<PAGE> 1
Fiscal 2000 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, 1999
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)
724-746-5500
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 ___
The number of shares outstanding of the Registrant's common stock, $.001 par
value, as of October 29, 1999 was 19,140,899 shares.
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BLACK BOX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
(Unaudited)
September 30, March 31,
ASSETS 1999 1999
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,053 $ 5,946
Accounts receivable, net of allowance for doubtful
accounts of $4,556 and $4,023, respectively 77,913 62,841
Inventories, net 35,367 32,258
Other current assets 22,181 16,172
--------- ---------
Total current assets 139,514 117,217
Property, plant and equipment, net of accumulated depreciation
of $24,009 and $20,741, respectively 28,480 24,190
Intangibles, net of accumulated amortization of $31,874 and
$29,219, respectively 124,450 104,208
Other assets 1,156 660
--------- ---------
Total assets $ 293,600 $ 246,275
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt $ 1,884 $ 1,511
Accounts payable 20,570 18,210
Other accrued expenses 22,207 19,549
Accrued income taxes 8,866 4,685
--------- ---------
Total current liabilities 53,527 43,955
Long-term debt 48,940 204
Deferred taxes 9,295 9,051
Other liabilities 488 413
Stockholders' equity:
Preferred stock authorized 5,000,000; par value $1.00;
none issued and outstanding
Common stock authorized 40,000,000; par value $.001;
issued 18,936,253 and 18,147,358, respectively 19 18
Additional paid-in capital 84,310 59,272
Retained earnings 159,421 137,204
Treasury stock, at cost, 1,335,000 shares (58,765) --
Cumulative foreign currency translation adjustments (3,635) (3,842)
--------- ---------
Total stockholders' equity 181,350 192,652
--------- ---------
Total liabilities and stockholders' equity $ 293,600 $ 246,275
========= =========
</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,
1999 1998 1999 1998
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $ 117,889 $ 79,130 $ 215,409 $ 152,226
Cost of sales 66,606 40,534 118,659 77,445
--------- --------- --------- ---------
Gross profit 51,283 38,596 96,750 74,781
Selling, general and administrative expenses 30,065 23,044 56,558 44,490
Intangibles amortization 1,366 988 2,655 1,936
--------- --------- --------- ---------
Operating income 19,852 14,564 37,537 28,355
Interest expense, net 624 100 674 283
Other expense/(income), net 92 11 140 (66)
--------- --------- --------- ---------
Income before income taxes 19,136 14,453 36,723 28,138
Provision for income taxes 7,559 5,689 14,506 11,090
--------- --------- --------- ---------
Net income $ 11,577 $ 8,764 $ 22,217 $ 17,048
========= ========= ========= =========
Basic earnings per common share $ 0.66 $ 0.51 $ 1.26 $ 0.99
========= ========= ========= =========
Diluted earnings per common share $ 0.62 $ 0.49 $ 1.18 $ 0.95
========= ========= ========= =========
Weighted average common shares 17,657 17,244 17,688 17,241
========= ========= ========= =========
Weighted average common and
common equivalent shares 18,811 17,922 18,801 18,037
========= ========= ========= =========
</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>
Cumulative
Common Stock Additional Foreign
------------------------ Treasury Paid-in Retained Currency
Shares Amount Stock Capital Earnings Translation Total
------------ ---------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 17,233,021 $ 17 -- $ 34,117 $ 99,733 $ (3,619) $ 130,248
Net income -- -- -- -- 38,145 -- 38,145
Issuance of common stock 567,592 1 -- 18,317 -- -- 18,318
Exercise of options 346,745 -- -- 3,732 -- -- 3,732
Tax benefit from exercised options -- -- -- 3,106 -- -- 3,106
Foreign currency translation
adjustment -- -- -- -- -- (223) (223)
Dividends declared to former
shareholders prior to mergers -- -- -- -- (674) -- (674)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at March 31, 1999 18,147,358 18 0 59,272 137,204 (3,842) 192,652
Net income -- -- -- -- 22,217 -- 22,217
Purchase of treasury stock -- -- (58,765) -- -- -- (58,765)
Issuance of common stock 344,530 -- -- 17,064 -- -- 17,064
Exercise of options 444,365 1 -- 5,183 -- -- 5,184
Tax benefit from exercised options -- -- -- 2,791 -- -- 2,791
Foreign currency translation
adjustment -- -- -- -- -- 207 207
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at September 30, 1999 18,936,253 $ 19 $ (58,765) $ 84,310 $ 159,421 $ (3,635) $ 181,350
========== ========== ========== ========== ========== ========== ==========
</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,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 22,217 $ 17,048
Adjustments to reconcile net income to cash provided
by operating activities:
Intangibles amortization 2,655 1,936
Depreciation 2,173 1,441
Other 11 (2)
Changes in working capital items:
Accounts receivable, net (8,999) 4,297
Inventories, net (1,982) (192)
Other current assets (4,679) (1,471)
Accounts payable and accrued liabilities 1,094 (6,044)
-------- --------
Cash provided by operating activities 12,490 17,013
-------- --------
Cash flows from investing activities:
Capital expenditures (4,735) (2,934)
Mergers, net of $775 and $1,065 cash acquired, respectively (5,794) (24,637)
-------- --------
Cash (used) in investing activities (10,529) (27,571)
-------- --------
Cash flows from financing activities:
Repayment of borrowings (4,897) (16,239)
Proceeds from borrowings 51,839 18,011
Proceeds from exercise of options 7,974 240
Purchase of Treasury Stock (58,765) --
Dividends paid to former shareholders prior to mergers -- (672)
-------- --------
Cash (used in)/provided by financing activities (3,849) 1,340
-------- --------
Foreign currency translation adjustment (5) 1,496
-------- --------
(Decrease) in cash and cash equivalents (1,893) (7,722)
Cash and cash equivalents at beginning of period 5,946 11,166
-------- --------
Cash and cash equivalents at end of period $ 4,053 $ 3,444
======== ========
Interest paid $ 667 $ 752
-------- --------
Income taxes paid $ 6,296 $ 6,167
-------- --------
</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 ("SEC"). Although Black Box
Corporation (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 with the SEC for
the fiscal year ended March 31, 1999. Certain prior year amounts have been
reclassified to conform to the current year financial statement presentation.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out
method) or market. The net inventory balances are as follows:
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
---- ----
<S> <C> <C>
Raw materials $ 2,815 $ 2,231
Work-in-process 42 31
Finished goods 35,975 33,552
Inventory reserve (3,465) (3,556)
-------- --------
Inventory, net $ 35,367 $ 32,258
======== ========
</TABLE>
NOTE 3 - FINANCIAL DERIVATIVES
The Company has entered and will continue in the future, on a selective
basis, to enter into forward exchange contracts to reduce the foreign currency
exposure related to certain intercompany transactions. On a monthly basis, the
open contracts are revalued to the current exchange rates and the resulting
gains and losses are recorded in other income. These gains and losses offset the
revaluation of the related foreign currency denominated receivables.
