<PAGE> 1
As Filed With the Securities and Exchange Commission
on June 14, 1995
Registration No. 33-
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SERVICE MERCHANDISE COMPANY, INC.
(Exact name of Registrant as specified in its charter)
TENNESSEE 62-0816060
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
SERVICE MERCHANDISE COMPANY, INC.
7100 SERVICE MERCHANDISE DRIVE 37027
BRENTWOOD, TENNESSEE (Zip Code)
(Address of Principal Executive Offices)
AMENDED AND RESTATED 1989 EMPLOYEE STOCK INCENTIVE PLAN
(Full title of the plan)
GLEN A. BODZY
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
SERVICE MERCHANDISE COMPANY, INC.
7100 SERVICE MERCHANDISE DRIVE
BRENTWOOD, TENNESSEE 37027
(Name and address of agent for service)
(615) 660-6000
(Telephone number, including area code, of agent for service)
Copy to:
JAMES H. CHEEK, III
BASS, BERRY & SIMS
2700 FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities Amount to offering price aggregate offering Amount of
to be registered(1) be registered per share (1) price (1) registration fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.50 per share 4,990,000 shares $4.4375 $22,143,125 $7,635.56
======================================================================================================================
</TABLE>
(1) The offering price is estimated solely for the purpose of determining the
amount of the registration fee. Such estimate has been calculated based on the
average of the high and low trading prices reported on the New York Stock
Exchange Composite Transactions tape for June 9, 1995 in accordance with Rule
457(c) and (h).
<PAGE> 2
PRIOR REGISTRATION OF SECURITIES UNDER THE 1989 EMPLOYEE STOCK INCENTIVE PLAN
8,437,500 shares of Common Stock, par value $.50 per share (the
"Common Stock"), after stock splits, of Service Merchandise Company, Inc., a
Tennessee corporation (the "Registrant"), that have been issued or are issuable
under the Registrant's 1989 Employee Stock Incentive Plan were registered on
the Registrant's Registration Statement on Form S-8 (Registration No.
33-30903).
PART II
INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by Service Merchandise
Company, Inc., a Tennessee corporation (the "Registrant") with the Securities
and Exchange Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") are incorporated herein by
reference:
(a) The Registrant's Annual Report on Form 10-K, as
amended, for the fiscal year ended January 1, 1995;
(b) The Registrant's Quarterly Report on Form 10-Q for
the fiscal periods ended April 2, 1995; and
(c) The description of the Registrant's Common Stock
contained in the Registrant's registration statement
on Form 8-A, as amended to date.
All documents and reports subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all shares covered hereby have been sold or which deregisters
all such shares then remaining unsold shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Tennessee Business Corporation Act ("TBCA") provides that a
corporation may indemnify any of the directors and officers against liability
incurred in connection with a proceeding if (i) such person acted in good
faith; (ii) in the case of conduct in an official capacity with the
corporation, he reasonably believed such conduct was in the corporation's best
interests; (iii) in all other cases, he reasonably believed that his conduct
was at least not opposed to the best interests of the corporation; and (iv) in
connection with any criminal proceeding, such person had no reasonable cause to
believe his conduct was unlawful. In actions brought by or in the right of the
corporation, however, the TBCA provides that no indemnification may be made if
the director or officer was adjudged to be liable to the corporation. The TBCA
also provides that in connection with any proceeding charging improper personal
benefit to an officer or director, no indemnification may be made if such
officer or director is
<PAGE> 3
adjudged liable on the basis that such personal benefit was improperly
received. Notwithstanding the foregoing, the TBCA provides that a court of
competent jurisdiction, unless the corporation's charter provides otherwise,
upon application, may order that an officer or director be indemnified for
reasonable expenses if, in consideration of all relevant circumstances, the
court determines that such individual is fairly and reasonably entitled to
indemnification, notwithstanding the fact that (i) such officer or director was
adjudged liable to the corporation in a proceeding by or in right of the
corporation; (ii) such officer or director was adjudged liable on the basis
that personal benefit was improperly received by him; or (iii) such officer or
director breached his duty of care to the corporation.
The Registrant's Restated Charter and Amended and Restated Bylaws
provide that no director shall be personally liable to the Registrant or its
shareholders for monetary damages for breach of any fiduciary duty as a
director except to the extent provided by the TBCA. Under the TBCA, this
provision relieves the Registrant's directors from personal liability arising
from a judgment or other final adjudication establishing (i) any breach of the
director's duty of loyalty, (ii) acts or commissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or (iii) any
unlawful distributions. The Registrant has entered into indemnification
agreements with each of its directors and executive officers providing for
contractual rights of indemnification to the fullest extent permitted by
Tennessee law.
