<PAGE> 1
As filed with the Securities and Exchange Commission on March 4, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
____________
MARKS BROS. JEWELERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-1433610
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
155 N. Wacker Drive
Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Marks Bros. Jewelers, Inc. 1997 Long-Term Incentive Plan
(Full title of the plan)
John R. Desjardins
Executive Vice President, Finance and Administration
Marks Bros. Jewelers, Inc.
155 N. Wacker Drive
Chicago, Illinois 60606
(Name and address of agent for service)
(312) 782-6800
(Telephone number, including
area code, of agent for service)
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Share(1) Price Registration Fee
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock,
$.001 par value(2) 400,000 shares $11.65, $17.82 $6,112,097.16 $1804
===============================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and,
pursuant to Rule 457(h) under the Securities Act of 1933, as amended,
based upon (i) as to options to purchase 164,652 shares of Common Stock, a
weighted average purchase price of $11.65 per share and (ii) as to 235,348
shares of Common Stock relating to options available for grant, the
average of the high and low prices of the Common Stock of the Company
reported on the Nasdaq National Market on February 27, 1998, which was
$17.82.
(2) Includes 400,000 associated rights ("Rights") to purchase 1/100 of a
share of Series A Junior Participating Preferred Stock, par value $.001
per share. Rights initially are attached to and trade with the Common
Stock of the Registrant. The value attributable to such Rights, if any,
is reflected in the market price of the Common Stock.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION*
----------------
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
------------------------------------------------------------
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended (the "Securities
Act"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have heretofore been filed by Marks Bros.
Jewelers, Inc. (the "Company" or the "Registrant"), with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), are incorporated by reference herein
and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1997;
2. The Company's Quarterly Reports on Form 10-Q for each of the three
months ended April 30, 1997, July 31, 1997 and October 31, 1997; and
3. The description of the Common Stock, par value $.001 per share,
("Common Stock"), of the Company contained in the Company's Report
on Form 8-A, dated April 10, 1996.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and made a part hereof from their
respective dates of filing (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").
Any statements contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
As permitted by Section 102(b)(7) of the General Corporation Law of
Delaware, Article Eighth of the Company's Restated Certificate of Incorporation
contains a provision providing that no director of the Company shall be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director except for breach of the director's duty
of loyalty to the Company or its stockholders, acts or omissions not in good
faith
II-1
<PAGE> 3
or which involve intentional misconduct or a knowing violation of law, unlawful
payment of dividends, unlawful stock redemptions or repurchases and
transactions from which the director or officer derived an improper personal
benefit.
Section 145 of the General Corporation Law of Delaware permits or requires
indemnification of directors, officers and employees of a corporation under
certain conditions and subject to certain limitations. Article Ninth of the
Company's Restated Certificate of Incorporation and Article VI of the Company's
Restated Bylaws contain provisions for the indemnification of directors,
officers and employees of the Company generally within the limitations of
Section 145.
The Company has a directors' and officers' liability insurance policy
which provides for indemnification of its directors and officers against
certain liabilities incurred in their capacities as such, which may include
liabilities under the Securities Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not Applicable.
ITEM 8. EXHIBITS.
--------
The exhibits accompanying this Registration Statement are listed on the
accompanying Exhibit Index. The Plan is not intended to be qualified under
Section 401(a) of the Internal Revenue Code.
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
II-2
<PAGE> 4
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the shares of Common Stock being registered
hereby which remain unsold at the termination of the offering.
(b) The Company hereby undertakes that, for the purposes of determining
any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering hereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on the 4th day of
March, 1998.
MARKS BROS. JEWELERS, INC.
By: /s/ John R. Desjardins
-------------------------------------
John R. Desjardins
Executive Vice President, Finance and
Administration
POWER OF ATTORNEY AND SIGNATURES
The undersigned officers and directors of Marks Bros. Jewelers, Inc.
hereby severally constitutes and appoints Hugh M. Patinkin and John R.
Desjardins, and each of them singly, our true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in the
capacities indicated below, all pre-effective and post-effective amendments to
this registration statement, and generally to do all things in our names and on
our behalf in such capacities to enable Marks Bros. Jewelers, Inc. to comply
with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated and on the 4th day of March, 1998.
/s/ Hugh M. Patinkin
- ----------------------- Chairman, President and Chief Executive Officer
Hugh M. Patinkin (principal executive officer) and Director
/s/ John R. Desjardins Executive Vice President, Finance and Administration
- ----------------------- and Treasurer (principal financial and accounting
John R. Desjardins officer) and Director
/s/ Matthew M. Patinkin
- ----------------------- Director
Matthew M. Patinkin
/s/ Norman J. Patinkin
- ----------------------- Director
Norman J. Patinkin
/s/ Jack A. Smith
- ----------------------- Director
Jack A. Smith
/s/ Daniel H. Levy
- ----------------------- Director
Daniel H. Levy
II-4
<PAGE> 6
EXHIBIT INDEX
The following documents are filed herewith or incorporated herein by
reference.
Exhibit
No. Description
- ------- -----------
4.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, as amended (Commission
File No. 333-1794) (the "Common Stock Registration
Statement")).
4.2 Restated By-Laws of the Company (incorporated by reference
to Exhibit 3.2 of the Common Stock Registration Statement).
4.3 Stockholders Rights Plan (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Forms
S-1, as amended (Commission File No. 333-04043) (the "Notes
Registration Statement")).
4.4 Certificate of Designation of Series A Junior Participating
Preferred Stock (incorporated by reference to Exhibit 4.2 of
the Common Stock Registration Statement).
5 Opinion of Sidley & Austin
23.1 Consent of Independent Public Accountants
23.2 Consent of Sidley & Austin (contained in Exhibit 5 hereto).
24.1 Powers of Attorney (included on signature page).
99.1 Marks Bros. Jewelers, Inc. 1997 Long-Term Incentive Plan.
II-5
<PAGE> 1
EXHIBIT 5
March 4, 1998
Marks Bros. Jewelers, Inc.
155 N. Wacker Drive
Suite 500
Chicago, Illinois 60606
Re: Marks Bros. Jewelers, Inc.
Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We are counsel to Marks Bros. Jewelers, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with the
Registration Statement on Form S-8 (the "Registration Statement") being filed
by the Company with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the issuance
and delivery of up to 400,000 shares of common stock, par value $.001 per
share, of the Company (the "Common Stock"), together with 400,000 Preferred
Stock Purchase Rights of the Company (the "Rights") associated therewith. The
terms of the Rights are set forth in the Stockholders Rights Agreement dated as
of May 1, 1996 (the "Rights Plan") between the Company and The First National
Bank of Boston, as Rights Agent. Up to 400,000 shares of Common Stock (the
"1997 Plan Shares") may be issued and delivered pursuant to the Company's 1997
Long-Term Incentive Plan (the "1997 Plan").
In rendering this opinion, we have examined and relied upon a copy of the
1997 Plan, and the Registration Statement. We have also examined and relied
upon originals, or copies of originals certified to our satisfaction, of such
agreements, documents, certificates and other statements of governmental
officials and other instruments, and have examined such questions of law and
have satisfied ourselves as to such matters of fact, as we have considered
relevant and necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures, the legal capacity of all natural persons and the conformity
with the original documents of any copies thereof submitted to us for our
examination.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the laws of
the State of Delaware.
2. The 1997 Plan Shares will be legally issued, fully paid and
nonassessable when (i) the Registration Statement shall have become effective
under the Securities Act; (ii) the 1997 Plan Shares shall have been duly issued
and delivered in the manner contemplated by the 1997 Plan; and (iii)
certificates representing the 1997 Plan Shares shall have been duly executed,
countersigned and registered and duly delivered to the persons entitled thereto
against receipt of the agreed consideration therefor (not less than the par
value thereof) in accordance with the 1997 Plan.
3. The Rights associated with the newly issued shares of Common Stock
referred to in paragraph 2 will be legally issued when such Rights have been
duly issued in accordance with the terms of the Rights Plan and such associated
shares have been duly issued and delivered as set forth in paragraphs 2.
This opinion is limited to the General Corporation Law of the State of
Delaware.
<PAGE> 2
Marks Bros. Jewelers, Inc.
March 4, 1998
Page 2
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
"Blue Sky" laws of the various states to the issuance and delivery of the 1997
Plan Shares.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our Firm in or made a part of
the Registration Statement.
Very truly yours,
SIDLEY & AUSTIN
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Marks Bros. Jewelers, Inc. on Form S-8 of our report dated March 17, 1997, on
our audits of the financial statements and financial statement schedules of
Marks Bros. Jewelers, Inc. as of January 31, 1997 and 1996, and for the years
ended January 31, 1997, 1996 and 1995, which report is included in the Marks
Bros. Jewelers, Inc. Annual Report on Form 10-K for the fiscal year ended
January 31, 1997.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 4, 1998
<PAGE> 1
EXHIBIT 99.1
MARKS BROS. JEWELERS, INC.
1997 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1997 Long-Term Incentive Plan (the
"Plan") of Marks Bros. Jewelers, Inc. (the "Company"), and its subsidiaries
from time to time (individually a "Subsidiary" and collectively the
"Subsidiaries"), are (a) to align the interests of the Company's stockholders
and the recipients of awards under this Plan by increasing the proprietary
interest of such recipients in the Company's growth and success, (b) to advance
the interests of the Company by attracting and retaining officers and other key
employees, and well-qualified persons who are not officers or employees of the
Company ("non-employee directors") for service as directors of the Company and
(c) to motivate such employees and non-employee directors to act in the
long-term best interests of the Company's stockholders. For purposes of this
Plan, references to employment by the Company shall also mean employment by a
Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to
such terms in Rule 12b-2, as in effect on the effective date of this Plan,
under the Exchange Act; provided, however, that no director or officer of the
Company shall be deemed an Affiliate or Associate of any other director or
officer of the Company solely as a result of his or her being a director or
officer of the Company.
"AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
"BENEFICIAL OWNER" (including the terms "BENEFICIALLY OWN" and "BENEFICIAL
OWNERSHIP"), when used with respect to any Person, shall be deemed to include
any securities which:
(a) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly (determined as provided in Rule
13d-3, as in effect on the effective date of this Plan, under the Exchange
Act);
(b) such Person or any of such Person's Affiliates or Associates, directly
or indirectly, has:
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of
any conditions, or both) pursuant to any written or oral agreement,
arrangement or understanding (other than customary agreements with and
among underwriters and selling group members with respect to a bona fide
public offering of securities), upon the exercise of any options,
warrants, rights or conversion or exchange privileges or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to Beneficially Own securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or
(ii) the right to vote pursuant to any written or oral agreement,
arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own, any security
otherwise subject to this item (ii) if such agreement, arrangement or
understanding to vote (1) arises solely from a revocable proxy or consent
given to such Person or any of such Person's Affiliates or Associates in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations under the
Exchange Act and (2) is not also then reportable by such Person on
Schedule 13D (or any comparable or successor report then in effect) under
the Exchange Act; or
<PAGE> 2
(iii) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary agreements
with and among underwriters and selling group members with respect to a
bona fide public offering of securities); or
(c) are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Person's Affiliates or Associates has any
written or oral agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to item (ii)
of subparagraph (b) of the first paragraph of this definition) or disposing of
any securities of the Company.
Notwithstanding the first paragraph of this definition, no director or
officer of the Company shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own," shares of Common Stock or other securities of the Company
beneficially owned by any other director or officer of the Company solely as a
result of his or her being a director or officer of the Company.
"BOARD" shall mean the Board of Directors of the Company.
"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.
"CAUSE" shall mean commission of a felony involving moral turpitude or any
material breach of any statutory or common law duty to the Company or a
Subsidiary involving wilful malfeasance.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Committee designated by the Board, consisting
of two or more members of the Board, each of whom shall be (a) a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and (b) an
"outside director" within the meaning of Section 162(m) of the Code, subject to
any transition rules applicable to the definition of outside director.
"COMMON STOCK" shall mean the common stock, $.001 par value, of the
Company.
"COMPANY" has the meaning specified in Section 1.1.
"DIRECTORS OPTIONS" shall have the meaning set forth in Section 5.1.
"DISABILITY" shall mean the inability for a continuous period of at least
six months of the holder of an award to perform substantially such holder's
duties and responsibilities, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXEMPT PERSON" shall mean each of Hugh M. Patinkin, John R. Desjardins,
Matthew M. Patinkin and each Affiliate thereof.