At September 30, 1999, the open foreign exchange contracts were in Yen,
Euro and Canadian dollars. These open contracts were valued at approximately
$3,602, with contract rates ranging from 108.38 to 113.97 Yen per U.S. dollar,
1.0711 to 1.0774 Euro per U.S. dollar and 1.4847 to 1.4848 Canadian dollar per
U.S. dollar, and will expire over the next two months. The effect of these
contracts on net income for the three and six month periods ended September 30,
1999 was not material.
6
<PAGE> 7
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
NOTE 4 - COMPREHENSIVE INCOME
In the first quarter of Fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," which established standards for reporting and displaying comprehensive
income and its components in financial statements. Comprehensive income is
defined as net income and all nonowner changes in shareholders' equity.
Accumulated other comprehensive income consists entirely of foreign currency
translation adjustments. Total comprehensive income for the three and six month
periods ended September 30, 1999 and three and six month periods ended September
30, 1998 were $12,736, $22,424, $10,778 and $18,544, respectively.
NOTE 5 - EARNINGS PER SHARE
Basic earnings per common share were computed based on the weighted
average number of common shares issued and outstanding during the relevant
periods. Diluted earnings per common share were computed under the treasury
stock method based on the weighted average number of common shares issued and
outstanding, plus additional shares assumed to be outstanding to reflect the
dilutive effect of common stock equivalents. The following table details this
calculation:
<TABLE>
<CAPTION>
Three month period ended Six month period ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income for earnings per share
computation $ 11,577 $ 8,764 $ 22,217 $ 17,048
Basic earnings per common share:
Weighted average common shares 17,657 17,244 17,688 17,241
-------- -------- -------- --------
Basic earnings per common share $ 0.66 $ 0.51 $ 1.26 $ 0.99
======== ======== ======== ========
Diluted earnings per common share:
Weighted average common shares 17,657 17,244 17,688 17,241
Shares issuable from assumed conversion
of common stock equivalents 1,363 812 1,314 952
Shares buyable with tax savings from
compensation expense of exercised options (209) (134) (201) (156)
-------- -------- -------- --------
Weighted average common and common
equivalent shares 18,811 17,922 18,801 18,037
-------- -------- -------- --------
Diluted earnings per common share $ 0.62 $ 0.49 $ 1.18 $ 0.95
======== ======== ======== ========
</TABLE>
7
<PAGE> 8
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
NOTE 6 - ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
amended by SFAS No. 137, which establishes accounting and reporting standards
for derivative instruments and requires that an entity recognize all derivatives
as either assets or liabilities and measure those instruments at fair value. The
Company expects to adopt the new statement in the first quarter of Fiscal 2002.
The effect of this statement on the Company's financial statements has not been
determined.
NOTE 7 - CHANGES IN BUSINESS
In April 1999, the Company merged Con-Optic, Inc. ("Con-Optic") into
Key-Four, Inc. ("Key-Four"), a wholly owned subsidiary of the Company. Based in
Atlanta, Georgia, privately held Con-Optic provides services similar to
Key-Four, including technical design, installation and maintenance services for
premise cabling and related products to customers throughout Georgia. The
results of operations and financial position of Con-Optic are not material to
the Company's consolidated results of operations or financial position.
On May 17, 1999, the Company effected a merger with C-Tel Corporation
("C-Tel"). Established in 1987 in Columbus, Ohio, privately held C-Tel provides
technical design, installation and maintenance services for premise cabling and
related products to customers primarily in Ohio. C-Tel was subsequently merged
into Midwest Communications Technologies, Inc. ("MCT"), a wholly owned
subsidiary of the Company, providing similar services. The results of operations
and financial position of C-Tel are not material to the Company's consolidated
results of operations or financial position.
On July 8, 1999 the Company effected a merger of American Cabling &
Equipment Services, Inc. ("American Cabling") into Atimco Network Services,
Inc., a wholly owned subsidiary of the Company. Established in 1988 in
Pittsburgh, Pennsylvania, privately held American Cabling provides technical
design, installation and maintenance services for premise cabling and related
products to customers in Western Pennsylvania and surrounding areas. The results
of operations and financial position of American Cabling are not material to the
Company's consolidated results of operations or financial position.
On July 30, 1999 the Company effected a merger with Comm Line, Inc.
