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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 4, 2000
METRETEK TECHNOLOGIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-19793 84-11698358
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1675 Broadway, Suite 2150, Denver, Colorado 80202
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(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (303) 592-5555
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Not Applicable
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
See Item 5. In the opinion of management of Metretek Technologies,
Inc., a Delaware corporation (the "Company"), the transactions described in Item
5 do not constitute a "change in control" of the Company.
ITEM 5. OTHER EVENTS.
THE PRIVATE PLACEMENT
GENERAL DESCRIPTION. On February 4, 2000, Metretek Technologies, Inc.,
a Delaware corporation (the "Company"), completed a private placement of 7,000
units ("Units"), at a purchase price of $2,000 per Unit, for an aggregate
purchase price of $14,000,000 in cash (the "Private Placement"). Each Unit
consisted of 200 shares of the Company's Common Stock, par value $.01 per share
("Common Stock"), one share of the Company's Series B Preferred Stock, par value
$.01 per share ("Series B Preferred Stock"), and warrants ("Warrants") to
purchase 100 shares of Common Stock. The Company issued 1,450 Units on December
9, 1999 and 5,550 Units on February 4, 2000. In the aggregate, the Company
issued in the Private Placement 1,400,000 shares of Common Stock, 7,000 shares
of Series B Preferred Stock and Warrants to purchase 700,000 shares of Common
Stock. The Units were issued to certain institutional investors and other
"accredited investors" (collectively, the "Unit Purchasers"), as such term is
defined in Regulation D promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Securities Purchase Agreement, dated as of
December 9, 1999, as amended December 21, 1999 (the "Securities Purchase
Agreement"), between the Company and the Unit Purchasers. The Private Placement
was approved and ratified by the stockholders of the Company at a Special
Meeting of the Stockholders held on February 3, 2000.
On February 3, 2000, immediately prior to the closing of the Private
Placement, 3,824,225 shares of Common Stock were outstanding. On February 4,
2000, immediately subsequent to the closing of the Private Placement, 4,934,225
shares of Common Stock were outstanding. The names of, and the amounts and
percentages of beneficial ownership of the Company's securities held by, the
Unit Purchasers are set forth in the "Shelf Registration Statement" (as defined
below).
The primary purpose of the Private Placement was to raise capital to
enable the Company to develop PowerSpring, Inc. ("PowerSpring"), the Company's
wholly-owned subsidiary which was formed to launch the Company's Internet-based
business to business energy services hub. In furtherance of its Internet-based
business strategy, the Company entered into a strategic relationship with Scient
Corporation ("Scient"), a leading eBusiness systems and strategy advisor, to
assist PowerSpring in designing, developing and creating an Internet-based
business. The goal of PowerSpring is to provide comprehensive energy consumption
data and a broad array of additional information designed to facilitate the
purchase and management of natural gas by commercial users of natural gas.
PowerSpring also intends to provide commercial electricity users with a
mechanism to manage their energy needs and reduce their electricity costs. The
Company's initial focus is the development of a website to provide a single
source of information and services for commercial energy users.
The Company estimates that this initial development phase of its
Internet-based business will require estimated expenditures of between
$5,000,000 and $7,000,000, consisting of consulting fees and expenses payable to
Scient and costs of acquiring the requisite technology, including hardware and
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software, as well as research and development costs. The Company expects that
after this initial development stage is completed and its website is launched
(which is currently scheduled for the second quarter of 2000), the further
development and growth of PowerSpring, including staffing, organizational and
start-up expenses, marketing costs and additional capital expenditures, will
require significant additional funds. In order to so develop and expand
PowerSpring, the Company will need to raise significant additional funds, beyond
the proceeds of the Private Placement, from the proceeds of public or private
equity financing, debt financing or from other sources. Any such capital raising
will be subject to the consent of the Company's lender on its credit facility,
if its credit facility is then in effect. In addition, such capital raising will
be subject to any required consents from the holders of Series B Preferred
Stock, as described below. There can be no assurance that such additional funds
will be available to the Company in the future or that, if available, such funds
can be obtained on terms favorable to the Company, and on terms acceptable to
the Company's lender, if its consent is required, and on terms acceptable to the
holders of the Series B Preferred Stock, if their consent is required. The
inability of the Company to raise sufficient additional funds, beyond the
proceeds of the Private Placement, to meet the capital requirements of
PowerSpring could have a material adverse effect on its business, financial
condition and results of operations.
The Company used a portion of the proceeds of the private placement to
repay its outstanding indebtedness (approximately $2,100,000 as of December 9,
1999) under its credit facility. The remaining proceeds of the Private Placement
will be used for general corporate and working capital purposes and the
expansion of its business operations.
TRANSFER RESTRICTIONS. The issuance of the shares of Common Stock, the
shares of Series B Preferred Stock and the Warrants in the Private Placement,
including the issuance of shares of Common Stock upon conversion of the Series B
Preferred Stock and upon exercise of the Warrants, has not been registered under
the Securities Act or any state securities laws. Such securities may not be
offered, sold or otherwise transferred by the holders thereof unless such offer,
sale or transfer is registered under the Securities Act and applicable state
securities laws, or made pursuant to valid exemption from such registration
requirements. All securities issued in the Private Placement bear or will
initially bear a legend to that effect.
REGISTRATION RIGHTS. Concurrently with and pursuant to the Securities
Purchase Agreement, the Company entered into a Registration Rights Agreement,
dated as of December 9, 1999 (the "Registration Rights Agreement"), with the
Unit Purchasers. Pursuant to the terms of the Registration Rights Agreement, the
Company filed a Form S-3 "shelf" registration statement (the "Shelf Registration
Statement") with the Securities and Exchange Commission covering the resale of
(i) the shares of Series B Preferred Stock issued in the Private Placement, and
(ii) the shares of Common Stock issued in the Private Placement, and the shares
of Common Stock issuable upon conversion of the Series B Preferred Stock and
upon exercise of the Warrants included in the Units (collectively, the
"Registrable Securities"). If the Shelf Registration Statement (i) has not
become effective on or prior to May 9, 2000, or (ii) is filed and declared
effective but its effectiveness is suspended for any reason (without being
succeeded immediately by a replacement shelf registration statement filed and
declared effective) for a period of time (including any suspension period as
discussed below) which exceeds 30 days in the aggregate, then the Company will
be required to pay liquidated damages to each holder of Registrable Securities.
The amount of liquidated damages payable during any period in which a
registration default shall have occurred and be continuing is that amount which
is equal to $1.00 per 1,000 shares of Registrable Securities per week and shall
increase by an amount equal to $0.10 per 1,000 shares of Registrable Securities
at the end of each subsequent two week period up to a maximum of $3.20. In
addition, pursuant to the Registration Rights Agreement, the holders of
Registrable
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Securities have certain "piggyback" registration rights in connection with
registration statements filed by the Company, on its own behalf or on behalf of
any of its stockholders, with respect to the Registrable Securities. The Company
will pay all expenses, other than underwriting and brokerage discounts and
commissions and other selling expenses, of all such registrations.
BOARD REPRESENTATION. Pursuant to the terms of the Securities Purchase
Agreement and the Series B Preferred Stock, the holders of a majority of the
outstanding shares of Series B Preferred Stock, voting together as a separate
class, are entitled to elect one member of the Company's Board of Directors, so
long as an aggregate of at least 2,000 shares of Series B Preferred Stock remain
outstanding. In addition, in the event the Company fails to redeem the Series B
Preferred Stock in accordance with its terms, the holders of the Series B
Preferred Stock will have the right to elect a majority of the Company's Board
of Directors until such time as all shares of Series B Preferred Stock have been
redeemed by the Company.
INDEMNIFICATION. The Company has agreed to indemnify and hold harmless
each Purchaser and its respective affiliates, and their employees, officers,
partners, members, directors and agents, from and against any and all losses,
claims, damages, liabilities, costs and expenses in connection with or arising
out of any breach by the Company of any of its representations, warranties or
covenants in the Securities Purchase Agreement or in the related agreements or
any third party proceeding in connection therewith.
EXPENSES. The Company paid all reasonable, documented, out-of-pocket
fees and expenses actually incurred by the Purchasers in connection with the
Private Placement.
TERMS OF THE SERIES B PREFERRED STOCK
The holders of the Series B Preferred Stock are entitled to significant
rights, preferences and privileges as a result of their investment in the
Company. These rights, preferences and privileges are summarized below. The
terms of the Series B Preferred Stock are set forth in the Company's Second
Restated Certificate of Incorporation (the "Second Restated Certificate"). The
following summary of certain key terms of the Series B Preferred Stock is not
complete and is qualified in its entirety by, and should be read in conjunction
with, the Second Restated Certificate.
AMOUNT. The Company has authorized a total of 1,000,000 shares of
Series B Preferred Stock, of which 7,000 shares were issued in the Private
Placement.
DIVIDENDS. The holders of shares of Series B Preferred Stock are
entitled, in preference to the holders of any other class of capital stock of
the Company, to receive cash dividends on a quarterly basis, at the rate per
annum of 8%, when, as and if declared by the Company. The dividends on the
Series B Preferred Stock are cumulative and so long as at least 1,000 shares of
Series B Preferred Stock are outstanding and such dividends have not been paid
in full, no dividends shall be paid or declared on, and the Company cannot
purchase, redeem or acquire, any shares of Common Stock or any other class of
capital stock of the Company ranking junior to or on parity with the Series B
Preferred Stock. In addition, in the event that the Company declares or pays any
cash or Common Stock dividends on the Common Stock, the Company must also
declare and pay to the holders of the Series B Preferred Stock, the same
dividends or distributions based upon the number of shares of Common Stock into
which the shares of Series B Preferred Stock are then convertible.
