in lieu
thereof) owned by such holder having a fair market value equal to the exercise
price applicable to that portion of the Option being exercised by the delivery
of such Shares or (b) in part, by delivering to the Company an executed
promissory note on such terms and conditions as the Committee shall determine,
at the time of grant, in its sole discretion; provided, however, that the
principal amount of such note shall not exceed eighty percent (80%) (or such
lesser percentage as would be permitted by applicable margin regulations) of
the aggregate purchase price of the Shares then being purchased pursuant to the
exercise of such Option. The fair market value of the stock so delivered shall
be determined as of the date immediately preceding the date on which the Option
is exercised, or as may be required in order to comply with or to conform to
the requirements of any applicable laws or regulations.
VI. USE OF PROCEEDS
The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general Corporate
purposes as the Board of Directors shall determine.
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<PAGE> 4
VII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Any Option shall be exercisable at such times, in such amounts and
during such period or periods as the Committee shall determine at the date of
the grant of such Option.
Subject to the provisions of Article XVIII, the Committee shall have
the right to accelerate, in whole or in part, from time to time, conditionally
or unconditionally, rights to exercise any Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.
In no event shall an Option granted hereunder be exercised for a
fraction of a Share.
VIII. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and specifying a business day not more than fifteen (15) days from the date
such notice is given for the payment of the purchase price against delivery of
the Shares being purchased. Subject to the terms of Articles XIV, XVI, and
XVII, the Company shall cause certificates for the Shares so purchased to be
delivered to the optionee at the principal business office of the Company,
against payment of the full purchase price, on the date specified in the notice
of exercise.
IX. STOCK APPRECIATION RIGHTS
In the discretion of the Committee, a Right may be granted (i) alone,
(ii) simultaneously with the grant of an Option and in conjunction therewith or
in the alternative thereto or (iii) subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of grant of such Right. A Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as
the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Right, by its terms,
shall be exercisable only when the fair market value of the Shares subject to
the Right and related Option exceeds the exercise price thereof.
Upon exercise of a Right granted simultaneously with or subsequent to
an Option and in the alternative thereto, the number of Shares for which the
related Option shall be exercisable shall be reduced by the number of Shares
for which the Right shall have been exercised. The number of Shares for which a
Right shall be exercisable shall be reduced upon any exercise of a related
Option by the number of Shares for which such Option shall have been exercised.
Any Right shall be exercisable upon such additional terms and
conditions as may from time to time be prescribed by the Committee.
A Right shall entitle the holder upon exercise thereof to receive from
the Company, upon a written request filed with the Secretary of the Company at
its principal offices (the "Request"), a number of Shares (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Committee in its sole discretion), an amount of cash, or any
combination of Shares and cash, as specified in the Request (but subject to the
approval of the Committee in its sole discretion, at any time up to and
including the time to
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<PAGE> 5
payment, as to the making of any cash payment), having an aggregate fair market
value equal to the product of (i) the excess of the fair market value, on the
day of such Request, of one Share over the exercise price per share specified
in such Right or its related Option, multiplied by (ii) the number of Shares
for which such Right shall be exercised.
Any election by a holder of a Right to receive cash in full or partial
settlement of such Right, and any exercise of such Right for cash, may be made
only by a Request filed with the Corporate Secretary of the Company during the
period beginning on the third business day following the date of release for
publication by the Company of quarterly or annual summary statements of sales
and earnings and ending on the twelfth business day following such date. Within
thirty (30) days of the receipt by the Company of a Request to receive cash in
full or partial settlement of a Right or to exercise such Right for cash, the
Committee shall, in its sole discretion, either consent to or disapprove, in
whole or in part, such Request. A Request to receive cash in full or partial
settlement of a Right or to exercise a Right for cash may provide that, in the
event the Committee shall disapprove such Request, such Request shall be deemed
to be an exercise of such Right for Shares.