"FAIR MARKET VALUE" shall mean the average of the high and low transaction
prices of a share of Common Stock as reported in the National Association of
Securities Dealers Automated Quotation National Market System on the date as of
which such value is being determined, or, if the Common Stock is listed on a
national securities exchange, the average of the high and low transaction
prices of a share of Common Stock on the principal national stock exchange on
which the Common Stock is traded on the date as of which such value is being
determined, or, if there shall be no reported transactions for such date, on
the next preceding date for which transactions were reported; provided,
however, that if Fair Market Value for any date cannot be so determined, Fair
Market Value shall be determined by the Committee by whatever means or method
as the Committee, in the good faith exercise of its discretion, shall at such
time deem appropriate.
<PAGE> 3
"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with,
or by reference to, an option, which entitles the holder thereof to receive,
upon exercise, shares of Common Stock (which may be Restricted Stock), cash or
a combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
"INCUMBENT BOARD" shall have the meaning set forth in Section 6.8(b)(ii)
hereof.
"MATURE SHARES" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (a) has held for at least six months or (b) has purchased on
the open market.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
an officer or employee of the Company or any Subsidiary (except in the
definition of Committee, in which case "Non-Employee Director" shall have the
meaning set forth in Rule 16b-3 under the Exchange Act).
"NON-STATUTORY STOCK OPTION" shall mean a stock option which is not an
Incentive Stock Option.
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (a) as a condition to the
exercisability of all or a portion of an option or SAR or (b) during the
applicable Restriction Period or Performance Period as a condition to the
holder's receipt, in the case of a Restricted Stock Award, of the shares of
Common Stock subject to such award, or, in the case of a Performance Share
Award, of payment with respect to such award. Such criteria and objectives may
include one or more of the following: the attainment by a share of Common
Stock of a specified Fair Market Value for a specified period of time, earnings
per share, return to stockholders (including dividends), return on equity,
earnings of the Company, revenues, market share, cash flows or cost reduction
goals, or any combination of the foregoing. If the Committee desires that
compensation payable pursuant to any award subject to Performance Measures be
"qualified performance-based compensation" within the meaning of section 162(m)
of the Code, the Performance Measures shall be established by the Committee no
later than the end of the first quarter of the Performance Period or
Restriction Period, as applicable (or such other time designated by the
Internal Revenue Service).
"PERFORMANCE PERIOD" shall mean any period designated by the Committee
during which the Performance Measures applicable to a Performance Share Award
shall be measured.
"PERFORMANCE SHARE" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to
receive one share of Common Stock, which may be Restricted Stock, or in lieu
thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in
Section 22(e)(3) of the Code or any successor thereto.
"PERSON" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any
of the forgoing.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to
a Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under
this Plan.
"RESTRICTION PERIOD" shall mean any period designated by the Committee
during which the Common Stock subject to a Restricted Stock Award may not be
sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award.
"SAR" shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.
<PAGE> 4
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior
to the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject
to such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
"TEN PERCENT HOLDER" shall have the meaning set forth in Section 2.1(a).
1.3 ADMINISTRATION. This Plan shall be administered by the Committee.
Subject to Section 6.1, any one or a combination of the following awards may be
made under this Plan to eligible persons: (a) options to purchase shares of
Common Stock in the form of Incentive Stock Options or Non-Statutory Stock
Options, (b) in the form of Tandem SARs or Free-Standing SARs, (c) Stock
Awards in the form of Restricted Stock or Bonus Stock and (d) Performance
Shares. The Committee shall, subject to the terms of this Plan, select
eligible persons for participation in this Plan and determine the form, amount
and timing of each award to such persons and, if applicable, the number of
shares of Common Stock, the number of SARs and the number of Performance Shares
subject to such an award, the exercise price or base price associated with the
award, the time and conditions of exercise or settlement of the award and all
other terms and conditions of the award, including, without limitation, the
form of the Agreement evidencing the award. The Committee shall, subject to
the terms of this Plan, interpret this Plan and the application thereof,
establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of an
award, conditions with respect to the award, such as limiting competitive
employment or other activities. All such interpretations, rules, regulations
and conditions shall be conclusive and binding on all parties.
The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or other executive officer of the
Company as the Committee deems appropriate; provided, however, that the
Committee may not delegate its power and authority with regard to (a) the grant
of an award under this Plan to any person who is a "covered employee" within
the meaning of Section 162(m) of the Code or who, in the Committee's judgment,
is likely to be a covered employee at any time during the period an award
hereunder to such employee would be outstanding or (b) the selection for
participation in this Plan of an officer or other person subject to Section 16
of the Exchange Act or decisions concerning the timing, pricing or amount of an
award to such an officer or other person.
No member of the Board of Directors or Committee, and neither the Chief
Executive Officer nor any other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any
act, omission, interpretation, construction or determination made in connection
with this Plan in good faith, and the members of the Board of Directors and the
Committee and the President and Chief Executive Officer or other executive
officer shall be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law, except as otherwise may
be provided in the Company's Certificate of Incorporation and/or By-laws, as
the same may be amended or restated from time to time, and under any directors'
and officers' liability insurance that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (a) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (b) acts
approved in writing by a majority of the members of the Committee without a
meeting.
Notwithstanding anything to the contrary herein, any grant of awards to a
Non-Employee Director (not including awards under Article V) shall require the
approval of the Board.
1.4 ELIGIBILITY. Participants in this Plan shall consist of such
directors, officers or other key employees of the Company and its Subsidiaries
as the Committee, in its sole discretion, may select from time to time. The
Committee's selection of a person to participate in this Plan at any time shall
not require the Committee to select such person to participate in this Plan at
any other time. Non-Employee Directors shall also be eligible to participate
in this Plan in accordance with Article V.