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LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the holders of Series B Preferred
Stock will be entitled to receive, out of the assets of the Company available
for distribution to stockholders, before any payment or distribution will be
paid on any Common Stock or any other class of stock ranking on liquidation
junior to the Series B Preferred Stock, an amount in cash equal to $1,000 per
share of Series B Preferred Stock held by such holder, plus accrued but unpaid
dividends, if any (the "Liquidation Preference"). In the event the assets of the
Company available for distribution to the holders of Series B Preferred Stock
are insufficient to permit payment in full of the Liquidation Preference, then
all such assets will be distributed ratably among the holders of the Preferred
Stock. If the holders of Series B Preferred Stock would have received more than
the Liquidation Preference if they had converted their Series B Preferred Stock
into Common Stock immediately prior to the liquidation event, then they will
receive such greater amount.
REDEMPTION. On December 9, 2004, the Company is required to redeem all
outstanding shares of Series B Preferred Stock at a purchase price per share
equal to the Liquidation Preference.
In addition, the holders of Series B Preferred Stock may, by majority
vote, elect either to participate in, or to have their shares of Series B
Preferred Stock redeemed upon the occurrence of, any of the following
"extraordinary transactions":
- certain mergers or consolidations of the Company;
- the sale or transfer of all or substantially all of the properties
and assets of the Company;
- any purchase by any person or group of capital stock of the Company
causing such person or group to own a majority of the voting power of
the Company; or
- the redemption or repurchase of a majority of the voting power of the
capital stock of the Company.
Furthermore, in the event that, at any time commencing after December
9, 2000, the market price of the Common Stock equals or exceeds 200% of the
Conversion Price (as defined below) then in effect for 20 out of a period of 30
consecutive trading days, then the Company will have the right to redeem the
Series B Preferred Stock at a purchase price per share equal to the Liquidation
Preference.
CONVERSION RIGHTS. After June 9, 2000, each share of Series B Preferred
Stock will be convertible, at the option of the holder thereof, into the number
of shares of Common Stock equal to the Liquidation Preference divided by the
"Conversion Price" per share then in effect. The initial "Conversion Price" is
$5.9334 (the "Initial Conversion Price"), which equals approximately 168 shares
of Common Stock per share of Series B Preferred Stock, based upon a Liquidation
Preference of $1,000 per share of Series B Preferred Stock. On December 9, 2000,
the Conversion Price will be reset to the lower of (i) the Initial Conversion
Price, (ii) the Conversion Price then in effect, if it has been adjusted
pursuant to the anti-dilution provision of the Series B Preferred Stock
discussed below, or (iii) 110% of the sum of (a) the average closing bid price
of the Common Stock for the 30 trading days immediately preceding such date,
plus (b) the fair market value of any securities, cash or assets (other than
dividends paid exclusively in cash or Common Stock) distributed to the holders
of Series B Preferred Stock, but the Conversion Price will not, in any event, be
reduced by more than 50% of the Conversion Price then in effect. Therefore, if
the Series B Preferred Stock is not converted into
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Common Stock prior to December 9, 2000, the Series B Preferred Stock may become
convertible into Common Stock at a rate which is below the prevailing market
price of the Common Stock on that date. If the Conversion Price is so adjusted,
then the holders of Series B Preferred Stock will not be permitted, for a period
of 90 days after the adjustment, sell, pledge or transfer any capital stock of
the Company, or, for a period of 30 days after the adjustment, purchase
(although they can convert their Series B Preferred Stock or exercise their
Warrants) any shares of Common Stock to cover any "short" position.
The Conversion Price, and the number of shares of Common Stock of the
Company (or the number and kind of other securities or rights) into which each
share of Series B Preferred Stock is convertible, are also subject to adjustment
pursuant to the anti-dilution provisions of the Series B Preferred Stock as set
forth in the Second Restated Certificate. These anti-dilution provisions include
the following:
- If the number of shares of Common Stock outstanding is
increased by a stock dividend or other distribution payable in
shares of Common Stock, or by a subdivision or split-up of the
outstanding shares of Common Stock into a greater number of
shares of Common Stock, then the Conversion Price will be
proportionally decreased so that the number of shares of
Common Stock issuable upon conversion of the Series B
Preferred Stock shall be increased in proportion to the
increase of outstanding shares of Common Stock.
- If the number of shares of Common Stock outstanding is
decreased by a combination or reverse split of the outstanding
shares of Common Stock, then the Conversion Price will be
proportionately increased so that the number of shares of
Common Stock issuable upon conversion of the Series B
Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares of Common Stock.
- If the Company issues any shares of Common Stock at a price,
or any options, rights, warrants or other securities
convertible into or exchangeable for shares of Common Stock
(other than certain shares and options to officers, director
or employees under the Company's employee plans, certain
shares issuable upon the exercise of outstanding warrants or
other rights, or securities issuable upon conversion of the
Series B Preferred Stock or upon exercise of the Warrants) at
a purchase price, conversion price or exercise price (as
applicable), per share less than the greater of the market
price of the Common Stock or the Conversion Price in effect
immediately prior to such issuance, then the Conversion Price
will be reduced pursuant to a "weighted price anti-dilution"
formula, thereby entitling the holders of the Series B
Preferred Stock to receive additional shares of Common Stock
upon conversion.
- If the Company distributes to all holders of shares of Common
Stock evidences of its indebtedness, shares of any class or
series of capital stock, other securities, cash or assets
(excluding cash dividends or distributions of shares of its
Common Stock), then, if they so elect by majority vote, the
holders of outstanding shares of Series B Preferred Stock will
be entitled to either (i) receive upon conversion, in addition
to shares of Common Stock, the consideration they would have
received if they had converted their holdings of Series B
Preferred Stock into Common Stock as of the payment date, or
(ii) have the Conversion Price of the Series B Preferred Stock
proportionately reduced.
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GENERAL VOTING RIGHTS. The holders of the Series B Preferred Stock are
not entitled to vote on matters presented to the holders of Common Stock
generally, except as expressly provided by law or in the Second Restated
Certificate.
SPECIAL CLASS VOTING RIGHTS - BOARD REPRESENTATION. The holders of the
Series B Preferred Stock, voting together as a separate class, have the right to
elect one member of the Company's Board of Directors, so long as at least 2,000
shares of Series B Preferred Stock remain outstanding. All other directors will
be elected by the holders of Common Stock and of any other class of capital
stock of the Company that has the right to vote in the election of directors.
In addition, in the event the Company fails for any reason to redeem
the Series B Preferred Stock in full in accordance with its terms, then the size
of the Board of Directors will be increased to allow the holders of the Series B
Preferred Stock to elect a sufficient number of additional directors to
constitute a majority of the Board of Directors, to serve until the Company pays
in full the redemption price for the shares of Series B Preferred Stock to be
redeemed. Thereafter, the size of the Board of Directors will be reduced to its
size in effect prior to the redemption default.
SPECIAL CLASS VOTING RIGHTS -- RIGHT TO VETO CERTAIN TRANSACTIONS. So
long as at least 1,000 shares of Series B Preferred Stock remain outstanding,
the Company may not, without the consent of the holders of at least a majority
of the shares of Series B Preferred Stock then outstanding, voting as a single
class, take any of the following actions:
- enter into any merger, consolidation, recapitalization,
reorganization or like transaction involving the Company or any of
its subsidiaries;
- liquidate or dissolve the Company;
- sell or transfer all or substantially all of the assets or properties
of the Company;
- dispose of assets in one or more transactions for consideration in
excess of $1,000,000 without approval of the Board of Directors of
the Company; or
- incur indebtedness for money borrowed, except for borrowings under
the Company's primary credit agreement of up to $3,000,000.
In addition, so long as any shares of Series B Preferred Stock remain
outstanding, the Company may not, without the consent of the holders of at least
a majority of the shares then outstanding, voting as a single class, take any of
the following actions:
- issue any equity security, or securities exchangeable or convertible
into equity securities or measured by the Company's earnings or
profit, other than (1) Series C Preferred Stock or (2) securities of
the Company or its Internet subsidiaries that rank junior to the
Series B Preferred Stock as to liquidation, dividend and redemption
rights;
- redeem, repurchase or otherwise acquire for value any equity security
of the Company (other than redemption of the Series B Preferred Stock
in accordance with its terms); or
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- amend the Certificate of Incorporation, By-Laws or other charter
documents of the Company or any of its subsidiaries.
WARRANTS
Each Warrant included in the Units sold in the Private Placement
entitles the holder thereof to purchase one share of Common Stock at the then
current "Exercise Price". The Warrants are initially exercisable at an exercise
price equal to $6.7425 per share of Common Stock (the "Initial Exercise Price").
The Initial Exercise Price will be reset on December 9, 2000 to the lower of (i)
the Initial Conversion Price, (ii) the Exercise Price then in effect, if it has
been adjusted pursuant to the anti-dilution provision of the Warrants, or (iii)
125% of the average closing bid price of the Common Stock for the 30 trading
days immediately preceding such date. The Exercise Price is subject to further
adjustment pursuant to certain anti-dilution provisions, which are substantially
the same as the anti-dilution provisions of the Series B Preferred Stock
described in "Terms of the Series B Preferred Stock - Conversion Rights" above.