The foregoing statements contained within this Item 6 are subject to
the detailed provisions of the Tennessee Business Corporation Act, the
Registrant's Restated Charter and the Registrant's Bylaws referenced above.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Amended and Restated 1989 Employee Stock Incentive Plan, as
amended through April 19, 1995.
4.2 Restated Charter of the Registrant (previously filed as
Exhibit 4.1 to the Registrant's Registration Statement on Form
S-8 filed on September 8, 1993 (Registration No. 33-50185)).
4.3 Amended and Restated Bylaws of the Registrant (previously
filed as Exhibit 3.2 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1989).
4.4 Shareholders Rights Agreement (incorporated by reference to
the Registrant's Current Report on Form 8-K dated February 8,
1988).
4.5 Amendment No. 1 to Shareholders Rights Agreement (incorporated
by reference to the Registrant's Current Report on Form 8-K
dated May 5, 1989).
4.6 Amendment No. 2 to Shareholders Rights Agreement (incorporated
by reference to Exhibit 4 the Registrant's Annual Report on
Form 10-K for the year ended January 1, 1995).
5 Opinion of Bass, Berry & Sims.
23.1 Consent of Bass, Berry & Sims (included in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24 Powers of Attorney (included at pages II-4 and II-5).
II-2
<PAGE> 4
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended
(the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment hereof) which individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act, that are incorporated by reference in the
Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and each filing of the Plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Brentwood, State of
Tennessee, on the 13th day of June, 1995.
SERVICE MERCHANDISE COMPANY, INC.
By:/s/ Raymond Zimmerman
------------------------------------
Raymond Zimmerman
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Raymond Zimmerman and Glen A.
Bodzy, or either of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including, without limitation, post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Raymond Zimmerman Chairman, Chief Executive June 13, 1995
--------------------- Officer and Director
Raymond Zimmerman (Principal Executive
Officer)
/s/ Gary M. Witkin President, Chief Operating June 13, 1995
------------------------------- Officer and Director
Gary M. Witkin
/s/ S. Cusano Vice President, Chief June 13, 1995
------------------------------- Financial Officer
S. Cusano (Principal Financial and
Accounting Officer)
/s/ Richard P. Crane, Jr. Director June 13, 1995
-------------------------------
Richard P. Crane, Jr.
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ R. Maynard Holt Director June 13, 1995
-------------------------------
R. Maynard Holt
/s/ Charles V. Moore Director June 13, 1995
-------------------------------
Charles V. Moore
/s/ James E. Poole Director June 13, 1995
-------------------------------
James E. Poole
/s/ Harold Roitenberg Director June 13, 1995
-------------------------------
Harold Roitenberg
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
Exhibit
No Exhibit Description
------- -------------------
4.1 Amended and Restated 1989 Employee Stock Incentive Plan,
as amended through April 19, 1995.
4.2 Restated Charter of the Registrant (previously filed as
Exhibit 4.1 to the Registrant's Registration Statement
on Form S-8 filed on September 8, 1993 (Registration
No. 33- 50185)).
4.3 Amended and Restated Bylaws of the Registrant
(previously filed as Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1989).
4.4 Shareholders Rights Agreement (incorporated by reference
to the Registrant's Current Report on Form 8-K dated
February 8, 1988).
4.5 Amendment No. 1 to Shareholders Rights Agreement
(incorporated by reference to the Registrant's Current
Report on Form 8-K dated May 5, 1989).
4.6 Amendment No. 2 to Shareholders Rights Agreement
(incorporated by reference to Exhibit 4 to the
Registrant's Annual Report on Form 10-K for the year
ended January 1, 1995).
5. Opinion of Bass, Berry & Sims.
23.1 Consent of Bass, Berry & Sims (included in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24 Powers of Attorney (included at pages II-4 and II-5).
<PAGE> 1
EXHIBIT 4.1
SERVICE MERCHANDISE COMPANY, INC.
AMENDED AND RESTATED
1989 EMPLOYEE STOCK INCENTIVE PLAN
(as amended through April 19, 1995)
SECTION 1. Purpose; Definitions.
The purpose of the Service Merchandise Company, Inc. Amended and
Restated 1989 Employee Stock Incentive Plan (the "Plan") is to enable Service
Merchandise Company, Inc. (the "Company") to attract, retain and reward key
employees of the Company and its Subsidiaries and Affiliates, and strengthen
the mutuality of interests between such key employees and the Company's
shareholders, by offering such key employees performance-based stock incentives
and/or other equity interests or equity-based incentives in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Affiliate" means any entity other than the Company
and its Subsidiaries that is designated by the Board as a
participating employer under the Plan, provided that the Company
directly or indirectly owns at least 20% of the combined voting power
of all classes of stock of such entity or at least 20% of the
ownership interests in such entity.
b. "Board" means the Board of Directors of the Company.