<PAGE> 5
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Sections 6.7
and 6.8, 400,000 shares of Common Stock shall be available under this Plan,
reduced by the sum of the aggregate number of shares of Common Stock (a) that
are issued upon the grant of a Stock Award and (b) which become subject to
outstanding options, including Directors' Options, outstanding Free-Standing
SARs and outstanding Performance Shares. To the extent that shares of Common
Stock subject to an outstanding option (other than in connection with the
exercise of a Tandem SAR), Free-Standing SAR or Performance Share are not
issued or delivered by reason of the expiration, termination, cancellation or
forfeiture of such award or by reason of the delivery or withholding of shares
of Common Stock to pay all or a portion of the exercise price of an award, if
any, or to satisfy all or a portion of the tax withholding obligations relating
to an award, then such shares of Common Stock shall again be available under
this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized
and issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of shares of Common Stock with
respect to which options or SARs, Stock Awards or Performance Share Awards, or
a combination thereof may be granted during any calendar year to any person
shall be 200,000 subject to adjustment as provided in Section 6.7.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTIONS. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option
shall be granted within ten years of the effective date of this Plan. To the
extent that the aggregate Fair Market Value (determined as of the date of
grant) of shares of Common Stock with respect to which options designated as
Incentive Stock Options are exercisable for the first time by a participant
during any calendar year (under this Plan or any other plan of the Company, or
any parent or Subsidiary) exceeds the amount (currently $100,000) established
by the Code, such options shall constitute Non-Statutory Stock Options.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price. To the extent required, the
number of shares of Common Stock subject to an option shall be determined by
the Committee. The purchase price per share of Common Stock purchasable upon
exercise of the option shall be determined by the Committee; provided, however,
that the purchase price per share of Common Stock purchasable upon exercise of
an Option shall not be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant of such option; provided further, that if an
Incentive Stock Option shall be granted to any person who, at the time such
option is granted, owns capital stock possessing more than ten percent of the
total combined voting power of all classes of capital stock of the Company (or
of any parent or Subsidiary) (a "Ten Percent Holder"), the purchase price per
share of Common Stock shall be the price (currently 110% of Fair Market Value)
required by the Code in order to constitute an Incentive Stock Option.
(b) Option Period and Exercisability. The period during which an option
may be exercised shall be determined by the Committee; provided, however, that
no Incentive Stock Option shall be exercised later than ten years after its
date of grant; provided further, that if an Incentive Stock Option shall be
granted to a Ten Percent Holder, such option shall not be exercised later than
five years after its date of grant. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a condition
to the grant of an option or to the exercisability of all or a portion of an
option. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in
full at any time. An exercisable option, or portion thereof, may be exercised
only with respect to whole shares of Common Stock, except that if the remaining
option then exercisable is for less than a whole share, such remaining amount
may be exercised.
(c) Method of Exercise. An option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common Stock to
be purchased and accompanied by payment therefor in full (or arrangement made
for such payment to the Company's satisfaction) either (1) in cash, (2) by
delivery of Mature Shares having a Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such
exercise, (3) by authorizing the Company to withhold whole shares of Common
Stock which would otherwise be delivered upon exercise of the option having a
Fair Market Value,
<PAGE> 6
determined as of the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (4) in cash by a broker-dealer acceptable to
the Company to whom the optionee has submitted an irrevocable notice of exercise
or (5) a combination of (1), (2) and (3), in each case to the extent set forth
in the Agreement relating to the option, (ii) if applicable, by surrendering to
the Company any Tandem SARs which are canceled by reason of the exercise of the
option and (iii) by executing such documents as the Company may reasonably
request. The Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5). Any fraction of a share of Common Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No certificate
representing Common Stock shall be delivered until the full purchase price
therefor has been paid.
(d) Additional Options. The Committee shall have the authority to include
in any Agreement relating to an option a provision entitling the optionee to an
additional option in the event such optionee exercises the option represented
by such option agreement, in whole or in part, by delivering previously owned
whole shares of Common Stock in payment of the purchase price in accordance
with this Plan and such Agreement. Any such additional option shall be for a
number of shares of Common Stock equal to the number of delivered shares, shall
have a purchase price determined by the Committee in accordance with this Plan,
shall be exercisable on the terms and subject to the conditions set forth in
the Agreement relating to such additional option.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant SARs to such eligible persons as may be selected by the Committee. The
Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price. The number of SARs subject to an award
shall be determined by the Committee. Any Tandem SAR related to an Incentive
Stock Option shall be granted at the same time that such Incentive Stock Option
is granted. The base price of a Tandem SAR shall be the purchase price per
share of Common Stock of the related option. The base price of a Free-Standing
SAR shall be determined by the Committee; provided, however, that such base
price shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the date of grant of such SAR.
(b) Exercise Period and Exercisability. The Agreement relating to an
award of SARs shall specify whether such award may be settled in shares of
Common Stock (including shares of Restricted Stock) or cash or a combination
thereof. The period for the exercise of an SAR shall be determined by the
Committee; provided, however, that no Tandem SAR shall be exercised later than
the expiration, cancellation, forfeiture or other termination of the related
option. The Committee may, in its discretion, establish Performance Measures
which shall be satisfied or met as a condition to the exercisability of an SAR.
The Committee shall determine whether an SAR may be exercised in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only
with respect to whole shares of Common Stock and, in the case of a
Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is
exercised for shares of Restricted Stock, a certificate or certificates
representing such Restricted Stock shall be issued in accordance with Section
3.2(c) and the holder of such Restricted Stock shall have such rights of a
stockholder of the Company as determined pursuant to Section 3.2(d). Prior to
the exercise of an SAR for shares of Common Stock, including Restricted Stock,
the holder of such SAR shall have no rights as a stockholder of the Company
with respect to the shares of Common Stock subject to such SAR.
(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving
written notice to the Company specifying the number of whole SARs which are
being exercised, (ii) by surrendering to the Company any options which are
canceled by reason of the exercise of the Tandem SAR and (iii) by executing
such documents as the Company may reasonably request. A Free-Standing SAR may
be exercised (i) by giving written notice to the Company specifying the whole
number (or if the remaining SAR then exercisable is for less then one whole
share, such remaining amount) of SARs which are being exercised and (ii) by
executing such documents as the Company may reasonably request.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE WITH THE COMPANY.
(a) Disability. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as
the case may be, if the employment or service with the Company of the holder of
an option or SAR terminates by reason of Disability, each option and SAR held
by such holder shall
<PAGE> 7
be exercisable only to the extent that such option or SAR, as the case may be,
is exercisable on the effective date of such holder's termination of employment
or service and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is three months (or such other period as set forth
in the Agreement relating to such option or SAR) after the effective date of
such holder's termination of employment or service and (ii) the expiration date
of the term of such option or SAR.
(b) Retirement. Subject to paragraph (f) below and Section 6.8, and
unless otherwise specified in the Agreement relating to an option or SAR, as
the case may be, if the employment or service with the Company of the holder of
an option or SAR terminates by reason of retirement on or after age 65 with the
consent of the Company, each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR, as the case may be, is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is six months (or such other period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(c) Death. Subject to paragraph (f) below and Section 6.8, and unless
otherwise specified in the Agreement relating to an option or SAR, as the case
may be, if the employment or service with the Company of the holder of an
option or SAR terminates by reason of death, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR, as the
case may be, is exercisable on the date of such holder's death, and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until and
including the earliest to occur of (i) the date which is one year (or such
other period as set forth in the Agreement relating to such option or SAR)
after the date of death and (ii) the expiration date of the term of such option
or SAR.