The Warrants are immediately detachable from the Units, can be exercised at any
time after March 9, 2000, and expire December 9, 2004. In lieu of paying the
Exercise Price in cash, holders of Warrants may exercise such Warrants by
delivering to the Company shares of Common Stock of the Company with a fair
market value equal to the Exercise Price. Alternatively, holders of Warrants may
make a "cashless" exercise of the Warrants and recover, upon exercise and
without making any payments (of cash, Common Stock or any other asset), a "net"
number of shares of Common Stock determined by a formula based on the amount the
trading price of the Common Stock exceeds the Exercise Price then in effect.
LISTING OF SECURITIES ISSUED
Neither the Series B Preferred Stock nor the Warrants issued in the
Private Placement are listed on the Nasdaq Stock Market, any national securities
exchange or any other stock market, stock exchange or stock trading system. The
Common Stock issued as part of the Units, as well as the shares of Common Stock
issuable upon conversion of the Series B Preferred Stock or upon exercise of the
Warrants, are being listed on the Nasdaq National Market.
PRIVATE PLACEMENT AGENT
The Company engaged First Albany Corporation ("First Albany") to serve
as its exclusive placement agent in connection with the Private Placement. The
Company paid First Albany a fee equal to two percent (2%) of the gross proceeds
received by the Company in the Private Placement, plus customary fees and
expenses, and issued to First Albany warrants to purchase 30,000 shares of
Common Stock at an exercise price of $14.50 per share, exercisable from date of
grant for four (4) years.
SPECIAL MEETING OF THE STOCKHOLDERS
The Company's Common Stock is listed on the Nasdaq National Market. Due
to certain rules of the Nasdaq Stock Market, Inc., the Company submitted the
Private Placement to its stockholders for their ratification and approval.
Stockholder approval of the Private Placement was not otherwise
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required as a matter of Delaware law or other applicable laws or rules or by the
Company's Second Restated Certificate or By-Laws.
At the Special Meeting of Stockholders of the Company held on February
3, 2000 (the "Special Stockholders Meeting"), the stockholders of the Company
approved and ratified the following:
- the issuance and sale in the private placement of (i) up to 1,400,000
shares of Common Stock, (ii) up to 7,000 shares of the Company's
Series B Preferred Stock, and (iii) Warrants to purchase up to 7,000
shares of the Company's Common Stock;
- the issuance of shares of Common Stock upon conversion of the Series
B Preferred Stock, in accordance with the terms of the Series B
Preferred Stock; and
- the issuance of shares of Common Stock upon the exercise of the
Warrants, in accordance with the terms of the Warrants.
In addition, at the Special Stockholders Meeting, the stockholders
approved the following items:
- An amendment to Article FOURTH of the Company's Restated Certificate
of Incorporation, as amended, to (a) increase the authorized number
of shares of the Company's Preferred Stock, par value $.01 per share,
by 1,000,000 shares to an aggregate of 3,500,000 shares; (b)
eliminate the Company's Series A Preferred Stock, of which no shares
were outstanding; (c) amend the terms of the Series B Preferred Stock
to provide the holders of Series B Preferred Stock with majority
board representation upon the occurrence of a redemption default; and
(d) eliminate references to prior reverse stock splits.
- An amendment to the Company's 1998 Stock Incentive Plan (the "1998
Plan") to (a) increase the number of shares of Common Stock
authorized for issuance under the 1998 Plan by 500,000 shares to an
aggregate of 750,000 shares; and (b) increase the limit on the
maximum number of shares with respect to which awards may be granted
during any calendar year to any individual participant under the 1998
Plan from 25,000 shares to 100,000 shares.
After filing the Amendment to Article FOURTH of its Restated
Certificate of Incorporation, as amended, as approved at the Special
Stockholders Meeting, the Company filed its Second Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware on February
7, 2000 for the sole purpose of restating and integrating without further
amending the provisions of its Restated Certificate of Incorporation, as
theretofore amended.
FAIRNESS OPINION OF FINANCIAL ADVISOR
In connection with the Private Placement, the Company received the
opinion of Hanifen, Imhoff Inc. to the effect that, based on and subject to the
assumptions made, matters considered and limits on review set forth in Hanifen's
opinion, the consideration received by the Company from the investment
contemplated by the Securities Purchase Agreement was fair to the Company from a
financial point of
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view. The full text of the opinion of Hanifen, dated December 22, 1999, was
attached as Appendix B to the Proxy Statement for the Special Stockholders
Meeting.
AMENDMENT TO STOCKHOLDER RIGHTS AGREEMENT
On December 9, 1999, the Company amended its Rights Agreement between
the Company and American Securities Transfer & Trust, Inc. (the "Rights
Agreement") to prevent the Private Placement, including the Unit Purchasers'
acquisition of the Common Stock, Series B Preferred Stock and the Warrants
included in the Units, and the Unit Purchasers' acquisition of Common Stock upon
conversion of the Series B Preferred Stock or upon exercise of the Warrants,
from triggering the protections contained in the Rights Agreement.
AMENDMENT TO CREDIT FACILITY
In connection with the Private Placement, the Company and National Bank
of Canada, the Company's lender under its credit facility (the "Lender"),
entered into the Third Amendment to Loan and Security Agreement and Loan
Documents (the "Loan Amendment"). Pursuant to the Loan Amendment, the Lender
waived all applicable restrictions and limitations in the credit facility
relating to the Private Placement, other than the right of the Company to redeem
the Series B Preferred Stock, and redefined certain covenants of the Company to
include the Series B Preferred Stock in the Company's tangible net worth.
FORWARD LOOKING STATEMENTS
This Form 8-K contains certain forward-looking statements within the
meaning of and made pursuant to the safe harbor provisions of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. From time to time, the Company may publish or otherwise make available
forward-looking statements of this nature. Forward-looking statements include
statements concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and other statements which are other
than statements or historical facts. The words "may", "could", "will",
"project", "intend", "continue", "believe", "anticipate", "estimate", "expect"
and similar predictive, future tense or forward-looking terminology, are
intended to identify forward-looking statements. Examples of forward-looking
statements include statements regarding, among other matters, the Company's
plans, intentions, beliefs and expectations with respect to its future
prospects, including PowerSpring, and the Company's ability to raise sufficient
additional capital, from the sale of equity, debt, assets or otherwise, to
successfully develop and market PowerSpring. Such forward-looking statements are
based on the current plans, intentions, beliefs and expectations of management
as well as assumptions made by and information currently available to
management. Forward-looking statements are not guarantees of future performance
or events but are subject to, and are qualified by, risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
by those statements. These risks and uncertainties include, but are not limited
to:
- the Company's ability to successfully develop and implement an
Internet-based business;
- the emergence and growth of a market for online energy information
and services;
- the success of the Company's strategic relationships;
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- changes in the energy industry in general and the natural gas and
electricity industry in particular;
- the Company's ability to successfully implement, and the market's
acceptance of, its PowerSpring offering;
- the ability of the Company to raise sufficient funds to finance
PowerSpring;
- the impact of current and future laws and government regulations
affecting the energy industry in general and the natural gas and
electricity industry in particular; and
- other risks and uncertainties that are discussed in this Form 8-K or
that are discussed from time to time in the Company's other reports
and filings with the Securities and Exchange Commission.
The Company does not intend, and assumes no responsibility or duty, to update
any oral or written forward-looking statements made by the Company.
SUMMARY
The foregoing summary of the provisions of the Securities Purchase
Agreement, the Second Restated Certificate, the Registration Rights Agreement,
the Warrants, the Loan Amendment and the amendment to the Rights Agreement is
qualified in its entirety by reference to, and should be read in conjunction
with, such documents, which are exhibits to this Form 8-K and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
4.1 Securities Purchase Agreement, dated as of December 9, 1999, as
amended December 21, 1999, by and among Metretek Technologies,
Inc. and certain purchasers of securities of Metretek
Technologies, Inc., (the "Unit Purchasers"). (Incorporated by
reference to Exhibit 4.1 to the Company's Form 8-K filed on
December 22, 1999).
4.2 Second Restated Certificate of Incorporation of Metretek
Technologies, Inc. (Incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement on Form S-3, Registration
No. 333-96369).
4.3 Form of Common Stock Purchase Warrant issued to the Unit
Purchasers. (Incorporated by reference to Exhibit 4.3 to the
Company's Form 8-K filed on December 22, 1999).
4.4 Registration Rights Agreement, dated as of December 9, 1999, by
and among Metretek Technologies, Inc. and the Unit Purchasers.
(Incorporated by reference to Exhibit 4.4 to the Company's Form
8-K filed on December 22, 1999).
11
<PAGE> 12
4.5 Amendment No. 2 to Rights Agreement, dated as of December 9,
2000, between Metretek Technologies, Inc. and American Securities
Transfer & Trust, Inc. (Incorporated by reference to Exhibit 1 to
Metretek's Form 8-A/A Amendment No. 4 filed December 22, 1999).
10.1 Third Amendment to Loan and Security Agreement and Loan
Documents, dated as of December 16, 1999 but effective as of
December 8, 1999, among National Bank of Canada, Metretek
Technologies, Inc., Southern Flow Companies, Inc., Metretek,
Incorporated and Sigma VI, Inc. (Incorporated by reference to
Exhibit 10.1 to the Company's Form S-3, Registration No.
333-96369).
10.2 Metretek Technologies, Inc. 1998 Stock Incentive Plan, amended
and restated as of February 3, 2000.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
METRETEK TECHNOLOGIES, INC.
By: /s/ W. Phillip Marcum
-------------------------------------
W. Phillip Marcum
President and Chief Executive Officer
Dated: February 22, 2000
13
<PAGE> 14
METRETEK TECHNOLOGIES, INC.