If the Committee disapproves in whole or in part any election by a
holder to receive cash in full or partial settlement of a Right or to exercise
such Right for cash, such disapproval shall not affect such holder's right to
exercise such Right at a later date, to the extent that such Right shall be
otherwise exercisable, or to elect the form of payment at a later date,
provided that an election to receive cash upon such later exercise shall be
subject to the approval of the Committee. Additionally, such disapproval shall
not affect such holder's right to exercise any related Option or Options
granted to such holder under the Plan.
A holder of a Right shall not be entitled to request or receive cash
in full or partial payment of such Right unless such Right shall have been held
for six (6) months from the date of acquisition to the date of cash settlement
thereof; provided, however, that such prohibition shall not apply if the holder
of such Right is not subject to the reporting requirements of Section 16(a) of
the Exchange Act. In no event will a holder of a Right who is subject to the
reporting requirements of Section 16(a) of the Exchange Act be entitled to make
such a request or receive cash in full or partial payment of such Right until
the Company shall have satisfied the informational requirements of Rule
16b-3(e)(1) promulgated under the Exchange Act for the specified one year
period.
A Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the Right exceeds the exercise price thereof on such
date.
For all purposes of this Article IX, the fair market value of Shares
shall be determined in accordance with the principles set forth in Article V.
X. NON-TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
Neither an Option nor a Right granted hereunder shall be transferable,
whether by operation of law or otherwise, other than by will or the law of
descent and distribution, and any Option or Right granted hereunder shall be
exercisable during the lifetime of the holder only by such holder. Except to
the extent provided above, Options and Rights may not be assigned, transferred,
pledged, hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process.
XI. TERMINATION OF EMPLOYMENT
Upon the cessation of such person's status as a director of the
Company and all subsidiary corporations and parent corporations of the Company,
an Option or Right previously granted to the director, unless otherwise
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<PAGE> 6
specified by the Committee in the Option or Right, shall, to the extent not
theretofore exercised, terminate and become null and void, provided that:
(a) if the director shall die while serving as a director of
such corporation or during either the three (3) month or one (1) year
period, whichever is applicable, specified in clause (b) below and at
a time when such director was entitled to exercise an Option or Right
as herein provided, the legal representative of such director, or such
person who acquired such Option or Right by bequest or inheritance or
by reason of the death of the director, may, not later than one (1)
year from the date of death, exercise such Option or Right, to the
extent not theretofore exercised, in respect of any or all of such
number of Shares as specified by the Committee in such Option or
Right; and
(b) if the service of any director to whom such Option or
Right shall have been granted shall terminate by reason of the
director's retirement (at such age or upon such conditions as shall be
specified by the Board of Directors), disability (as described in
Section 22(e)(3) of the Code) or removal other than for cause (as
defined below), and while such director is entitled to exercise such
Option or Right as herein provided, such director shall have the right
to exercise such Option or Right so granted, to the extent not
theretofore exercised, in respect of any or all of such number of
Shares as specified by the Committee in such Option or Right, at any
time up to and including (i) three (3) months after the date of such
termination of service in the case of termination by reason of
retirement or removal other than for cause and (ii) one (1) year after
the date of termination of service in the case of termination by
reason of disability.
If a director voluntarily terminates his or her service, or is
discharged for cause, any Option or Right granted hereunder shall, unless
otherwise specified by the Committee in the Option or Right, forthwith
terminate with respect to any unexercised portion thereof.
If an Option or Right granted hereunder shall be exercised by the
legal representative of a deceased or disabled director or former director, or
by a person who acquired an Option or Right granted hereunder by bequest or
inheritance or by reason of death of any director or former director, written
notice of such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal representative or
other person to exercise such Option or Right.