(d) Other Termination. If the employment or service with the Company of
the holder of an option or SAR is terminated by the Company for Cause, each
option and SAR held by such holder shall terminate automatically on the
effective date of such holder's termination of employment or service.
Subject to paragraph (f) below and Section 6.8, and unless specified in
the Agreement relating to an option or SAR, as the case may be, if the
employment or service with the Company of the holder of an option or SAR
terminates for any reason other than Disability, retirement on or after age 65
with the consent of the Company, death or Cause, each option and SAR held by
such holder shall be exercisable only to the extent that such option or SAR is
exercisable on the effective date of such holder's termination of employment or
service and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months (or such other period as set forth in the
Agreement relating to such option or SAR) after the effective date of such
holder's termination of employment or service and (ii) the expiration date of
the term of such option or SAR.
(e) Death Following Termination of Employment or Service. Subject to
paragraph (f) below and Section 6.8, and unless otherwise specified in the
Agreement relating to an option or SAR, as the case may be, if the holder of an
option or SAR dies during the three-month period following termination of
employment or service by reason of Disability, or if the holder of an option or
SAR dies during the three-month period following termination of employment or
service by reason of retirement on or after age 65 with the consent of the
Company, or if the holder of an option or SAR dies during the three-month period
following termination of employment or service for any reason other than
Disability or retirement on or after age 65 with the consent of the Company (or,
in each case, such other period as set forth in the Agreement relating to such
option or SAR), each option and SAR held by such holder shall be fully
exercisable and may thereafter be exercised by the holder's executor,
administrator, legal representative, beneficiary or similar person, as the case
may be, until and including the earliest to occur of (i) the date which is one
year (or such other period as set forth in the Agreement relating to such option
or SAR) after the date of death and (ii) the expiration date of the term of such
option or SAR.
(f) Termination of Employment or Service - Incentive Stock Options.
Subject to Section 6.8 and unless otherwise specified in the Agreement relating
to the option, if the employment or service with the Company of a holder of an
incentive stock option terminates by reason of Permanent and Total Disability
(as defined in Section 22(e)(3) of the Code), each incentive stock option held
by such optionee shall be exercisable only to the extent that such option is
exercisable on the effective date of such optionee's termination of employment
or service by reason of Permanent and Total Disability, and may thereafter be
exercised by such optionee (or such optionee's legal representative or similar
person) until and including the earliest to occur of (i) the date which is
three months (or such other period no longer than one year as set forth in the
Agreement relating to such option) after the effective date
<PAGE> 8
of such optionee's termination of employment or service by reason of
Permanent and Total Disability and (ii) the expiration date of the term of such
option.
Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment or service with the Company of a
holder of an Incentive Stock Option terminates by reason of death, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such optionee's death and
may thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option)after the date of death and (ii) the
expiration date of the term of such option.
If the employment or service with the Company of the optionee of an
Incentive Stock Option is terminated by the Company for Cause, each Incentive
Stock Option held by such optionee shall terminate automatically on the
effective date of such optionee's termination of employment or service.
If the employment or service with the Company of a holder of an Incentive
Stock Option terminates for any reason other than Permanent and Total
Disability, death or Cause, each Incentive Stock Option held by such optionee
shall be exercisable only to the extent such option is exercisable on the
effective date of such optionee's termination of employment or service, and may
thereafter be exercised by such holder (or such holder's legal representative
or similar person) until and including the earliest to occur of (i) the date
which is three months after the effective date of such optionee's termination
of employment or service and (ii) the expiration date of the term of such
option.
If the holder of an Incentive Stock Option dies during the three-month
period following termination of employment or service by reason of Permanent
and Total Disability (or such shorter period as set forth in the Agreement
relating to such option), or if the holder of an Incentive Stock Option dies
during the three-month period following termination of employment or service
for any reason other than Permanent and Total Disability, death or Cause, each
Incentive Stock Option held by such optionee shall be exercisable only to the
extent such option is exercisable on the date of the optionee's death and may
thereafter be exercised by the optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the earliest
to occur of (i) the date which is one year (or such shorter period as set forth
in the Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock
Awards to such eligible persons as may be selected by the Committee. Subject
to adjustment as provided in Sections 6.7 and 6.8 of this Plan, the aggregate
number of shares of Common Stock available under this Plan pursuant to all
Stock Awards shall not exceed 100,000 of the aggregate number of shares of
Common Stock available under this Plan. The Agreement relating to a Stock
Award shall specify whether the Stock Award is a Restricted Stock Award or
Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of this Plan, as the Committee shall deem
advisable.
(a) Number of Shares and Other Terms. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of the
shares of Common Stock subject to such award (i) if specified Performance
Measures are satisfied or met during the specified Restriction Period or (ii)
if the holder of such award remains continuously in the employment or service
of the Company during the specified Restricted Period and for the forfeiture of
the shares of Common Stock subject to such award (x) if specified Performance
Measures are not satisfied or met during the specified Restriction Period or
(y) if the holder of such award does not remain continuously in the employment
or service of the Company during the specified Restriction Period.
<PAGE> 9
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) Share Certificates. During the Restriction Period, a certificate or
certificates representing a Restricted Stock Award shall be registered in the
holder's name and may bear a legend, in addition to any legend which may be
required pursuant to Section 6.6, indicating that the ownership of the shares
of Common Stock represented by such certificate is subject to the restrictions,
terms and conditions of this Plan and the Agreement relating to the Restricted
Stock Award. All such certificates shall be deposited with the Company,
together with stock powers or other instruments of assignment (including a
power of attorney), each endorsed in blank with a guarantee of signature if
deemed necessary or appropriate, which would permit transfer to the Company of
all or a portion of the shares of Common Stock subject to the Restricted Stock
Award in the event such award is forfeited in whole or in part. Upon
termination of any applicable Restriction Period (and the satisfaction or
attainment of applicable Performance Measures), or upon the grant of a Bonus
Stock Award, in each case subject to the Company's right to require payment of
any taxes in accordance with Section 6.5, a certificate or certificates
evidencing ownership of the requisite number of shares of Common Stock shall be
delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, and subject to the
terms and conditions of a Restricted Stock Award, the holder of such award
shall have all rights as a stockholder of the Company, including, but not
limited to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment applicable to all holders of Common
Stock; provided, however, that a distribution with respect to shares of Common
Stock, other than a distribution in cash, shall be deposited with the Company
and shall be subject to the same restrictions as the shares of Common Stock
with respect to which such distribution was made.