FORM 8-K
DATED FEBRUARY 4, 2000
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 Securities Purchase Agreement, dated as of December 9, 1999, as
amended December 21, 1999, by and among Metretek Technologies,
Inc. and certain purchasers of securities of Metretek
Technologies, Inc., (the "Unit Purchasers"). (Incorporated by
reference to Exhibit 4.1 to the Company's Form 8-K filed on
December 22, 1999).
4.2 Second Restated Certificate of Incorporation of Metretek
Technologies, Inc. (Incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement on Form S-3, Registration
No. 333-96369).
4.3 Form of Common Stock Purchase Warrant issued to the Unit
Purchasers. (Incorporated by reference to Exhibit 4.3 to the
Company's Form 8-K filed on December 22, 1999).
4.4 Registration Rights Agreement, dated as of December 9, 1999, by
and among Metretek Technologies, Inc. and the Unit Purchasers.
(Incorporated by reference to Exhibit 4.4 to the Company's Form
8-K filed on December 22, 1999).
4.5 Amendment No. 2 to Rights Agreement, dated as of December 9,
2000, between Metretek Technologies, Inc. and American Securities
Transfer & Trust, Inc. (Incorporated by reference to Exhibit 1 to
Metretek's Form 8-A/A Amendment No. 4 filed December 22, 1999).
10.1 Third Amendment to Loan and Security Agreement and Loan
Documents, dated as of December 16, 1999 but effective as of
December 8, 1999, among National Bank of Canada, Metretek
Technologies, Inc., Southern Flow Companies, Inc., Metretek,
Incorporated and Sigma VI, Inc. (Incorporated by reference to
Exhibit 10.1 to the Company's Form S-3, Registration No.
333-96369).
10.2 Metretek Technologies, Inc. 1998 Stock Incentive Plan, amended
and restated as of February 3, 2000.
<PAGE> 1
EXHIBIT 10.2
METRETEK TECHNOLOGIES, INC.
1998 STOCK INCENTIVE PLAN
(AMENDED AND RESTATED AS OF FEBRUARY 3, 2000)
SECTION 1. PURPOSES. The purposes of the Metretek Technologies, Inc.
1998 Stock Incentive Plan (the "Plan") are to promote the long-term interests of
Metretek Technologies, Inc. and its Subsidiaries by (i) attracting, retaining
and rewarding high-quality executives and other key employees and directors of,
and advisors and consultants to, the Company and its Subsidiaries, (ii)
motivating such persons by enabling them to acquire or increase a proprietary
interest in the Company in order to align the interests of such persons with the
Company's stockholders, and (iii) providing such persons with incentives to
pursue and participate in the long-term growth, profitability and financial
success of the Company.
SECTION 2. DEFINITIONS. In addition to the terms defined elsewhere in
the Plan, the following terms as used in the Plan shall have the meanings set
forth below:
(a) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Performance Award, Dividend Equivalent or Other
Stock-Based Award, together with any other right or interest granted to a
Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract or other
instrument or document evidencing any Award which may, but need not, be executed
or acknowledged by a Participant.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" has the meaning given to such term in Section
9(b)(i) of the Plan.
(e) "Change in Control Price" has the meaning given to such term in
Section 9(b)(ii) of the Plan.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, together with the rules, regulations and interpretations
promulgated thereunder, and any successor provisions, rules, regulations and
interpretations.
(g) "Committee" means a committee of directors designated by the Board,
in its discretion, to administer the Plan; provided, however, that, unless
otherwise determined by the Board, the Committee shall consist of two or more
directors, each of whom shall be (i) a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act, unless administration of the Plan
by "non-employee directors" is not then required in order for exemptions under
Rule 16b-3 to apply to transactions under the Plan, and (ii) an "outside
director" as defined under Section 162(m) of the Code, unless administration of
the Plan by "outside directors" is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code.
(h) "Company" means Metretek Technologies, Inc., a Delaware
corporation, together with any successor thereto.
(i) "Covered Employee" means any individual who is or, in the
determination of the Board, is likely to be a "covered employee" within the
meaning of Section 162(m) of the Code.
(j) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive cash, Shares, other Awards or other property
equal in value to dividends paid with respect to a specified number of Shares,
or other periodic payments.
(k) "Director" means any individual who is a member of the Board.
<PAGE> 2
(l) "Director Option" means a Non-Qualified Stock Option automatically
granted to each Non-Employee Director pursuant to Section 6(b)(v) of the Plan
without any action by the Board.
(m) "Dividend Equivalent" means a right granted to a Participant under
Section 6(g) hereof to receive cash, Shares, other Awards or other property
equal in value to dividends paid with respect to a specific number of Shares, or
other periodic payments.
(n) "Effective Date" means June 12, 1998.
(o) "Eligible Person" means an officer, employee or director of, or an
advisor or consultant to, the Company or a Subsidiary.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, together with the rules, regulations and
interpretations promulgated thereunder, and any successor provisions, rules,
regulations and interpretations.
(q) "Fair Market Value" means the fair market value of the property or
other item being valued, as determined by the Board in its sole discretion or by
procedures established by the Board; provided, however, that the fair market
value of Shares as of any date means the closing sale price of the Shares on
such date or, if there are no sales on such date, then the closing sale price of
the Shares on the most recent date prior to such date on which there was a sale
of Shares, as reported on the Nasdaq Stock Market, on any other quotation system
approved by the National Association of Securities Dealers, Inc. or on any
national securities exchange on which Shares are then listed or quoted, which
constitutes the primary trading market for the Shares.
(r) "Incentive Stock Option" or "ISO" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor provision
thereto and is expressly designated as an Incentive Stock Option.
(s) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(t) "Non-Employee Director" means a Director who is not an officer or
employee of the Company or any of its Subsidiaries on the applicable date.
(u) "Non-Qualified Stock Option" or "NQSO" means an Option that is not
intended to be an Incentive Stock Option.
(v) "Option" means a right granted under Section 6(b) hereof to
purchase Shares or other Awards at a specific price during a specific time.
(w) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(x) "Participant" means any Eligible Person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.
(y) "Performance Award" means a right granted under Section 8 hereof to
receive Awards based upon performance criteria specified by the Board.
(z) "Person" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
(aa) "Plan" means the Metretek Technologies, Inc. 1998 Stock Incentive
Plan, as amended from time to time in accordance with the provisions hereof.
(bb) "Restricted Stock" means any Shares granted under Section 6(d)
hereof.
(cc) "Related Party" has the meaning given to such term in Section
9(b)(iii) hereof.
<PAGE> 3
(dd) "Rule 16b-3" means Rule 16b-3 as from time to time in effect and
applicable to the Plan and the Participants, as promulgated and interpreted by
the SEC under Section 16 of the Exchange Act, including any successor rule
thereto.
(ee) "SEC" means the Securities and Exchange Commission or any
successor thereto and shall include the staff thereof.
(ff) "Shares" means shares of common stock, par value $.01 per share,
of the Company, or such other securities of the Company as may be designated by
the Board from time to time.
(gg) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Section 6(c) hereof, to be paid an amount measured by the
appreciation in the Fair Market Value of shares from the date of grant to the
date of exercise.
(hh) "Subsidiary" means any corporation (whether now or hereafter
existing) which, on the date of determination, qualifies as a subsidiary
corporation of the Company under Section 425(f) of the Code, and any successor
thereto.
(ii) "Voting Securities" has the meaning given to such term in Section
9(b)(iv) hereof.
SECTION 3. ADMINISTRATION.
(a) Authority of the Board. The Plan shall be administered by
the Board. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Board by the Plan,
the Board shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an Eligible Person;
(iii) determine the number of Awards to be granted, the number of Shares or
amount of cash or other property to which an Award will relate, the terms and
conditions of any Award (including, but not limited to, any exercise price,
grant price or purchase price, any exercise or vesting periods, any limitation
or restriction, any schedule for lapse of limitations, forfeiture restrictions
or restrictions on exercisability or transferability, and any accelerations or
waivers thereof, based in each case on such considerations as the Board shall
determine), and all other matters to be determined in connection with an Award;
(iv) determine whether, to what extent and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property, or Awards may be accumulated, vested, exchanged, surrendered,
canceled, forfeited or suspended; (v) determine whether, to what extent and
under what circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the Participant or of the Committee;
(vi) interpret and administer the Plan and any instrument or agreement relating
to, or Award made under, the Plan; (vii) prescribe the form of each Award
Agreement, which need not be identical for each Participant; (viii) adopt,
amend, suspend, waive or rescind such rules and regulations and appoint such
agents as it shall deem necessary or desirable for the administration of the
Plan; (ix) correct any defect or supply any omission or reconcile any
inconsistency, and to construe and interpret the Plan, the rules and
regulations, any Award Agreement or other instrument entered into or Award made
under the Plan; and (x) make any other determinations and decisions and take any
other action that the Board deems necessary or desirable for the administration
of the Plan. Notwithstanding anything else contained in the Plan to the
contrary, neither the Committee, if any, nor the Board shall have any discretion
regarding whether an Non-Employee Director shall receive a Director Option
pursuant to Section 6(b)(v) hereof or regarding the terms of any Director Option
which are set forth in Section 6(b)(v) hereof.
(b) Exercise of Authority. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Board, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, its
Subsidiaries, Eligible Persons, Participants, holders or beneficiaries of
Awards, and stockholders. The express grant of any specific power to the Board,
and the taking of any action by the Board, shall not be construed as limiting
any power or authority of the Board. The Board may delegate to officers or
managers of the Company or any Subsidiary, or committees thereof, the authority,
subject to such terms as the Board shall determine, to perform such functions,
including administrative functions, as the Board may determine, to the extent
that such delegation will not result in the loss of an exemption under Rule
16b-3 for Awards granted to Participants subject to Section 16 of the Exchange
Act in respect of the Company and will not cause Awards intended to qualify as
"performance-based compensation" under
<PAGE> 4
Section 162(m) of the Code of the Code to fail to so qualify. The Board may
appoint agents to assist it in administering the Plan.