("Comm Line"). Comm Line, based in Cincinnati, Ohio, provides technical design,
installation and maintenance services for premise cabling and related products
to customers primarily in Cincinnati, Columbus and Dayton, Ohio; Indianapolis,
Indiana and Austin, Texas. The results of operations and financial position of
Comm Line are not material to the Company's consolidated results of operations
or financial position.
8
<PAGE> 9
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
On September 3, 1999 the Company effected a merger with Florida
Intranet Group, Inc. ("FIG"). Established in 1986 in Miami, Florida, FIG
provides technical design, installation and maintenance services for premise
cabling and related network products to customers in Southern Florida and
surrounding areas. The results of operations and financial position of FIG are
not material to the Company's consolidated results of operations or financial
position.
On September 29, 1999 the Company effected a merger with Business
Communication Concepts, Inc. ("BusCom"). BusCom, based in Sterling, Virginia,
provides technical design, installation and maintenance services for premise
cabling and related products to customers in the Dulles Corridor - which
includes the District of Columbia metropolitan area, northern Virginia and
central Maryland. The results of operations and financial position of BusCom are
not material to the Company's consolidated results of operations or financial
position.
On September 30, 1999, the Company acquired 50% of the shares of
Comunicaciones SA Spain ("Black Box Spain") bringing its ownership in Black Box
Spain to 100%. Black Box Spain was established in 1989 in Madrid, Spain as a
joint venture between the Company and Payma Comunicaciones SA Spain. The results
of operations and financial position of Black Box Spain are not material to the
Company's consolidated results of operations or financial position.
The Company issued an aggregate of 353,236 shares of its common stock
in exchange for all of the outstanding shares of Con-Optic, C-Tel, American
Cabling, Comm Line, FIG, BusCom, and Black Box Spain. In addition, an aggregate
of $6,286 in cash was used. The aggregate purchase price was $24,078 and
resulted in goodwill after assumed liabilities of approximately $22,932, which
will be amortized over twenty-five years.
NOTE 8 - TREASURY STOCK
On March 31, 1999, the Company announced its intention to repurchase up
to 1 million shares of its Common Stock. As of June 1999, the Company had
repurchased all 1 million shares at prevailing market prices for an aggregate
purchase price of $41,981. On July 15, 1999, the Company announced its intention
to repurchase an additional 500,000 shares of its Common Stock. As of September
30, 1999, the Company had repurchased 335,000 shares under this plan at
prevailing market rates for an aggregate purchase price of $16,784. Funding for
these stock repurchases came from existing cash flow and borrowings under credit
facilities maintained with Mellon Bank, N.A.
The following represents the Company's results for the three and six
month periods ended September 30, 1999 and September 30, 1998 on a pro forma
basis as if the stock repurchase had occurred as of the beginning of each
period:
9
<PAGE> 10
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended Three months ended
September 30, 1999 September 30, 1998
- -----------------------------------------------------------------------------------------------
Reported Pro Forma Reported Pro Forma
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $11,577 $11,577 $ 8,764 $ 8,764
Basic earnings per
common share 0.66 0.66 0.51 0.55
Diluted earnings per
common share $ 0.62 $ 0.62 $ 0.49 $ 0.53
Weighted average common
shares 17,657 17,418 17,244 15,909
Weighted average common
and common equivalent
shares 18,811 18,572 17,922 16,587
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six months ended Six months ended
September 30, 1999 September 30, 1998
- -----------------------------------------------------------------------------------------------
Reported Pro Forma Reported Pro Forma
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $22,217 $22,217 $17,048 $17,048
Basic earnings per
common share 1.26 1.29 0.99 1.07
Diluted earnings per
common share $ 1.18 $ 1.22 0.95 $ 1.02
Weighted average common
shares 17,688 17,157 17,241 15,906
Weighted average common
and common equivalent
shares 18,801 18,270 18,037 16,702
- ----------------------------------------------------------------------------------------------
</TABLE>
NOTE 9 - DEBT
The Mellon Credit Facility, dated as of February 12, 1999, provides
a revolving line of credit up to $49,000 and expires September 30, 2002.
On August 27, 1999, the Company signed an agreement providing an additional
$30 million revolving credit facility with Mellon Bank, N.A. (the "New Mellon
Facility"). The New Mellon Facility will expire on August 25, 2000. Upon its
expiration, the Company has the option to convert the New Mellon Facility into a
three-year note with substantially similar terms. The interest on the borrowings
is variable, as defined in the agreements.
10
<PAGE> 11
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
The Company's total debt at September 30, 1999 was comprised of $46,500
under the Mellon Credit Facility, dated as of February 12, 1999, $1,100 under
the New Mellon Facility, and $3,224 of various other loans. The weighted average
interest rate on all indebtedness of the Company as of September 30, 1999 was
approximately 6.1% compared to 6.7% as of September 30, 1998.
NOTE 10 - SEGMENT REPORTING
Since the annual report for the fiscal year ended March 31, 1999, the
Company has changed its basis of segmentation from a geographic basis to a
product and service line basis. The Company now manages the business primarily
on a product and service line basis. Its reportable segments are comprised of
On-Site Support and Phone Support. The Other operating segment includes
corporate expenses. Corporate expenses include costs related to tradename and
trademark protection and various administrative items. The Company reports its
segments separately because of differences in the ways the product and service
lines are managed and operated. Consistent with SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," the Company
aggregates similar operating segments into reportable segments.