(e) Awards to Certain Executive Officers. Notwithstanding any other
provision of this Article III, and only to the extent necessary to ensure the
deductibility of the award to the Company, the Fair Market Value of the number
of shares of Common Stock subject to a Stock Award granted to a "covered
employee" within the meaning of Section 162(m) of the Code shall not exceed
$2,000,000 (i) at the time of grant in the case of a Stock Award granted upon
the attainment of Performance Measures or (ii) in the case of a Restricted
Stock Award with Performance measures which shall be satisfied or met as a
condition to the holder's receipt of the shares of Common Stock subject to such
award, on the earlier of (x) the date on which the Performance Measures are
satisfied or met and (y) the date the holder makes an election under Section
83(b) of the Code.
3.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and
unless otherwise set forth in the Agreement relating to a Restricted Stock
Award, if the employment or service with the Company of the holder of such
award terminates, the portion of such award which is subject to a Restriction
Period shall terminate as of the effective date of such holder's termination of
employment or service shall be forfeited and such portion shall be canceled by
the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
(a) Number of Performance Shares and Performance Measures. The number of
Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The Agreement relating to a Performance Share
Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of such
award, if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if
specified Performance Measures are not satisfied or met during the specified
Performance Period.
<PAGE> 10
(c) Settlement of Vested Performance Share Awards. The Agreement relating
to a Performance Share Award (i) shall specify whether such award may be
settled in shares of Common Stock (including shares of Restricted Stock) or
cash or a combination thereof and (ii) may specify whether the holder thereof
shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on any deferred
dividend equivalents, with respect to the number of shares of Common Stock
subject to such award. If a Performance Share Award is settled in shares of
Restricted Stock, a certificate or certificates representing such Restricted
Stock shall be issued in accordance with Section 3.2(c) and the holder of such
Restricted Stock shall have such rights of a stockholder of the Company as
determined pursuant to Section 3.2(d). Prior to the settlement of a
Performance Share Award in shares of Common Stock, including Restricted Stock,
the holder of such award shall have no rights as a stockholder of the Company
with respect to the shares of Common Stock subject to such award.
4.3 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to Section 6.8 and
unless otherwise set forth in the Agreement relating to a Performance Share
Award, if the employment or service with the Company of the holder of such
award terminates, the portion of such award which is subject to a Performance
Period on the effective date of such holder's termination of employment or
service shall be forfeited and such portion shall be canceled by the Company.
V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1 ELIGIBILITY. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Article V (collectively
"Directors Options"). All options granted under this Article V shall
constitute Non-Statutory Stock Options.
5.2 GRANTS OF STOCK OPTIONS. Each Non-Employee Director shall be granted
Non-Statutory Stock Options as follows:
(a) Time of Grant. On the date on which a person is first elected or
begins to serve as a Non-Employee Director (other than by reason of termination
of employment) he or she shall be granted an option to purchase 10,000 shares
of Common Stock at a purchase price per share equal to the Fair Market Value of
a share of Common Stock on the date of grant of such option; provided, however,
that no such grant will be made to the extent an automatic option grant is
being or has been made to such Non-Employee Director as of or with respect to
such date pursuant to another incentive compensation plan of the Company.
(b) Option Period and Exercisability. Except as otherwise provided
herein, each option granted under this Article V shall not be exercisable
during the first year following its date of grant. Thereafter, such option may
be exercised: (i) on or after the first anniversary of its date of grant, for
up to one-third of the shares of Common Stock subject to such option on its
date of grant, (ii) on or after the second anniversary of its date of grant,
for up to an additional one-third (two-thirds on a cumulative basis) of the
shares of Common Stock subject to such option on its date of grant, and (iii)
on or after the third anniversary of its date of grant, for up to the
remaining one-third (all shares on a cumulative basis) of the shares of Common
Stock subject to such option on its date of grant. Each option granted under
this Article V shall expire ten years after its date of grant. An exercisable
option, or portion thereof, may be exercised in whole or in part only with
respect to whole shares of Common Stock. Options granted under this Article V
shall be exercisable in accordance with Section 2.1(c).
5.3 TERMINATION OF DIRECTORSHIP.
(a) Disability. Subject to Section 6.8, if the holder of an option
granted under this Article V ceases to be a director of the Company by reason
of Disability, each such option held by such holder shall be exercisable only
to the extent that such option is exercisable on the effective date of such
holder's ceasing to be a director and may thereafter be exercised by such
holder (or such holder's guardian, legal representative or similar person)
until the earliest to occur of the (i) date which is three months after the
effective date of such holder's ceasing to be a director and (ii) the
expiration date of the term of such option.
(b) Retirement. Subject to Section 6.8, if the holder of an option
granted under this Article V ceases to be a director of the Company on or after
age 65, each such option held by such holder shall be exercisable only to the
extent that such option is exercisable on the effective date of such holder's
ceasing to be a director and may thereafter be exercised by such holder (or
such holder's legal representative or similar person) until the earliest
<PAGE> 11
to occur of the (i) date which is three months after the effective date of such
holder's ceasing to be a director and (ii) the expiration date of the term of
such option.
(c) Death. Subject to Section 6.8, if the holder of an option granted
under this Article V ceases to be a director of the Company by reason of death,
each such option held by such holder shall be fully exercisable and may
thereafter be exercised by such holder's executor, administrator, legal
representative, beneficiary or similar person, as the case may be, until the
earliest to occur of the (i) date which is one year after the date of death and
(ii) the expiration date of the term of such option.
(d) Other Termination. Subject to Section 6.8, if the holder of an option
granted under this Article V ceases to be a director of the Company for any
reason other than Disability, retirement on or after age 65 or death, each such
option held by such holder shall be exercisable only to the extent such option
is exercisable on the effective date of such holder's ceasing to be a director
and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until the earliest to occur of the (i) date
which is three months after the effective date of such holder's ceasing to be a
director and (ii) the expiration date of the term of such option.
(e) Death Following Termination of Directorship. Subject to Section 6.8,
if the holder of an option granted under this Article V dies during the
three-month period following such holder's ceasing to be a director of the
Company by reason of Disability, or if such a holder dies during the
three-month period following such holder's ceasing to be a director of the
Company on or after age 65, or if such a holder dies during the three-month
period following such holder's ceasing to be a director for any reason other
than by reason of Disability or retirement on or after age 65, each such option
held by such holder shall be exercisable only to the extent that such option is
exercisable on the date of the holder's death and may thereafter be exercised
by the holder's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, until the earliest to occur of the (i) date
one year after the date of death and (ii) the expiration date of the term of
such option.