(c) Delegation to a Committee. Notwithstanding anything to the
contrary contained herein, the Board may at any time, or from time to time,
appoint a Committee and delegate to such Committee the authority of the Board to
administer the Plan, including to the extend provided by the Board, the power to
further delegate such authority. Upon such appointment and delegation, any such
Committee shall have all the powers, privileges and duties of the Board in the
administration of the Plan to the extent provided in such delegation, except for
the power to appoint members of the Committee and to terminate, modify or amend
the Plan. The Board may from time to time appoint members of any such Committee
in substitution for or in addition to members previously appointed, may fill
vacancies in such Committee and may discharge such Committee. Any such Committee
shall hold its meetings at such times and places as it shall deem advisable. A
majority of members shall constitute a quorum and all determinations shall be
made by a majority of such quorum. Any determination reduced to writing and
signed by all of the members shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held.
(d) Limitation of Liability. The Board, the Committee, if any,
and each member of each shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him or her by any executive
officer, other officer or employee of the Company or a Subsidiary, the Company's
independent auditors, legal counsel, other consultants or any other agents
assisting in the administration of the Plan. Members of the Board and of the
Committee, if any, and any officer or employee of the Company or a Subsidiary
acting at the direction or on behalf of the Board and of the Committee, if any,
shall not be personally liable for any action or determination taken or made in
good faith with respect to the Plan, and shall, to the extent permitted by law,
be fully indemnified and protected by the Company with respect to any such
action or determination.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in
Section 4(b) hereof, the total number of Shares with respect to which Awards may
be granted under the Plan shall be 750,000. If any Shares covered by an Award
granted under the Plan, or to which such an Award relates, are forfeited, or if
an Award otherwise terminates or is canceled without the delivery of Shares, or
if payment is made to the Participant in the form of cash or other property
other than Shares, then the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the aggregate number
of Shares with respect to which Awards may be granted, to the extent of any such
settlement, forfeiture, termination or cancellation, shall again be, or shall
become, Shares with respect to which Awards may be granted, to the extent
permissible under Rule 16b-3. In the event that any Option or other Award
granted hereunder is exercised through the delivery of Shares, the number of
Shares available for Awards under the Plan shall be increased by the number of
Shares surrendered, to the extent permissible under Rule 16b-3. For purposes of
this Section 4(a), the number of Shares to which an Award relates shall be
counted against the number of Shares reserved and available under the Plan at
the time of grant of the Award, unless such number of Shares cannot be
determined at that time, in which case the number of Shares actually distributed
pursuant to the Award shall be counted against the number of Shares reserved and
available under the Plan at the time of distribution; provided, however, that
Awards related to or retroactively added to, or granted in tandem with,
substituted for or converted into, other Awards shall be counted or not counted
against the number of Shares reserved and available under the Plan in accordance
with procedures adopted by the Committee so as to ensure appropriate counting
but avoid double counting; and provided, further, that the number of Shares
deemed to be issued under the Plan upon exercise of an Option or an Other
Stock-Based Award in the nature of a stock purchase right shall be reduced by
the number of Shares surrendered by the Participant in payment of the exercise
or purchase price of the Award.
(b) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities or other
property), recapitalization, forward or reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, exchange of Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such that an
adjustment is necessary or determined by the Board to be appropriate in order to
prevent dilution or enlargement of the Participants' rights under the Plan, then
the Board shall proportionately adjust any or all of (i) the number and kind of
Shares or other securities of the Company (or number and kind of other
securities or property) which may thereafter be issued in connection with
Awards; (ii) the number and kind of Shares or other securities of the Company
(or number and kind of other securities or property) issued or issuable with
respect to outstanding Awards; and (iii) the grant, exercise or purchase price
with respect to any Award; provided, in each case, that with respect to Awards
of Incentive Stock Options, no such adjustment shall be authorized to the extent
that such authority would cause the Plan to violate Section 422(b)(1) of the
Code, as from time to
<PAGE> 5
time amended. If, pursuant to the preceding sentence, an adjustment is made to
outstanding Options held by Participants, a corresponding adjustment shall be
made to outstanding Director Options and if, pursuant to the preceding sentence,
an adjustment is made to the number of Shares authorized for issuance under the
Plan, a corresponding adjustment shall be made to the number of Shares subject
to each Director Option thereafter granted pursuant to Section 6(b)(v).
(c) Sources of Shares. Any Shares delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued Shares or of
treasury Shares, including Shares repurchased by the Company for purposes of the
Plan.
(d) Annual Limits on Awards. Subject to adjustment as provided
in Section 4(b) hereof the maximum number of Shares subject to Awards in any
combination that may be granted during any one fiscal year of the Company to any
one Participant shall be limited to 100,000.
SECTION 5. ELIGIBILITY. Awards may be granted under the Plan only to
Eligible Persons, except that (a) only Eligible Persons who are employees of the
Company or a Subsidiary shall be eligible for the grant of Incentive Stock
Options, and (b) only Non-Employee Directors shall receive Director Options in
accordance with Section 6(b)(v) hereof.
SECTION 6. SPECIFIC TERMS OF AWARDS.
(a) General. Subject to the provisions of the Plan and any
applicable Award Agreement, Awards may be granted as set forth in this Section
6. In addition, the Board may impose on any Award or the exercise thereof, at
the date of grant or thereafter (subject to the terms of Section 10 hereof),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Board shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment by the Participant and terms
permitting a Participant to make elections pertaining to his Award. Subject to
the provisions of the Plan, the Board shall have the right to accelerate the
vesting or exercising of any Award granted under the Plan. Except as provided in
Section 7(a) hereof, or as required by applicable law, Awards shall be granted
for no consideration other than prior and future services.
(b) Options. Subject to the provisions of the Plan, the Board
is authorized to grant Options to Eligible Persons on the following terms and
conditions:
(i) Exercise Price. The exercise price per Share of
an Option shall be determined by the Board; provided, however, that,
except as provided in Section 7(a), such exercise price shall not be
less than the Fair Market Value of a Share on the date of grant of such
Option.
(ii) Option Term. The term of each Option shall be
determined by the Board.
(iii) Methods of Exercise. The Board shall determine
the time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on achievement of
performance goals and/or service requirements), the methods by which
such exercise price may be paid or deemed to be paid, and the form of
such payment, including, without limitation, cash, Shares, other
outstanding Awards or other property (including notes or other
contractual obligations of Participants to make payment on a deferred
bases, to the extent permitted by law) or any combination thereof,
having a Fair Market Value equal to the exercise price.
(iv) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
material respects with the provisions of Section 422 of the Code or any
successor provision thereto. Incentive Stock Options may only be issued
to employees of the Company or a Subsidiary. Anything in the Plan to
the contrary notwithstanding, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify either the Plan or any ISO under
Section 422, unless the Participant has first requested the change that
will result in such disqualification.
(v) Director Options.
(A) Annual Grants. Notwithstanding any other
provision in the Plan to the contrary, each Non-Employee Director shall
be automatically granted, without action on the part of the Company,
the Board, the Committee or any other person, a Director Option to
purchase 10,000 Shares on the date of each
<PAGE> 6
annual meeting of stockholders of the Company beginning with the 1998
Annual Meeting of Stockholders; provided, however, that Director
Options shall not be granted to a Non-Employee Director in a given year
if, during the 6-month period prior to and including the date the
Director Option would otherwise be granted pursuant to this Section
6(b)(v), such Non-Employee Director was granted a Director Option
pursuant to clause (B) below.
(B) Grant Upon Initial Election. A Director
Option to purchase 20,000 Shares shall be automatically granted to each
individual who is first elected or appointed to serve as a member of
the Board after the Effective Date and who, as of the time of such
election or appointment, is a Non-Employee Director.
(C) Terms. All Director Options shall be
NQSOs which shall be granted for no consideration other than services.
The exercise price per Share purchasable under a Director Option shall
be equal to the Fair Market Value of the Shares on the date of grant of
the Director Option. Each Director Option shall be exercised by giving
written notice of exercise to the Company accompanied by payment in
full of the Exercise price in cash (including by check) or by surrender
of Shares acquired by the Director at least six months prior to the
Exercise Date, which Shares have a Fair Market Value at the time of
delivery equal to the Exercise price, or a combination of a cash
payment and such a surrender of Shares.
(D) Exercisability. A Director Option shall
be exercisable and fully vested immediately upon grant and shall
continue to be exercisable until the earlier of (1) 10 years after the
date of grant, (2) a number of years after the Non-Employee Director
ceases to serve as a member of the Board equal to the number of years
(including any partial years) the Non-Employee Director served as a
member of the Board, if a Non-Employee Director ceases to serve as a
member of the Board for any reason other than dismissal for cause, and
(3) at the time the Non-Employee Director ceases to serve as a member
of the Board, if he is dismissed for cause; provided, however, that, if
a Non-Employee Director ceases serving as a member of the Board and,
immediately thereafter, he is employed by the Company or a Subsidiary,
then, solely for purposes of this Section 6(b)(v), he shall not be
deemed to have ceased to serve as a member of the Board at any time,
and his continued employment by the Company or any Subsidiary shall be
deemed to be continued service as a member of the Board for purposes of
the Plan (except that such former Board member shall not be eligible
for additional grants and Director Options under the Plan); and
provided, further, that a Director Option shall be exercisable after
the date a Non-Employee Director ceases to serve as a member of the
Board (unless the Non-Employee Director continues to be employed by the
Company or a Subsidiary under the preceding proviso) only to the extent
such Director Option was exercisable at such date.