The Company evaluates the performance of each segment based on
"Worldwide EBITA." A segment's Worldwide EBITA is its earnings before interest,
taxes and amortization with all profit on intercompany sales allocated to the
segment providing the third-party revenues. Intersegment sales are not reviewed
by management and are not included in the total revenues reported below. Certain
costs included in the Phone Support segment are incurred for the benefit of the
On-Site Support segment but are not allocated for internal management reporting
and are, therefore, not allocated herein. These unallocated costs include
certain order fulfillment, shipping and various overhead items. Segment interest
income, interest expense and expenditures for segment assets are not presented
to or reviewed by management, and are, therefore, not presented.
11
<PAGE> 12
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
Summary information by reportable segment is as follows:
<TABLE>
<CAPTION>
Three month period Six month period
ended September 30, ended September 30,
- ------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
On-Site Support
Revenues $ 29,906 $ 5,680 $ 47,708 $ 10,892
Worldwide EBITA 3,936 668 6,142 1,172
Phone Support
Revenues $ 87,983 $73,450 $167,701 $141,334
Worldwide EBITA 17,263 14,907 34,067 29,153
Other
Revenues $0 $0 $0 $0
Worldwide EBITA 19 (23) (17) (34)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The following is a reconciliation between the reportable segment data and the
corresponding consolidated amount for EBITA:
EBITA
<TABLE>
<CAPTION>
Three month period Six month period
ended September 30, ended September 30,
- ------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Worldwide EBITA for reportable
segments $21,199 $15,575 $40,209 $30,325
Other EBITA 19 (23) (17) (34)
Total consolidated EBITA 21,218 15,552 40,192 30,291
- ------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
BLACK BOX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except per-share amounts)
The following is summary information of assets by reportable segment and a
reconciliation to the consolidated assets:
ASSETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
September 30, March 31,
Reportable Segments 1999 1999
- --------------------------------------------------------------------------------------
<S> <C> <C>
On-Site Support $ 77,085 $ 37,626
Phone Support 276,851 256,826
-------------------- ---------------
Total assets for reportable segments 353,936 294,452
Other assets 239,886 207,878
Corporate eliminations (300,222) (256,055)
-------------------- ---------------
Total consolidated assets $ 293,600 $ 246,275
- --------------------------------------------------------------------------------------
</TABLE>
Due to the change in the composition of the reportable segments, prior period
amounts have been restated and will be shown in future periods on a comparable
basis.
Information about geographic areas is as follows:
<TABLE>
<CAPTION>
REVENUES
- --------
Three month period Six month period
ended September 30, ended September 30,
- -----------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
North America $ 77,898 $46,422 $139,965 $ 89,236
International 39,991 32,708 75,444 62,990
-------- ------- -------- --------
Total Revenues $117,889 $79,130 $215,409 $152,226
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ASSETS
- --------------------------------------------------------------------------------------
September 30, March 31,
1999 1999
- --------------------------------------------------------------------------------------
<S> <C> <C>
North America $228,457 $184,420
International 65,143 61,855
-------- --------
Total consolidated assets $293,600 $246,275
- --------------------------------------------------------------------------------------
</TABLE>
NOTE 11 - SUBSEQUENT EVENTS
On October 22, 1999, the Company effected a merger with Koncepts
Communications, Inc. ("Koncepts"). Established in 1982 in Westbury, New York,
Koncepts provides technical design, installation and maintenance services for
premise cabling and related products to customers in the New York, New Jersey
and Connecticut "tri-state" area. The results of operations and financial
position of Koncepts are not material to the Company's consolidated results of
operations or financial position.
On October 27, 1999, the Company effected a merger with Communication
Contractors, Inc. ("CC Inc."). CC Inc., based in Chicago, Illinois, provides
technical design, installation and maintenance services for premise cabling and
related products to customers throughout the greater Chicago region. The results
of operations and financial position of Com Con are not material to the
Company's consolidated results of operations or financial position.
As of November 11, 1999, the Company had repurchased 470,000 shares
under the July 15, 1999 repurchase plan. The shares were purchased at prevailing
market rates for an aggregate purchase price of $23,669. The funding for these
stock repurchases came from existing cash flow and borrowings under the Mellon
Bank, N.A. credit facilities.
13
<PAGE> 14
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (dollars in thousands)
GENERAL
FORWARD-LOOKING STATEMENTS
When included in this Quarterly Report on Form 10-Q or in documents
incorporated herein by reference, the words "expects," "intends," "anticipates,"
"believes," "estimates," and analogous expressions are intended to identify
forward-looking statements. Such statements are inherently subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, competition, changes in foreign,
political and economic conditions, fluctuating foreign currencies compared to
the U.S. dollar, rapid changes in technologies, customer preferences and various
other matters, many of which are beyond the Company's control. These
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and speak only as of the
date of this Quarterly Report on Form 10-Q. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or any changes in the
Company's expectations with regard thereto or any change in events, conditions,
or circumstances on which any statement is based.
RESULTS OF OPERATIONS
The table below should be read in conjunction with the following
discussion (percentages are based on total revenues).
<TABLE>
<CAPTION>
Three month period ended Six month period ended
September 30, September 30,
-----------------------------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $117,889 $79,130 $215,409 $152,226
======== ======= ======== ========
Revenues:
On-Site Support 25.4% 7.2% 22.1% 7.2%
Phone Support:
North America 41.0 51.5 43.1 51.4
International 33.6 41.3 34.8 41.4
---- ---- ---- ----
Total Phone Support 74.6 92.8 77.9 92.8
---- ---- ---- ----
Total Revenues 100.0 100.0 100.0 100.0
Cost of sales 56.5 51.2 55.1 50.9
---- ---- ---- ----
Gross profit 43.5 48.8 44.9 49.1
Selling, general and
administrative expenses 25.5 29.2 26.3 29.2
---- ---- ---- ----
Operating income before
amortization 18.0 19.6 18.6 19.9
Intangibles amortization 1.2 1.2 1.2 1.3
---- ---- ---- ----
Operating income 16.8% 18.4% 17.4% 18.6%
==== ==== ==== ====
</TABLE>
14
<PAGE> 15
Revenues for the three and six month periods ended September 30, 1999
were $117,889 and $215,409, respectively, an increase of $38,759, or 49.0%,
and $63,183, or 41.5%, respectively, over the same period in the prior year.