5.4 DIRECTORS OPTIONS. Each Directors Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:
(a) Option Period and Exercisability. Directors Options shall become
exercisable as provided in Section 5.2(b). If at any time prior to the time
that a Directors Option becomes exercisable, a Non-Employee Director shall no
longer be a member of the Board, such Directors Option shall become void and of
no further force or effect.
(b) Purchase Price. The purchase price for the shares of Common Stock
subject to any Directors Option shall be equal to 100% of the Fair Market Value
of a share of Common Stock on the date of grant of such Directors Option. Such
Directors Options shall be exercisable in accordance with Section 2.1(c).
(c) Restrictions on Transfer. Directors Options shall be subject to the
transfer restrictions and other provisions of Section 6.4.
(d) Expiration. Each Directors Option which has become exercisable
pursuant to Section 5.4(a), to the extent not theretofore exercised, shall
expire on the first to occur of (i) the date which is three months after the
first date on which the Non-Employee Director shall no longer be a member of
the Board or the Board of Directors of a Subsidiary and (ii) the tenth
anniversary of the date of grant of such option; provided, however, that if the
Non-Employee Director shall die within such three-month period following the
date on which he shall have ceased to serve as such a director, such option may
be exercised at any time within the one-year period following the date of death
to the extent not theretofore exercised (but in no event later than the tenth
anniversary of the date of grant).
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN; SUBMISSION TO STOCKHOLDERS. This Plan
is effective immediately upon its approval by the Board. This Plan shall
terminate ten years after its effective date unless terminated earlier by the
Board. Termination of this Plan shall not affect the terms or conditions of
any award granted prior to termination. Awards hereunder may be made at any
time prior to the termination of this Plan, provided that no award may be made
later than ten years after the effective date of this Plan.
<PAGE> 12
This Plan shall be submitted to the stockholders of the Company for
approval. Unless the Plan is approved by the affirmative vote of a majority of
the voting power of the shares of capital stock of the Company represented at a
meeting in which the Plan is considered for approval, no awards may be made
under the Plan to any director or officer of the Company; provided that (a)
awards with respect to not more than 25,000 shares of Common Stock in the
aggregate may be granted to directors or officers of the Company and (b) in
addition, awards may be made to a person not previously employed by the Company
as an inducement essential to such person's entering into an employment
contract with the Company.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Section 162(m) of the Code; provided, however,
that no amendment shall be made without stockholder approval if such amendment
would (a) reduce the minimum purchase price in the case of an option or the
base price in the case of an SAR, (b) effect any change inconsistent with
Section 422 of the Code or (c) extend the term of this Plan. No amendment may
impair the rights of a holder of an outstanding award without the consent of
such holder.
6.3 AGREEMENT. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
award shall be valid until an Agreement is executed by the Company and the
recipient of such award and, upon execution by each party and delivery of the
Agreement to the Company, such award shall be effective as of the effective
date set forth in the Agreement.
6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES. No
option, SAR or Performance Share shall be transferable other than (i) by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise set forth in the
Agreement relating to such award. Each option, SAR or Performance Share may be
exercised or settled during the participant's lifetime only by the holder or
the holder's legal representative or similar person. Except as permitted by
the second preceding sentence, no option, SAR or Performance Share may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any option, SAR or
Performance Share, such award and all rights thereunder shall immediately
become null and void.
6.5 TAX WITHHOLDING. The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award
of any Federal, state, local or other taxes which may be required to be
withheld or paid in connection with such award. An Agreement may provide that
(i) the Company shall withhold whole shares of Common Stock which would
otherwise be delivered to a holder, having an aggregate Fair Market Value
determined as of the date the obligation to withhold or pay taxes arises in
connection with an award (the "Tax Date"), or withhold an amount of cash which
would otherwise be payable to a holder, in the amount necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of the
following means: (1) a cash payment to the Company, (2) delivery to the Company
of Mature Shares having an aggregate Fair Market Value, determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation, (3)
authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered having an aggregate Fair Market Value, determined as of
the Tax Date, or withhold an amount of cash which would otherwise be payable to
a holder, equal to the amount necessary to satisfy any such obligation, (4) in
the case of the exercise of an option, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted an irrevocable
notice of exercise or (5) any combination of (1), (2) and (3), in each case to
the extent set forth in the Agreement relating to the award; provided, however,
that the Committee shall have sole discretion to disapprove of an election
pursuant to any of clauses (2)-(5). An Agreement may provide for shares of
Common Stock to be delivered or withheld having an aggregate Fair Market Value
in excess of the minimum amount required to be withheld. Any fraction of a
share of Common Stock which would be required to satisfy such an obligation
shall be disregarded and the remaining amount due shall be paid in cash by the
holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company.
The Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that
the sale, transfer or other disposition
<PAGE> 13
thereof by the holder is prohibited except in compliance with the Securities
Act of 1933, as amended, and the rules and regulations thereunder.
6.7 ADJUSTMENT. Except as provided in Section 6.8, in the event of any
stock split, stock dividend, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to holders of
Common Stock other than a regular cash dividend, the number and class of
securities available under this Plan, the number and class of securities
subject to each outstanding option and the purchase price per security, the
number of securities subject to each option to be granted to Non-Employee
Directors pursuant to Article V, the terms of each outstanding SAR, the number
and class of securities subject to each outstanding Stock Award, and the terms
of each outstanding Performance Share shall be appropriately adjusted by the
Committee, such adjustments to be made in the case of outstanding options and
SARs without an increase in the aggregate purchase price or base price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive. If any such adjustment would result in a fractional security
being (a) available under this Plan, such fractional security shall be
disregarded, or (b) subject to an award under this Plan, the Company shall pay
the holder of such award, in connection with the first vesting, exercise or
settlement of such award, in whole or in part, occurring after such adjustment,
an amount in cash determined by multiplying (i) the fraction of such security
(rounded to the nearest hundredth) by (ii) the excess, if any, of (1) the Fair
Market Value on the vesting, exercise or settlement date over (2) the exercise
or base price, if any, of such award.