(E) Non-Exclusivity. The automatic grant of
Director Options under this Section 6(b)(v) shall not be exclusive and,
in addition thereto, additional Options or other Awards may be granted
to such Non-Employee Director in the discretion of the Board or the
Committee of such kinds, in such amounts and at such times as the Board
or the Committee shall decide in its sole discretion.
(c) Stock Appreciation Rights. The Board is authorized to
grant Stock Appreciation Rights to Eligible Persons on the following terms and
conditions:
(i) Right to Payment. A Stock Appreciation Right
shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market Value
of a Share on the date of exercise (or, in the case of a Limited SAR,
the Fair Market Value determined by reference to the Change in Control
Price), or, if the Board shall so determine in the case of any such
right other than one related to any Incentive Stock Option, at any time
during a specified period before or after the date of exercise, over
(B) the grant price of the Stock Appreciation Right as determined by
the Board as of the date of grant of the Stock Appreciation Right,
which, except as provided in Section 7(a) hereof, shall not be less
than the Fair Market Value of a Share on the date of grant.
(ii) Other Terms. The term, methods of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be determined by the Board. Limited SARs that
may only be exercised in connection with a Change in Control or other
event as specified by the Board may be granted on such terms, not
inconsistent with this Section 6(c), as the Board may determine. SARs
and Limited SARs may be awarded either on a free-standing basis or in
tandem with other Awards.
<PAGE> 7
(d) Restricted Stock. The Board is authorized to grant
Restricted Stock to Eligible Persons on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be
subject to such restrictions on transferability, risk of forfeiture and
other restrictions as the Board may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive dividends thereon), which restrictions may lapse
separately or in combination at such times, under such circumstances
(including based on the achievement of performance goals and/or future
service requirements), in such installments, or otherwise, as the Board
shall determine at the time of grant or thereafter. Except to the
extent restricted under the terms of the Plan and any Award Agreement
relating to the Restricted Stock, a Participant granted Restricted
Stock shall have all of the rights of a stockholder, including the
right to vote the Restricted Stock and the right to receive dividends
thereon (subject to any mandatory reinvestment or other requirement
imposed by the Board). During the restricted period applicable to the
Restricted Stock, subject to Section 11 hereof, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by
the Committee at the time of grant or thereafter, upon termination of
employment or service on the Board (as determined under criteria
established by the Board) during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided, however, that
restrictions on Restricted Stock shall be waived in whole or in part in
the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part restrictions on
or the forfeiture of Restricted Stock.
(iii) Certificates for Shares. Restricted Stock
granted under the Plan may be evidenced in such manner as the Board
shall determine, including, without limitation, issuance of
certificates representing Shares. Certificates representing Shares of
Restricted Stock shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, and the Board may
require that the Company retain physical possession of the
Certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the
grant of an Award of Restricted Stock, the Board may require that any
cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Board, Shares distributed in connection with a stock
split or stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Shares or
other property has been distributed.
(e) Deferred Stock. The Board is authorized to grant Deferred
Stock to Eligible Persons on the following terms and conditions:
(i) Issuance and Limitations. Delivery of Shares
shall occur upon expiration of the deferral period specified for the
Award of Deferred Stock by the Board. In addition, an Award of Deferred
Stock shall be subject to such limitations (including a risk of
forfeiture) as the Committee may impose (if any), which limitations may
lapse at the expiration of the deferral period or at other specified
times (including based on achievement of performance goals and/or
future service requirements, separately or in combination, in
installments or otherwise, as the Committee shall determine at the time
of grant or thereafter. A Participant awarded Deferred Stock shall have
no voting rights and shall have no rights to receive dividends in
respect of Deferred Stock, unless and only to the extent that the
Committee shall award Dividend Equivalents in respect of such Deferred
Stock.
(ii) Forfeiture. Except as otherwise determined by
the Board upon termination of employment with or service to the Company
(as determined under criteria established by the Board) during the
applicable deferral period or portion thereof to which forfeiture
conditions apply, Deferred Stock that is at that time subject to
deferral (other than a deferral at the election of the Participant)
shall be forfeited; provided, however, that the Board may provide, by
rule or regulation or in any Award Agreement or may determine in any
individual case, that restriction or forfeiture conditions relating to
Deferred Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Board may in
other cases waive in whole or in part the forfeiture of Deferred Stock.
<PAGE> 8
(f) Bonus Shares and Awards in Lieu of Obligations. The Board
is authorized to grant Shares or other Awards as a bonus to Eligible Persons or
in lieu of obligations to pay cash or deliver other property under the Plan or
under other plans or compensatory arrangements (including salary requirements),
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Board to the
extent necessary to ensure that acquisitions of Shares or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Shares or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Board.
(g) Dividend Equivalents. The Board is authorized to grant
Dividend Equivalents to a Participant. Dividend Equivalents shall confer upon
the Participant rights to receive, currently or on a deferred basis, cash,
Shares, other Awards or other property equal in value to dividends paid with
respect to a specified number of Shares, or otherwise, as determined by the
Board. The Board may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Shares or Awards or other investment vehicles, and subject to such
restrictions or transferability and risk of forfeiture, as the Board may
specify. Dividend Equivalents may be awarded on a free-standing basis or with
another Award.
(h) Other Stock-Based Awards. The Board is authorized, subject
to limitations under applicable law, to grant to Participants such other Awards
that are denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or related to, Shares, as deemed by the Board to be
consistent with the purposes of the Plan, including, without limitation,
purchase rights for Shares, Shares awarded which are not subject to any
restrictions or conditions, convertible or exchangeable debt securities or other
rights convertible or exchangeable into Shares, Awards with value and payment
contingent upon performance of the Company or any other factors designated by
the Board, and Awards valued by reference to the book value of Shares or the
value of securities of or the performance of specified Subsidiaries as the Board
determines. The Board shall determine the terms and conditions of such awards.
Except as provided in Section 7(a) hereof, Shares or securities delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods and in such forms, including, without limitation, cash, Shares,
other outstanding Awards or other property or any combination thereof, as the
Committee shall determine. Cash awards, as an element of or supplement to any
other Award under the Plan, may also be granted pursuant to this Section 6(h).
(i) Exchange Provisions. The Board may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Shares,
another Award or other property, based on such terms and conditions as the Board
shall determine and communicate to the Participant at the time that such offer
is made.
SECTION 7. GENERAL TERMS OF AWARDS.
(a) Stand-Alone, Additional, Tandem and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Board, be granted
either alone or in addition to, in tandem with or in substitution or exchange
for, any other Award granted under the Plan or any award granted under any other
plan of the Company or any Subsidiary (subject to the terms of Section 10
hereof), or any other right of a Participant to receive payment from the Company
or any Subsidiary. Such additional, tandem, substitute or exchange Awards may be
granted at any time. If an Award is granted in substitution or exchange for
another Award or award, the Board shall require the surrender of such other
Award or award in consideration for the grant of the new Award. The exercise
price of any Option, the grant price of any Stock Appreciation Right or the
purchase price of any other Award conferring a right to purchase Share
retroactively granted in tandem with an outstanding Award or award shall be
either not less than the Fair Market Value of Shares at the date of grant of the
later Award or equal to the Fair Market Value of Shares at the date of grant of
the earlier Award or award. Notwithstanding the foregoing, the exercise price of
any Option, grant price of any Stock Appreciation Right or purchase price of any
other Award conferring a right to purchase Shares which is granted in exchange
or substitution for an option, stock appreciation right or other award granted
by the Company (other than in connection with a transaction described in Section
9(a) hereof) shall not be less than the exercise price, grant price or purchase
price of the exchanged or substituted Option, Stock Appreciation Right or other
Award, and outstanding Awards shall not be amended (other than in connection
with a transaction described in Section 4(b) hereof to reduce the exercise
price, grant price or purchase price of any such Award.
(b) Decisions Required to be Made by the Board. Other
provisions of the Plan and any Award Agreement notwithstanding, if any decision
regarding an Award or the exercise of any right by a Participant, at any time
such Participant is subject to Section 16 of the Exchange Act or is a Covered
Employee under Section 162(m) of the Code, is required to be made or approved by
the Board in order that a grant to or transaction by such Participant will be
exempt
<PAGE> 9
under Rule 16b-3 or qualify as "qualified performance-based compensation" for
purposes of Section 162(m) of the Code then the Board shall retain full and
exclusive power and authority to make such decision or to approve or disapprove
any such decision by the Participant.
(c) Term of Awards. The term of each Award shall be for such
period as may be determined by the Board; provided, however, that in no event
shall the term of any Incentive Stock Option, or a Stock Appreciation Right
granted in tandem therewith, exceed a period of ten years from the date of its
grant.
(d) Form and Timing of Payment of Awards. Subject to the terms
of the Plan and any applicable Award Agreement, payments or substitutions to be
made by the Company or a Subsidiary upon the grant, exercise or settlement of an
Award may be made in such forms as the Board shall determine at the time of
grant or thereafter (subject to the terms of Section 10 hereof), including,
without limitation, cash, Shares, other Awards or other property or any
combination thereof, and may be made in a single payment or substitution, in
installments or on a deferred basis, in each case in accordance with rules and
procedures established by the Board. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments. The
settlement of any Award may be accelerated, and cash paid in lieu of Shares in
connection with such settlement, in the discretion of the Board or upon
occurrence of one or more specified events (in addition to a Change in Control).