Revenues from on-site support for the three months ended September 30, 1999
(Second Quarter 2000) were $29,906, an increase of $24,226, or 426.5%, over
revenues for the three months ended September 30, 1998 (Second Quarter 1999).
For the six months ended September 30, 1999, revenues from on-site support were
$47,708, an increase of $36,816, or 338.0%, over revenues for the six months
ended September 30, 1998. On-site support revenue growth for the quarter and
year-to-date was primarily due to the Company's continued expansion by merger of
its on-site support capabilities as well as strong demand for on-site services
from customers of existing on-site service providers.
Revenues from the Company's phone support business for Second Quarter
2000 were $87,983, an increase of $14,533, or 19.8%, over revenues for Second
Quarter 1999. For the six months ended September 30, 1999, revenues from the
phone support business were $167,701, an increase of $26,367, or 18.7%, over
revenues for the six months ended September 30, 1998. Overall, phone support
revenue growth was driven by strong sales in all geographic regions. Phone
support revenues from North America for Second Quarter 2000 were $48,312, an
increase of $7,570, or 18.6%, over revenues for Second Quarter 1999. For the six
months ended September 30, 1999, phone support revenues from North America were
$92,813, an increase of $14,469, or 18.5%, over revenues for the six months
ended September 30, 1998. The growth of the North America phone support is
driven primarily by continued strong demand for cables and connectors,
ServSwitch, racks and cabinets and LAN products from customers of all sizes.
International phone support revenues for Second Quarter 2000 were $39,671, an
increase of $6,963, or 21.3%, over revenues for the same period in the prior
year. For the six months ended September 30, 1999, International phone support
revenues were $74,888, an increase of $11,898, or 18.9%, over revenues for the
six months ended September 30, 1998. International phone support revenue growth
for the quarter and six-month period was driven by strong customer demand for
cables and connectors, ServSwitch, other switches and modems. If exchange rates
had remained constant from the corresponding periods in the prior year,
International phone support revenues for the three and six month periods ended
September 30, 1999 would have increased 19.7% and 17.7%, respectively.
Reported revenue dollar and percentage growth of the Company's largest
subsidiaries over the comparable periods in the prior year were as follows:
Japan revenues were $8,587, up $2,346, or 37.6%, in Second Quarter 2000 and were
$15,299, up $3,471, or 29.3%, year-to-date; United Kingdom revenues were $8,609,
up $999, or 13.1%, in Second Quarter 2000 and were $16,532, up $2,035, or 14.0%,
year-to-date; and France revenues were $5,237, up $438, or 9.1%, in Second
Quarter 2000 and were $10,268, up $637, or 6.6%, year-to-date. Excluding Japan,
United Kingdom and France, the remaining international business grew $3,180, or
22.6%, in Second Quarter 2000 and increased $5,755, or 21.3%, year-to-date.
Japan revenues increased, in part, due to the strengthening of the Japanese Yen
compared to the U.S. Dollar. If exchange rates had remained constant from the
corresponding periods in the prior year, Japan revenues would have increased
12.1%, for the three months ended September 30, 1999 and increased 9.5%, for the
six months ended September 30, 1999; United Kingdom revenues would have
increased 17.0%, for the three months ended September 30, 1999 and increased
17.7%, for the six months ended September 30, 1999; and France revenues would
have increased 16.3%, for the three months ended September 30, 1999 and
increased 11.9% for the six months ended September 30, 1999.
15
<PAGE> 16
Gross profit in Second Quarter 2000 increased to $51,283, or 43.5% of
revenues, from $38,596, or 48.8% of revenues, in Second Quarter 1999. Gross
profit for the six month period ended September 30, 1999 increased to $96,750,
or 44.9% of revenues, from $74,781, or 49.1%, of revenues over the same period
in the prior year. The decline in gross profit margin for the quarter and the
six months ended September 30, 1999 was due primarily to the impact of the
strong revenue growth of the Company's on-site support product line
which provides slightly lower gross margins. The revaluation of foreign
denominated intercompany receivables had little impact on gross profit margin.
Excluding the impact of revaluing the intercompany receivables, the gross profit
margin was 43.2% for Second Quarter 2000 compared to 48.8% for Second Quarter
1999 and 44.8% for the six months ended September 30, 1999 compared to 49.2% for
the six months ended September 30, 1998.
Selling, general and administrative ("SG&A") expenses in Second Quarter
2000 were $30,065, or 25.5% of revenues, an increase of $7,021 over SG&A
expenses of $23,044, or 29.2% of revenues, in Second Quarter 1999. SG&A expenses
for the six month period ended September 30, 1999 were $56,558, or 26.3% of
revenues, an increase of $12,068 over SG&A expenses of $44,490, or 29.2% of
revenues over the same period in the prior year. SG&A expense as a percentage of
revenues decreased from last year as the Company was able to leverage its
existing cost structure and because of the revenue growth of the Company's
on-site support product line which provides slightly less operating expense
relative to revenues. The dollar increases from the same periods in the
prior year related primarily to additional marketing and personnel costs
worldwide and additional costs related to the addition of the Company's on-site
support product line.