6.8 CHANGE IN CONTROL.
(a) (i) Notwithstanding any provision in this Plan or any Agreement,
in the event of a Change in Control pursuant to Section (b)(iii) or (iv)
below, (1) all outstanding options and SARS shall immediately become
exercisable in full, (2) the Restriction Period applicable to any
outstanding Restricted Stock Award shall lapse, (3) the Performance
Period applicable to any outstanding Performance Share shall lapse and
(4) the Performance Measures applicable to any outstanding Restricted
Stock Award (if any) and to any outstanding Performance Share shall be
deemed to be satisfied at the maximum level. If, in connection with such
Change in Control, holders of Common Stock receive solely shares of
common stock that are registered under Section 12 of the Exchange Act,
there shall be substituted for each share of Common Stock available under
this Plan, whether or not then subject to an outstanding award, the
number and class of shares into which each outstanding share of Common
Stock shall be converted pursuant to such Change in Control. If, in
connection with such Change in Control, holders of Common Stock receive
solely cash and shares of common stock that are registered under Section
12 of the Exchange Act, each outstanding award shall be surrendered to
and canceled by the Company, and the holder shall receive, within ten
days of the occurrence of such Change in Control, a proportionate amount
of cash in the manner provided in Section (a)(ii) below, and there shall
be substituted for the award surrendered a similar award reflecting a
proportionate number of the class of shares into which each outstanding
share of Common Stock shall be converted to such Change in Control. In
the event of any such substitution, the proportion of cash and common
stock, the purchase price per share in the case of an option and the base
price in the case of an SAR, and any other terms of outstanding awards
shall be appropriately adjusted by the Committee, such adjustments to be
made in the case of outstanding options and SARs without an increase in
the aggregate purchase price or base price; provided, that the proportion
of cash and common stock substituted for outstanding awards shall reflect
the approximate proportion of cash and common stock received by holders of
Common Stock in such Change in Control. If, in connection with a Change
in Control, holders of Common Stock receive any portion of the
consideration in a form other than cash or shares of common stock that are
registered under Section 12 of the Exchange Act, each share of Common
Stock available under this Plan, whether or not then subject to an
outstanding award, shall be substituted or surrendered for such proportion
of common stock, cash or other consideration as shall be determined by the
Committee pursuant to Section 6.7.
(ii) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(i) or (ii)
below, or in the event of a Change in Control pursuant to Section
(b)(iii) or (iv) below in connection with which the holders of Common
Stock receive cash, each outstanding award shall be surrendered to the
Company by the holder thereof, and each such award shall immediately be
canceled by the Company, and the holder shall receive, within ten days of
the occurrence of a Change in Control pursuant to Section (b)(i) or (ii)
below or within ten days of the approval of the stockholders of the
Company contemplated by Section (b)(iii) or (iv) below, a cash payment
from the Company in an amount equal to (1) in the case of an option, the
number of shares of Common Stock then subject to such option, multiplied
by the excess, if any, of the greater of (A) the highest per share price
offered to stockholders of
<PAGE> 14
the Company in any transaction whereby the Change in Control takes place
or (B) the Fair Market Value of a share of Common Stock on the date of
occurrence of the Change in Control, over the purchase price per share of
Common Stock subject to the option; (2) in the case of a Free-Standing
SAR, the number of shares of Common Stock then subject to such SAR,
multiplied by the excess, if any, of the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction
whereby the Change in Control takes place or (B) the Fair Market Value of
a share of Common Stock on the date of occurrence of the Change in
Control, over the base price of the SAR; and (3) in the case of a
Restricted Stock Award or Performance Share Award, the number of shares of
Common Stock or the number of Performance Shares, as the case may be, then
subject to such award, multiplied by the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction
whereby the Change in Control takes place or (B) the Fair Market Value of
a share of Common Stock on the date of occurrence of the Change in
Control. In the event of a Change in Control, each Tandem SAR shall be
surrendered by the holder thereof and shall be canceled simultaneously
with the cancellation of the related option. Except as may be provided in
an agreement relating to an award, the Company may, but is not required
to, cooperate with any person who is subject to Section 16 of the Exchange
Act to assure that any cash payment in accordance with the foregoing to
such person is made in compliance with Section 16 and the rules and
regulations thereunder.
(b) "Change in Control" shall mean:
(i) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act, of Beneficial Ownership of 25% or more of either (1)
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (2) the combined voting power of
the then outstanding securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (A) any acquisition
directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired directly
from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company,
(D) any acquisition by an Exempt Person or (E) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this Section 6.8(b); provided further,
that for purposes of clause (2), if any Person (other than an Exempt
Person, the Company or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company) shall become the Beneficial Owner of 50% or more of the
Outstanding Company Common Stock or 50% or more of the Outstanding
Company Voting Securities by reason of an acquisition by the Company, and
such Person shall, after such acquisition by the Company, become the
Beneficial Owner of any additional shares of the Outstanding Company
Common Stock or any additional Outstanding Company Voting Securities and
such Beneficial Ownership is publicly announced, such additional
Beneficial Ownership shall constitute a Change in Control;
(ii) individuals who, as of the effective date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the
effective date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a majority
of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any individual
who was initially elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on behalf
of any Person other than the Board shall not be deemed a member of the
Incumbent Board;
(iii) approval by the stockholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals or entities who are
the Beneficial Owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to
such Corporate Transaction will Beneficially Own, directly or indirectly,
more than 50% of, respectively, the outstanding shares of common stock,
and the combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or indirectly) in substantially the
same proportions relative to each other as their Beneficial Ownership,
immediately prior to such Corporate Transaction, of the
<PAGE> 15
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (2) no Person (other than an Exempt
Person; the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company; the corporation resulting from such Corporate Transaction;
and any Person which Beneficially Owned, immediately prior to such
Corporate Transaction, directly or indirectly, 50% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) will Beneficially Own, directly or
indirectly, 50% or more of, respectively, the outstanding shares of common
stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such corporation
entitled to vote generally in the election of directors and (3)
individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
Notwithstanding anything to the contrary herein, no Change of Control
shall be deemed to have taken place as a result of the issuance of shares of
Common Stock by the Company or the sale of shares of Common Stock by its
stockholders in connection with the Company's initial public offering.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT/SERVICE. No person shall have
any right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment or
service by the Company, any Subsidiary or any affiliate of the Company or
affect in any manner the right of the Company, any Subsidiary or any affiliate
of the Company to terminate the employment or service of any person at any time
without liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless
and until such person becomes a stockholder of record with respect to such
shares of Common Stock or equity security.
6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