(e) Exemptions from Section 16(b) Liability. It is the intent
of the Company that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be exempt
under Rule 16b-3 (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of the Plan or
any Award Agreement does not comply with the requirements of Rule 16b-3 as then
applicable to any such transaction, such provision shall be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).
(f) Share Certificates. All certificates for Shares delivered
under the terms of the Plan shall be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under federal or state
securities laws, rules and regulations thereunder, and the rules of any national
securities exchange, the Nasdaq Stock Market or any other automated quotation
system on which Shares are listed or quoted. The Board may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions or any other restrictions or limitations that may be
applicable to Shares. In addition, during any period in which Awards or Shares
are subject to restrictions or limitations under the terms of the Plan or any
Award Agreement, or during any period during which delivery or receipt of an
Award or Shares has been deferred by the Board or a Participant, the Board may
require any Participant to enter into an agreement providing that certificates
representing Shares issuable or issued pursuant to an Award shall remain in the
physical custody of the Company or such other Person as the Committee may
designate.
SECTION 8. PERFORMANCE AWARDS.
(a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Section 8(b)
hereof in the case of a Performance Award intended to qualify under Section
162(m) of the Code.
(b) Performance Awards Granted to Designated Covered
Employees. If the Board determines that a Performance Award to be granted to an
Eligible Person who is designated by the Board as likely to be a Covered
Employee should qualify as "performance-based compensation" for purposes of
Section 162(m) of the Code, the Board shall comply with the pre-established
performance goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance
goals for such Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each of such
criteria, as specified by the Board consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet the requirements
of Section 162(m) of the Code, including the requirement that the level or
levels of performance targeted by the Board result in the achievement of
performance goals being "substantially uncertain." The Board may determine that
such achievement of performance be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise
<PAGE> 10
and/or settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to anyone Participant or to different Participants.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis, and/or for specified
Subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the Board
in establishing performance goals for such Performance Awards: (1) earnings per
share; (2) revenues; (3) cash flow; (4) return on investment; (5) return on net
assets, assets, capital or equity; (6) economic value added; (7) operating
margin; (8) net income; (9) pretax earnings; (10) pretax earnings before
interest, depreciation and amortization; (11) pretax operating earnings after
interest expense and before extraordinary or special items; (12) operating
earnings; (13) total stockholder return; (14) price of the shares (and changes
thereof); and (15) any of the above goals as compared to the performance of a
published or special index deemed applicable by the Board including, but not
limited to, the Standard & Poor's 500 Stock Index or a group of comparable
companies.
(iii) Performance Period; Timing for Establishing
Performance Goals. Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up to 10
years, a specified by the Board. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable to
such Performance Awards or at such other date as may be required or permitted
for "performance-based compensation" under Section 162(m) of the Code.
(iv) Performance Award Pool. The Board may establish
a Performance Award pool, which shall be an unfunded pool for purposes of
measuring performance of the Company in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof during the given performance period, as
specified by the Board in accordance with Section 8(b)(iii) hereof. The Board
may specify the amount of the Performance Award pool as a percentage of any such
business criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to such
business criteria.
(v) Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Board. The Board may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable to a Covered Employee in respect of a Performance Award
subject to this Section 8(b). The Board shall specify the circumstances in which
such Performance Awards shall be paid or forfeited in the event of termination
of employment by the Participant prior to the end of a performance period or
settlement of Performance Awards.
(c) Written Determinations. All determinations by the Board as
to the establishment of performance goals, the amount of any Performance Award
pool or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b) hereof shall
be made in writing in the case of any Award intended to qualify under Section
162(m) of the Code. The Board may not delegate any responsibility relating to
such Performance Awards.
(d) Status of Section 8(b) Awards under Section 162(m) of the
Code. It is the intent of the Company that Performance Awards under Section 8(b)
granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Section 162(m) of the Code and the regulations
thereunder shall, if so designated by the Board, constitute "performance-based
compensation" within the meaning of Section 162(m) of the Code of the Code and
the regulations thereunder. The foregoing notwithstanding, because the Board
cannot determine with certainty whether a given participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that fiscal year. If
any provision of the Plan as in effect on the date of adoption or any agreements
relating to performance Awards or Annual Incentive Awards that are designated as
intended to comply with Section 162(m) of the Code does not comply or is
inconsistent with the requirements of Section 162(m) of the Code, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements.
<PAGE> 11
SECTION 9. CHANGE IN CONTROL.
(a) Acceleration of Exercisability and Lapse of Restrictions
and Cash-Out of Awards upon "Change in Control". In the event of a Change in
Control, subject only to the applicable restrictions set forth in Section 11(a)
hereof, the following provisions shall apply unless otherwise provided in the
Award Agreement, and:
(i) All outstanding Awards, pursuant to which the
Participant may have a right to exercise which was not previously exercisable
and vested, shall become fully exercisable and vested as of the time of the
Change in Control and shall remain exercisable and vested for the balance of the
stated term of such Award without regard to any termination of employment or
services by the Participant.
(ii) Unless the right to lapse of restrictions or
limitations is waived or deferred by a Participant prior to such lapse, all
restrictions (including risks of forfeiture and deferrals) on outstanding Awards
subject to restrictions or limitations under the Plan shall lapse and such
Awards shall be deemed fully vested as of the time of the Change in Control.
(iii) All performance criteria, goals and other
conditions to payment of Awards under which payments of cash, Shares or other
property are subject to conditions shall be deemed to be achieved or fulfilled
as of the time of the Change in Control.
(iv) For a period of 60 days following a Change in
Control, each Participant may elect to surrender any outstanding Award and to
receive, in full satisfaction therefor, a cash payment equal to the value of
such Award calculated on the basis of the Change in Control Price of any Shares
or the Fair Market Value of any property other than Shares relating to such
Award; provided, however, that in the case of an Incentive Stock Option, or a
Stock Appreciation Right granted in tandem therewith, the payment shall be based
upon the Fair Market Value of Shares on the date which the Change in Control
occurred; provided further, however, that in the case of a Change in Control
described in Section 9(b)(i)(C) or (D) hereof, the payment described in this
sentence shall not necessarily be made in cash but instead shall be made in the
same form (i.e., cash, Shares, other securities or combination thereof) as
holders of Shares receive in exchange for their Shares in the transaction that
results in the Change in Control. In the event that an Award is granted in
tandem with another Award such that the Participant's right to payment for such
Award is an alternative to payment of another Award, the Participant electing to
surrender any such tandem Award shall surrender all alternative Awards related
thereto and receive payment for the Award which produces the highest payment to
the Participant.
(b) Definition of Certain Terms. For purposes of this Section
9, the following definitions, in addition to those set forth in Section 2, shall
apply:
(i) "Change in Control" means and shall be deemed to
have occurred if:
(A) any Person, other than the Company or a
Related Party, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act, except that a Person shall be deemed to be the
beneficial owner of all Shares that such Person has the right to acquire
pursuant to any agreement or arrangement or upon exercise, conversation rights,
warrants, options or otherwise, without regard to the 60 day period referred to
in Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting
Securities representing 25% or more of the total voting power of all the then
outstanding Voting Securities, except that there shall be excluded from the
number of Voting Securities deemed to be beneficially owned by a Person a number
of Voting Securities representing not more than 10 percent of the then
outstanding voting power if such Person is (1) eligible to file a Schedule 13G
pursuant to Rule 13-1(b)(1) under the Exchange Act with respect to Voting
Securities or (2) an underwriter who becomes the beneficial owner of more than
20% of the then outstanding Voting Securities pursuant to a firm commitment
underwriting agreement with the Company; or
(B) the individuals who, as of the effective
date of the Plan, constitute the members of the Board together with those
directors who are first elected subsequent to such date and whose election by
the Board or nomination for election by the Company's stockholders was approved
by a vote of at least a majority of the members of the Board then still in
office who were either directors as of the effective date of the Plan or whose
election or nomination for election was previously so approved (the "Continuing
Directors"), cease for any reason to constitute at least a majority of the
members of the Board; or
<PAGE> 12
(C) the consummation of a merger,
consolidation, recapitalization or reorganization of the Company, reverse spilt
of any class of Voting Securities, or in an acquisition of securities or assets
by the Company, other than (1) any such transaction which would result in at
least 75% of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
beneficially owned by at least 75% of the holders of outstanding Voting
Securities immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not
substantially altered in the transaction, or (2) any such transaction which
would result in a Related Party beneficially owning more than 50% of the voting
securities of the surviving entity outstanding immediately after such
transaction; or
(D) the stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
other than (1) any such transaction which would result in a Related Party owning
or acquiring more than 50 percent of the assets owned by the Company immediately
prior to the transaction, or (2) a sale or disposition immediately after which
such assets will be owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the common
stock of the Company immediately prior to such sale or disposition.
(E) any other event occurs which the Board
determines, in its discretion, would materially alter the structure of the
Company or its ownership.
(ii) "Change in Control Price" means, with respect to
a Share, the higher of (A) the highest Fair Market Value of the Shares at any
time during the 60 calendar days preceding and the 60 days following the Change
in Control; or (B) the highest price paid per Share in a transaction which
either (1) results in a Change in Control or (2) would be consummated but for
another transaction which results in a Change in Control and, if it were
consummated, would result in a Change in Control. With respect to clause (B) in
the preceding sentence, the "price paid" will be equal to the sum of (1) the
face amount of any portion of the consideration consisting of cash or cash
equivalents and (2) the Fair Market Value of any portion of the consideration
consisting or real or personal property other than cash or cash equivalents, as
established by an independent appraiser selected by the Board.