Operating income before amortization in Second Quarter 2000 was
$21,218, or 18.0% of revenues, compared to $15,552, or 19.6% of revenues, in
Second Quarter 1999. Operating income before amortization for the six month
period ended September 30, 1999 was $40,192, or 18.6% of revenues, compared to
$30,291, or 19.9% of revenues over the same period in the prior year. Intangible
amortization for the three and six month periods ended September 30, 1999 were
$1,366, an increase of $378, or 38.3%, and $2,655, an increase of $719, or
37.1%, respectively. The increase in amortization is due to additional goodwill
related to the Company's continued expansion by merger of its on-site support
providers.
Net interest expense for the three and six month periods ended
September 30, 1999 was $624 and $674 respectively, an increase from the same
periods last year of $524 and $391, respectively, due to an increase in
borrowings for the repurchase of treasury stock.
The tax provision in Second Quarter 2000 was $7,559, or an effective
tax rate of 39.5%, which is comparable to $5,689, or an effective tax rate of
39.4%, in Second Quarter 1999. The tax provision for the six month period ended
September 30, 1999 was $14,506, or an effective tax rate of 39.5%, which is
comparable to $11,090, or an effective tax rate of 39.4% for the six month
period ended September 30, 1998.
Net income for Second Quarter 2000 was $11,577 compared to $8,764 in
Second Quarter 1999, an increase of 32.1%. Net income for the six month period
ended September 30, 1999 was $22,217 compared to $17,048 for the six month
period ended September 30, 1998, an increase of 30.3%. This growth was primarily
due to strong revenue growth, the Company's ability to leverage its existing
cost structure and the successful expansion by merger of the Company's on-site
support offering.
16
<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
In Second Quarter 2000, the Company's net proceeds from borrowings
increased by $13,898 and by $46,942 for the three and six month periods ended
September 30, 1999, respectively, as a result of borrowings used to finance the
repurchase of its Common Stock. As of September 30, 1999, the Company had cash
and cash equivalents of $4,053, working capital of $85,987, and total debt of
$50,824.
On August 27, 1999, the Company signed an agreement providing an
additional $30 million revolving credit facility with Mellon Bank, N.A. (the
"New Mellon Facility"). The New Mellon Facility provides additional liquidity
for future stock repurchases and operations. The terms of the New Mellon
Facility are substantially similar to the existing Mellon Credit Facility except
that the New Mellon Facility will expire on August 25, 2000. Upon its
expiration, the Company has the option to convert the facility into a three-year
term note with substantially similar terms.
The Company's total debt at September 30, 1999 was comprised of $46,500
under the Mellon Credit Facility, dated as of February 12, 1999, between the
Company and Mellon Bank, N.A., $1,100 under the New Mellon Facility, and $3,224
of various other loans. The weighted average interest rate on all indebtedness
of the Company as of September 30, 1999 was approximately 6.1% compared to 6.7%
as of September 30, 1998. In addition, at September 30, 1999, the Company had
$986 of letters of credit outstanding and $30,414 of additional funds available
under the Mellon Credit Facility and the New Mellon Facility.
On March 31, 1999, the Company announced its intention to repurchase up
to 1 million shares of its Common Stock. As of June 1999, the Company had
repurchased all 1 million shares in the open market at a total cost of $41,981.
On July 15, 1999, the Company announced its intention to repurchase an
additional 500,000 shares of its Common Stock. As of September 30, 1999, the
Company had repurchased 335,000 shares under this plan at prevailing market
rates for an aggregate purchase price of $16,784. Funding for these stock
repurchases came from existing cash flow and borrowings under the Mellon Credit
Facility and New Mellon Facility.
The Company has operations, customers and suppliers worldwide, thereby
exposing the Company's financial results to foreign currency fluctuations. In an
effort to reduce this risk, the Company generally sells and purchases inventory
based on prices denominated in U.S. dollars. Intercompany sales to subsidiaries
are generally denominated in the subsidiaries' local currency, although
intercompany sales to the Company's subsidiaries in Brazil and Mexico are
denominated in U.S. dollars. The gains and losses resulting from the revaluation
of the intercompany balances denominated in foreign currencies are recorded to
gross profit to the extent the intercompany transaction resulted from an
intercompany sale of inventory.
The Company has entered and will continue in the future, on a selective
basis, to enter into forward exchange contracts to reduce the foreign currency
exposure related to certain intercompany transactions. On a monthly basis, the
open contracts are revalued to the current exchange rates and the resulting
gains and losses are recorded in other income. These gains and losses offset the
revaluation of the related foreign currency denominated receivables discussed
above. At September 30, 1999, the open foreign exchange contracts were in Yen,
Euro and Canadian Dollars. These open contracts were
17
<PAGE> 18
valued at approximately $3,602, with contract rates ranging from 108.38 to
113.97 Yen per U.S. dollar, 1.0711 to 1.0774 Euro to U.S. dollar and 1.4847 to
1.4848 Canadian dollar per U.S. dollar, and the last contract will expire in
November 1999. The effect of these contracts on net income for the three-and
six-month periods ended September 30, 1999 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.
YEAR 2000
The Company has conducted a review of its information technology
systems and non-information technology systems to evaluate the potential impact
and disruption to its business arising from the year 2000. Those systems that
were determined to not be year 2000 compliant have been corrected or are
currently in the process of being modified. The Company's mainframe Distribution
Control System, which processes customer orders, controls inventory, and updates
accounts receivable, became compliant in early 1998. The hardware supporting
this application is year 2000 compliant and the system software became year 2000
compliant in July 1999 as part of regular maintenance upgrades. The Company
completed the process of upgrading the functionality of the hardware and system
software that supports both the financial general ledger and the manufacturing
control system. This upgrade resulted in a year 2000 compliant system in March
1999. The application software for the financial general ledger and the
manufacturing system has been assessed and became compliant in March 1999. The
Company had determined that a minimal amount of updates and replacements were
required for the hardware and software on the workstations and servers and this
has been completed. The Company has evaluated its subsidiaries to determine
their state of readiness for the year 2000 and does not anticipate any major
issues. Total costs for modifications/upgrades to the information technology
systems an estimated $400, all of which has been incurred. All costs that
directly related to the year 2000 have been expensed as incurred.