For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to a director who is party to a written agreement with, or,
alternatively, participates in a compensation or benefit plan of the Company or
a subsidiary corporation or parent corporation of the Company, which agreement
or plan contains a definition of "for cause" or "cause" (or words of like
import) for purposes of termination of service thereunder, "for cause" or
"cause" as defined in the most recent of such agreements or plans, or (ii) in
all other cases, as determined by the Committee in its sole discretion, (a) the
willful commission by a director of a criminal or other act that causes or
probably will cause substantial economic damage to the Company or a subsidiary
corporation or parent corporation of the Company or substantial injury to the
business reputation of the Company or a subsidiary corporation or parent
corporation of the Company; (b) the commission by a director of an act of fraud
in the performance of such director's duties on behalf of the Company or a
subsidiary corporation or parent corporation of the Company; or (c) the
continuing willful failure of a director to perform the duties of such director
to the Company or a subsidiary corporation or parent corporation of the Company
(other than such failure resulting from the director's incapacity due to
physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity to be
heard and cure such failure are given to the director by the Board of Directors
or the Committee. For purposes of the Plan, no act, or failure to act, on the
director's part shall be considered "willful" unless done or omitted to be done
by the director not in good faith and without reasonable belief that the
director's action or omission was in the best interest of the Company or a
subsidiary corporation or parent corporation of the Company.
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<PAGE> 7
In the event of the complete liquidation or dissolution of a
subsidiary corporation, or in the event that the Company ceases to own,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock of such corporation, any unexercised
Options or Rights theretofore granted to any person who served as a director of
such subsidiary corporation will be deemed canceled unless such person serves
on the board of directors of the Company or any parent corporation or another
subsidiary corporation after the occurrence of such event. In the event an
Option or Right is to be canceled pursuant to the provisions of the previous
sentence, notice of such cancellation will be given to each director holding
unexercised Options or Rights and such holder will have the right to exercise
such Options or Rights in full (without regard to any limitation set forth or
imposed pursuant to Article VII) during the 30 day period following notice of
such cancellation.
Notwithstanding anything to the contrary contained in this Article XI,
in no event, however, shall any person be entitled to exercise any Option or
Right after the expiration of the period of exercisability of such Option or
Right as specified therein.
XII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other like change in capital structure of the Company, the Committee shall make
such adjustment to each outstanding Option and Right that it, in its sole
discretion, deems appropriate. The term "Shares" after any such change shall
refer to the securities, cash and/or property then receivable upon exercise of
an Option or Right. In addition, in the event of any such change, the Committee
shall make any further adjustment as may be appropriate to the maximum number
of Shares which may be acquired under the Plan pursuant to the exercise of
Options and Rights, the maximum number of Shares which may be so acquired by
one director and the number of Shares and prices per Share subject to
outstanding Options and Rights as shall be equitable to prevent dilution or
enlargement of rights under such Options or Rights, and the determination of
the Committee as to these matters shall be conclusive.
In the event of a "change in control" of the Company, all then
outstanding Options and Rights shall immediately become exercisable. For
purposes of the Plan, a "change in control" of the Company occurs if: (a) any
"Person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than Odyssey Partners, L.P. and its affiliates (which, for purposes
of this Article XII only, is deemed to include E.R. Yost) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing (i) 50% or more of the
combined voting power of the Company's then-outstanding securities; or (ii) 25%
or more but less than 50% of the combined voting power of the Company's then
outstanding securities if such transaction(s) giving rise to such beneficial
ownership are not approved by the Company's Board of Directors; or (b) at any
time a majority of the members of the Board of Directors has been elected or
designated by any Person, other than Odyssey Partners, L.P. and its affiliates
(which, for purposes of this Article XII only, is deemed to include E.R. Yost);
or (c) the Board of Directors shall approve a sale of all or substantially all
of the assets of the Company or any merger, consolidation, issuance of
securities or purchase of assets, in all cases other than to or with Odyssey
Partners, L.P. or its affiliates (which, for purposes of this Article XII only,
is deemed to include E.R. Yost), the result of which would be the occurrence of
any event described in clause (a) or (b) above.
The Committee, in its discretion, may determine that, upon the
occurrence of a transaction described in the preceding paragraph, each Option
or Right outstanding hereunder shall terminate within a specified number of
days after notice to the holder, and such holder shall receive, with respect to
each Share subject to such Option or Right, cash in an amount equal to the
excess of the fair market value of such Shares immediately prior to the
occurrence of such transaction over the exercise price per share of such Option
or Right. The provisions contained in the preceding sentence shall be
inapplicable to an Option or Right granted within six (6) months before the
occurrence of a transaction described above if the holder of such Option or
Right is subject to the reporting requirements of Section 16(a) of the Exchange
Act.