(iii) "Related Party" means (A) a Subsidiary of the
Company; or (B) an employee or group of employees of the Company or any
majority-owned Subsidiary of the Company; or (C) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
majority-owned Subsidiary of the Company; or (D) an entity owned directly or
indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of Voting Securities.
(iv) "Voting Securities or Security" means any
securities of the Company which carry the right to vote generally in the
election of directors.
SECTION 10. AMENDMENTS TO AND TERMINATION OF THE PLAN AND AWARDS. The
Board may amend, alter, suspend, discontinue or terminate the Plan or the
Committee's authority to grant Awards under the Plan without the consent of
stockholders or Participants, except that any amendment, alteration, suspension,
discontinuation or termination shall be subject to approval of the Company's
stockholders not later than the annual meeting next following such Board action
if stockholder approval is required by any federal or state law or regulation or
the rules of the Nasdaq Stock Market or on any national securities exchange,
stock market or automated quotation system on which the Shares are then listed,
traded or quoted, or if the Board in its discretion determines that obtaining
such stockholder approval is for any reason advisable; provided, however, that,
without the consent of the Participant, no amendment, alteration, suspension,
discontinuation or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him. The
Board may waive any conditions or rights under, amend any terms of, or amend,
alter, suspend, discontinue or terminate, any Award theretofore granted,
prospectively or retrospectively; provided, however, that, without the consent
of the Participant, no amendment, alteration, suspension, discontinuation or
termination of any Award may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him.
SECTION 11. GENERAL PROVISIONS.
(a) Compliance with Legal and Other Requirements. The Company
may, to the extent deemed necessary or advisable by the Board, postpone the
issuance or delivery of Shares or payment of other benefits under any Award
until completion of such registration or qualification of such Shares or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to the Nasdaq Stock Market or any national
<PAGE> 13
securities exchange, automated quotation system or any other stock exchange or
stock market upon which the Shares or other securities of the Company are listed
or quoted, or compliance with any other obligation of the Company, as the Board
may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Shares or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The
foregoing notwithstanding, in connection with a Change in Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement of other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Change in Control.
(b) Transferability. No Award granted under the Plan, nor any
other rights acquired by a Participant under the Plan, shall be assignable or
transferable by a Participant, other than by a will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined
under the Code or Title I of the Board of Retirement Income Security Act of
1974, and each such Award or right shall be exercisable during the Participant's
lifetime only by the Participant or, if admissible under applicable law, by the
Participant's guardian or legal representative or a transferee receiving such
Award pursuant to a QDRO; provided, however, that the Board may, in its sole
discretion, authorize all or a portion of an Award to be transferable by the
Participant, but only to (i) any immediate family members of the Participant,
(ii) any trust or trusts for the exclusive benefit of such immediate family
members, or (iii) a partnership or limited liability company in which such
immediate family members are the only partners or members, provided that (A)
there may be no consideration for any such transfer, other than an interest in a
transferee's partnership, limited liability company or other similar entity, (B)
the Award Agreement related to the Award must expressly provide for such
transferability in a manner consistent with this section 11(b), (C) the Board,
in granting an Award, may impose additional restrictions on transfer or prohibit
such transfer entirely, (D) following any transfer, any such Award shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of the Plan, any
reference to a Participant shall be deemed to refer to the transferee, (E) in
the event of a transferee's death, an Award may be exercised by the personal
representative of the transferee's estate or, if no personal representative has
been appointed, by the successor or successors in interest determined under the
transferee's will or under the applicable laws of descent and distribution.
Following any such transfer, any transferee shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer,
provided for purposes of Section 11(b) hereof, the term "Participant" shall be
deemed to refer to the transferee, and any event of termination of employment of
the Participant as set forth in the Award Agreement or in this Plan shall
continue to be applied with respect to the original Participant, following which
the Award shall be exercisable by the transferee only to the extent, and for the
period specified by, the Award Agreements.
(c) No Rights to Awards; No Stockholder Rights. Nothing in the
Plan shall be construed as giving any Participant, Eligible Person or other
Person any right to claim to be granted any Award under the Plan, or to be
treated uniformly with other Participants and Eligible Persons. No Award shall
confer on any Participant any of the rights of a stockholder of the Company
unless and until Shares are in fact issued to such Participant in connection
with the terms of such Award. Notwithstanding the foregoing, in connection with
each grant of Restricted Stock hereunder, the applicable Award shall specify if
and to what extent the Participant shall not be entitled to the rights of a
stockholder in respect of such Restricted Stock.
(d) Withholding. The Company or any Subsidiary is authorized
to withhold from any Award granted or any payment due under the Plan, including
from a distribution of Shares, amounts of withholding and other taxes due with
respect to an Award, its exercise or any payment thereunder, and to take such
other action as the Committee may deem necessary or advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Awards. This authority shall
include authority to withhold or receive Shares, Awards or other property and to
make cash payments in respect thereof in satisfaction of such tax obligations.
(e) No Right to Employment. Nothing contained in the Plan or
any Award Agreement shall confer, and no grant of an Award shall be construed
as, (i) conferring, upon any Participant or any Eligible Person, any right to
continue in the employ or service of the Company or any Subsidiary or (ii)
interfering in any way with the right of the Company or any Subsidiary to (A)
terminate any Participant's or Eligible Person's employment or service at any
time or (B) increase or decrease the compensation of any Participant or Eligible
Person from the rate in existence at the time of granting of an Award, except as
may be expressly provided in any Award Agreement or other compensation
arrangement.
<PAGE> 14
(f) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to Participant pursuant
to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company; provided, however, that the Board may authorize the
creation of trusts or make other arrangements to meet the Company's obligations
under the Plan to deliver cash, Shares or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Board otherwise determines.
(g) No Limit on Other Compensatory Arrangements Nothing
contained in the Plan shall prevent the Company or any Subsidiary from adopting
or continuing in effect other or additional compensation arrangements (which may
include, without limitation, employment agreements with executives and
arrangements which relate to Awards under the Plan), and such arrangements may
be either generally applicable only in specific cases.
(h) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award. The Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
(i) Governing Law. The validity, interpretation, construction
and effect of the Plan, any rules and regulations relating to the Plan and any
Award Agreement shall be governed by the laws of the State of Delaware (without
regard to provisions governing conflicts of laws) and applicable federal law.
(j) Severability.
(i) If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any Person or Award, or would disqualify the Plan or any Award under
any law deemed amended to conform to applicable laws or, if it cannot be
construed or deemed amended without, in the determination of the Board,
materially altering the intent of the Plan, it shall be deleted and the
remainder of the Plan shall remain in full force and effect; provided, however,
that, unless otherwise determined by the Board, the provision shall not be
construed or deemed amended or deleted with respect to any Participant whose
rights and obligations under the Plan are not subject to the law of such
jurisdiction or the law deemed applicable by the Board.
(ii) If any of the terms or provisions of the Plan
conflict with the requirements of applicable law or applicable rules and
regulations thereunder, including the requirements of Section 162(m) of the
Code, Rule 16b-3 and/or Section 422A of the Code, then such terms or provisions
shall be deemed inoperative to the extent necessary to avoid the conflict with
applicable law, or applicable rules and regulations, without invalidating the
remaining provisions hereof. With respect to ISOs, if the Plan does not contain
any provision required to be included herein under Section 422A of the Code,
such provisions shall be deemed to be incorporated herein with the same force
and effect as if such provision had been set out at length herein; provided,
further, that to the extent any Option which is intended to qualify as an ISO
cannot so qualify, such Option, to that extent, shall be deemed to be a
Nonqualified Stock Option for all purposes of the Plan.
(k) Rule 16b-3 Compliance. With respect to persons subject to
Section 16 of the Exchange Act, transactions under the Plan are intended to
comply with all applicable terms and conditions of Rule 16b-3 and any successor
provisions. To the extent that any provision of the Plan or action by the Board
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Board.
(l) Headings. Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
(m) Award Agreements. Each Award hereunder shall be evidenced
by an Award Agreement which shall be delivered to the Participant and shall
specify the terms and conditions of the Award and any rules applicable thereto.
Such terms may include, but are not limited to, the effect on such Award of the
death, retirement or other termination of employment of a Participant and the
effect, if any, of a change in control of the Company.
(n) Indemnification. Each person who is or shall have been a
member of the Committee, if any, or of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit or proceeding to which he may be made a
party or in which he may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit or
<PAGE> 15
proceeding against him, provided he shall give the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right of indemnification shall
not be exclusive and shall be independent of any other rights of indemnification
to which such persons may be entitled under the Company's Certificate of
Incorporation or By-laws, by contract, as a matter of law, or otherwise.
(o) Construction. For purposes of the Plan, the following
rules of construction shall apply: (i) the word "or" is disjunctive but not
necessarily exclusive; (ii) words in the singular include the plural; words in
the plural include the singular; and words in the neuter gender include the
masculine and feminine genders; and (iii) words in the masculine or feminine
gender include the other and neuter genders.
SECTION 12. EFFECTIVE DATE AND TERMINATION.
(a) The Plan shall become effective as of June 12, 1998, the
date the Plan was adopted and approved by the stockholders of the Company. Any
Awards granted under the Plan prior to such approval of stockholders shall be
effective when made (unless otherwise specified by the Board at the time of
grant) but shall be conditioned upon and subject to such approval of the Plan by
stockholders.
(b) Awards may not be granted under the Plan after June 12,
2008. Unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted hereunder may, and the authority of the Board to
amend, alter, adjust, suspend, discontinue or terminate any such Award or to
waive any conditions or rights under any such Award shall, continue after June
12, 2008.