The Company has surveyed significant vendors in order to evaluate the
risks of year 2000 threats related to their interaction with the Company's
systems and the supply of products and no major complications or disruptions are
anticipated. The Company is currently evaluating the year 2000 readiness of its
significant service providers and currently does not anticipate any related
problems. The Company has the ability to communicate to customers information
about year 2000 compliance for all products. Other significant non-information
technology systems have been evaluated and the estimated cost for replacement is
not material.
The Company has fully tested its mainframe Distribution Control System
and does not expect any processing failures as a result of the year 2000.
However, in the event of a year 2000 failure of this system, the Company has a
contingency plan to fulfill customer orders using a manual process.
18
<PAGE> 19
CONVERSION TO THE EURO CURRENCY
On January 1, 1999, certain members of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency, the Euro. The Company conducts business in member
countries. The transition period for the introduction of the Euro will be
between January 1, 1999 and June 30, 2002. The Company is assessing the issues
involved with the introduction of the Euro, and it does not expect Euro
conversion to have a material impact on its operations or financial results.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks in the ordinary course of
business that include foreign currency exchange rates. In an effort to mitigate
the risk, the Company, on a selective basis, will enter into forward exchange
contracts. At June 30, 1999, the Company had open contracts valued at
approximately $3,602 and with a fair value of approximately $3,680.
19
<PAGE> 20
PART II OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 10, 1999, 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 amendment to the 1992 Stock Option Plan to
increase the number of shares authorized; (iii) the amendment to the 1992
Director Stock Option Plan to increase the number of shares authorized; and (iv)
the ratification of the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending March 31, 2000.
Each of the Company's nominees for director was re-elected at the
annual meeting by the following vote:
<TABLE>
<CAPTION>
SHARES SHARES SHARES BROKER
VOTED FOR WITHHELD ABSTAINING NON-VOTES
--------- -------- ---------- ---------
<S> <C> <C> <C> <C>
William F. Andrews 15,169,316 359,541 0 0
Thomas G. Greig 15,169,396 359,461 0 0
William R. Newlin 15,169,396 359,461 0 0
Brian D. Young 15,169,396 359,461 0 0
Fred C. Young 15,169,396 359,461 0 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:
<TABLE>
<CAPTION>
SHARES SHARES VOTED SHARES BROKER
VOTED FOR AGAINST ABSTAINING NON-VOTES
--------- ------- ---------- ---------
<S> <C> <C> <C>
8,873,577 6,629,849 25,431 0
</TABLE>
The amendment to the 1992 Director Stock Option Plan to increase the
number of shares authorized was approved by the following vote:
<TABLE>
<CAPTION>
SHARES SHARES VOTED SHARES BROKER
VOTED FOR AGAINST ABSTAINING NON-VOTES
--------- ------- ---------- ---------
<S> <C> <C> <C>
14,198,587 1,276,155 54,115 0
</TABLE>
20
<PAGE> 21
The appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending March 31, 2000 was approved by the
following vote:
<TABLE>
<CAPTION>
SHARES SHARES VOTED SHARES BROKER
VOTED FOR AGAINST ABSTAINING NON-VOTES
--------- ------- ---------- ---------
<S> <C> <C> <C>
15,495,299 15,176 18,382 0
</TABLE>
21
<PAGE> 22
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 1992 Stock Option Plan, as amended
10.2 1992 Director Stock Option Plan, as amended
10.3 Credit Agreement, dated as of August 25, 1999, among
Black Box Corporation of Pennsylvania, Black Box
Corporation and Mellon Bank, N.A.
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule - September 30, 1999
(b) Reports on Form 8-K.
None.
22
<PAGE> 23
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/ Anna M. Baird
-----------------------------------
Anna M. Baird, Vice President,
Chief Financial Officer, Treasurer,
and Principal Accounting Officer
November 15, 1999
23
<PAGE> 24
EXHIBIT INDEX
Exhibit
No.
- -------
10.1 1992 Stock Option Plan, as amended
10.2 1992 Director Stock Option Plan, as amended
10.3 Credit Agreement, dated as of August 25, 1999, among Black Box
Corporation of Pennsylvania, Black Box Corporation and Mellon Bank, N.A.
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule - September 30, 1999
<PAGE> 1
Exhibit 10.1
BLACK BOX CORPORATION
1992 STOCK OPTION PLAN
(AS AMENDED THROUGH AUGUST 10, 1999)
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, August 12, 1996, August 13, 1997, February 3, 1998, August
10, 1998, and August 10, 1999 (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, 4,600,000 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.
1
<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.
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.
2
<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, 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 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.
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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.
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.
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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.
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,
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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.
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.
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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.
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
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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.
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
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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.
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
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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 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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Exhibit 10.2
BLACK BOX CORPORATION
1992 DIRECTOR STOCK OPTION PLAN
(AS AMENDED THROUGH AUGUST 10, 1999)
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, as
originally approved on November 11, 1992, and as further amended on, May
10,1994, August 9, 1994, August 7, 1995, August 12, 1996, August 13, 1997,
September 2, 1997, February 3, 1998, May 5, 1998, August 10, 1998, and August
10, 1999 (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, 150,000 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") may designate from
among its members a director stock option committee, (the "Committee") to
administer the Plan. The Committee shall consist of no
<PAGE> 2
fewer than two members of the Board. 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, and any vacancy on the Committee at any time may be filled by resolution
adopted by the Board.