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<PAGE> 8
XIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the service of
any holder of Options or Rights and it shall not impose any obligation on the
part of any holder of Options or Rights to remain in the service of the Company
or of any subsidiary corporation or parent corporation thereof.
XIV. PURCHASE FOR INVESTMENT
Except for hereinafter provided, the Committee may require a director,
as a condition upon exercise of any Option or Right granted hereunder, to
execute and deliver to the Company (a) stock powers with respect to Shares
underlying a particular Option or Right and required to be held by a custodian,
and (b) a written statement, in form satisfactory to the Committee in which the
director represents and warrants that Shares are being acquired for such
person's own account for investment only and not with a view to the resale or
distribution thereof. The director shall, at the request of the Committee, be
required to represent and warrant in writing that any subsequent resale or
distribution of Shares by the director shall be made only pursuant to either
(i) a Registration Statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), which Registration Statement has
become effective and is current with regard to the Shares being sold, or (ii) a
specific exemption from the registration requirements of the Securities Act,
but in claiming such exemption the director shall, prior to any offer of sale
or sale of such Shares, obtain a prior favorable written opinion of counsel, in
form and substance satisfactory to counsel for the Company, as to the
application of such exemption thereto. The foregoing restriction shall not
apply to (i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof is
current or (ii) re-offerings of Shares by affiliates of the Company (as defined
in Rule 405 or any successor rule or regulation promulgated under the
Securities Act) if the Shares being re-offered are registered under the
Securities Act and a prospectus in respect thereof is current.
XV. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES
Upon any exercise of an Option or Right which may be granted hereunder
and, in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option or Right and shall be delivered to or upon the
order of such person.
The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares as, in its
discretion, it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of the Plan and any agreement
between the Company and the optionee or grantee with respect to such Shares.
The Company shall pay all issue or transfer taxes with respect to the
issuance of transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration Statement has
been filed by the Company for its own corporate purposes (and the Company so
states) in which event the recipient of the Shares shall bear only fees and
expenses as are attributable solely to the inclusion of the Shares he or she
receives in the Registration Statement.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XVI. LISTING OF SHARES AND RELATED MATTERS
The Committee may delay any award, issuance or delivery of Shares if
it determines that listing, registration or qualification of Shares or the
consent or approval of any governmental regulatory body is
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<PAGE> 9
necessary or desirable as a condition of, or in connection with, the sale or
purchase of Shares under the Plan, until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Committee.
XVII. AMENDMENT OF THE PLAN
The Board of Directors or the Committee, as the case may be, may, from
time to time, amend the Plan, provided that no amendment shall be made, without
the approval of the stockholders of the Company, that will (i) increase the
total number of Shares reserved for Options under the Plan (other than an
increase resulting from an adjustment provided for in Article XII), (ii) reduce
the exercise price of any Option granted hereunder below the price required by
Article V, (iii) modify the provisions of the Plan relating to eligibility, or
(iv) materially increase the benefits accruing to participants under the Plan.
The rights and obligations under any Option or Right granted before amendment
of the Plan or any unexercised portion of such Option or Right shall not be
adversely affected by amendment of the Plan, Option or Right without the
consent of the holder of such Option or Right. `
XVIII. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options and Rights
may not be granted while the Plan is suspended or after it is terminated.
Rights and obligations under any Option or Right granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option or Right was
granted. The power of the Committee to construe and administer any Options or
Rights granted prior to the termination or suspension of the Plan under Article
III nevertheless shall continue after such termination or during such
suspension.
XIX. GOVERNING LAW
The Plan, such Options and Rights as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware from time to time obtaining.
XX. PARTIAL INVALIDITY
The invalidity or illegibility of any provision hereof shall not be
deemed to affect the validity of any other provision.
XXI. EFFECTIVE DATE
The Plan shall become effective at 5:30 P.M., New York City Time, on
the Effective Date.
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF THE SECOND QUARTER FISCAL 1997 FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000849547
<NAME> BLACK BOX CORPORATION
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0
0
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</TABLE>