Subject to the express provisions of the Plan, the Board and the
Committee shall have authority, in their 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 Board and 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 Board and 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 Board or Committee on matters referred to in
this Article III shall be conclusive.
The Board or 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 in the engagement of such counsel, consultant or
agent shall be paid by the Company. No member or former member of the Board or
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. Any person who shall cease to serve on the Board
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.
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 but not less than
one hundred percent (100%) of the fair market value per share at the date the
Option is granted.
2
<PAGE> 3
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 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 Board or Committee shall determine at the
date of the grant of such Option.
Subject to the provisions of Article XVIII, the Board or 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.
3
<PAGE> 4
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 Board or 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
Board or 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 Board or 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 Board 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 Board in its sole discretion, at any time up to and including
the time to 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 Board shall disapprove such Request, such Request shall be deemed to
be an exercise of such Right for Shares.
If the Board 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
4
<PAGE> 5
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 Board. 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.
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 specified
by the Board or 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 Board or 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), 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
Board or 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 Board or 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
5
<PAGE> 6
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 Board 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 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.
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 or
board of directors of 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 Board or 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 Board or 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
Board or 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"), 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
6
<PAGE> 7
such beneficial ownership are not approved by the Board; or (b) at any time a
majority of the members of the Bard has been elected or designated by any
Person; or (c) the Board shall approve a sale of all or substantially all of the
assets, the result of which would be the occurrence of any event described in
clause (a) or (b) above.
The Board or 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.
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 Board or 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 Board or 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 Board or
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.
7
<PAGE> 8
XVI. LISTING OF SHARES AND RELATED MATTERS
The Board or 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.
XVII. AMENDMENT OF THE PLAN
The Board 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 may at any time suspend or terminate the Plan. The Plan,
unless sooner terminated by action of the Board, 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 Board or
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.
222
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.
8
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
NAME LOCATION STATE OF
- ---- -------- --------
INCORPORATION
-------------
<S> <C> <C>
Advanced Communications Corporation Columbia, South Carolina, USA South Carolina
American Telephone Wiring Company Charleston, West Virginia, USA West Virginia
Associated Network Solutions, Inc. St. Petersburg, Florida, USA Florida
ATIMCO Network Services, Inc. Pittsburgh, Pennsylvania, USA Pennsylvania
BBox Holding Company Wilmington, Delaware, USA Delaware
BB Technologies, Inc. Wilmington, Delaware, USA Delaware
Black Box Corporation of Pennsylvania Lawrence, Pennsylvania, USA Delaware
Business Communication Concepts, Inc. Sterling, Virginia, USA Virginia
Cable Consultants, Incorporated Atlanta, Georgia, USA Georgia
Comm Line, Inc. Cincinnati, Ohio, USA Ohio
Communication Contractors, Inc. Chicago, Illinois, USA Illinois
Florida Intranet Group, Inc. Miami, Florida, USA Florida
Key-Four, Inc. Atlanta, Georgia, USA Georgia
Koncepts Communications of L.I., Corp. Westbury, New York, USA New York
Midwest Communications Technologies, Inc. Columbus, Ohio, USA Ohio
Todd Communications, Inc. Winston-Salem, North Carolina, USA North Carolina
Alpeco International Foreign Sales Corporation Bridgetown, Barbados
Alpeco Puerto Rico, Inc. San Juan, Puerto Rico
Black Box Catalog Australia Pty. Ltd. Croydon VIC, Australia
Black Box Canada Corporation Ontario, Canada
Black Box Catalog New Zealand Limited Wellington, New Zealand
Black Box Catalogue, Ltd. Reading, England
Black Box Communication SANV Zaventum, Belgium
Black Box Comunicaciones, SA Madrid, Spain
Black Box Datacom, B.V. Utrecht, Netherlands
Black Box de Mexico, S.A. de C.V. Mexico City, Mexico
Black Box Deutschland GmbH Munich, Germany
Black Box do Brazil Industria e Comercio Ltda. Sao Paulo, Brazil
Black Box France, S.A. Rungis, France
Black Box Foreign Sales Corporation St. Thomas, U.S.V.I.
Black Box Italia, SpA Vimodrone, Italy
Black Box Japan Kabushiki Kaisha Tokyo, Japan
Datacom Black Box Services AG Altendorf, Switzerland
Datacom Black Box Holding, AG Zug, Switzerland
Ohmega Installations Limited Newbury, Berkshire, England
South Hills Datacomm Chile, S.A. Santiago, Chile
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BLACK BOX
CORPORATION'S FORM 10-Q FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,053
<SECURITIES> 0
<RECEIVABLES> 82,469
<ALLOWANCES> 4,556
<INVENTORY> 35,367
<CURRENT-ASSETS> 139,514
<PP&E> 52,489
<DEPRECIATION> 24,009
<TOTAL-ASSETS> 293,600
<CURRENT-LIABILITIES> 53,527
<BONDS> 48,940
0
0
<COMMON> 19
<OTHER-SE> 181,331
<TOTAL-LIABILITY-AND-EQUITY> 293,600
<SALES> 117,889
<TOTAL-REVENUES> 117,889
<CGS> 66,606
<TOTAL-COSTS> 66,606
<OTHER-EXPENSES> 92
<LOSS-PROVISION> 731
<INTEREST-EXPENSE> 624
<INCOME-PRETAX> 19,136
<INCOME-TAX> 7,559
<INCOME-CONTINUING> 11,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,577
<EPS-BASIC> 0.66
<EPS-DILUTED> 0.62
</TABLE>