c. "Book Value" means, as of any given date, on a per
share basis (i) the Stockholders' Equity in the Company as of the end
of the immediately preceding fiscal year as reflected in the Company's
consolidated balance sheet, subject to such adjustments as the
Committee shall specify at or after grant, divided by (ii) the number
of then outstanding shares of Stock as of such year-end date (as
adjusted by the Committee for subsequent events).
d. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
e. "Committee" means the Committee referred to in
Section 2 of the Plan. If at any time no Committee shall be in
office, then the functions of the Committee specified in the Plan
shall be exercised by the Board.
f. "Company" means Service Merchandise Company, Inc., a
corporation organized under the laws of the State of Tennessee or any
successor corporation.
g. "Disability" means disability as determined under
procedures established by the Committee for purposes of this Plan.
h. "Disinterested Person" shall have the meaning set
forth in Rule 16b-3(c)(2)(i) as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or any
successor definition adopted by the Commission.
i. "Early Retirement" means retirement, with the express
consent for purposes of this Plan of the Company at or before the time
of such retirement, from active employment with the Company and any
Subsidiary or Affiliate pursuant to the early retirement provisions of
the applicable pension plan of such entity.
j. "Fair Market Value" means, as of any given date,
unless otherwise determined by the Committee in good faith, the mean
between the highest and lowest quoted selling price, regular way, of
the Stock on the New York Stock Exchange or, if no such sale of Stock
occurs on the New York Stock Exchange on such date, the fair market
value of the Stock as determined by the Committee in good faith.
<PAGE> 2
k. "Incentive Stock Option" means any Stock Option
intended to be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code.
l. "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
m. "Normal Retirement" means retirement from active
employment with the Company and any Subsidiary or Affiliate on or
after age 65.
n. "Other Stock-Based Award" means an award under
Section 9 below that is valued in whole or in part by reference to, or
is otherwise based on, Stock.
o. "Plan" means this Service Merchandise Company, Inc.
1989 Employee Stock Incentive Plan, as amended from time to time.
p. "Restricted Stock" means an award of shares of Stock
that is subject to restrictions under Section 7 below.
q. "Retirement" means Normal or Early Retirement.
r. "Stock" means the Common Stock, $.50 par value per
share, of the Company.
s. "Stock Appreciation Right" means the right pursuant
to an award granted under Section 6 below to surrender to the Company
all (or a portion) of a Stock Option in exchange for an amount equal
to the difference between (i) the Fair Market Value, as of the date
such Stock Option (or such portion thereof) is surrendered, of the
shares of Stock covered by such Stock Option (or such portion
thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii); and (ii) the aggregate exercise price of such Stock
Option (or such portion thereof).
t. "Stock Option" or "Option" means any option to
purchase shares of Stock (including Restricted Stock, if the Committee
so determines) granted pursuant to Section 5 below.
u. "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in the chain.
In addition, the terms "Change in Control", "Potential Change in
Control" and "Change in Control Price" shall have meanings set forth,
respectively, in Sections 9(b), (c) and (d) below and the term "Cause" shall
have the meaning set forth in Section 5(i) below.
SECTION 2. Administration.
The Plan shall be administered by a Committee of not less than three
Disinterested Persons, who shall be appointed by the Board of Directors of the
Company (the "Board") and who shall serve at the pleasure of the Board. The
functions of the Committee specified in the Plan shall be exercised by the
Board, if and to the extent that no Committee exists which has the authority to
so administer the Plan.
The Committee shall have full authority to grant, pursuant to the
terms of the Plan, to officers and other key employees eligible under Section
4: (i) Stock Options, (ii) Stock and Appreciation Rights, (iii) Restricted
Stock and (iv) Other Stock-Based Awards.
In particular, the Committee shall have the authority:
2
<PAGE> 3
(i) to select the officers and other key employees of the
Company and its Subsidiaries and Affiliates to whom Stock Options,
Stock Appreciation Rights, Restricted Stock, and/or Other Stock-Based
Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock, and/or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible
employees;
(iii) to determine the number of shares to be covered by
each such award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the share price and any
restriction or limitation, or any vesting acceleration or waiver of
forfeiture restrictions regarding any Stock Option or other award
and/or the shares of Stock relating thereto, based in each case on
such factors as the Committee shall determine, in its sole
discretion);
(v) to determine whether and under what circumstances a
Stock Option may be settled in cash, Restricted Stock and/or under
Section 5(k) or (1), as applicable, instead of Stock;
(vi) to determine whether, to what extent and under what
circumstances Option grants and/or other awards under the Plan made by
the Company are to be made, and operate, on a tandem basis vis-a-vis
other awards under the Plan or on an additive basis;
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining
the amount (if any) of any deemed earnings on any deferred amount
during any deferral period);
(viii) to determine whether to require payment of any
withholding taxes in shares of Common Stock.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 8,437,500 shares. On and after April 19,
1995, the total number of shares of Stock reserved and available for
distribution under the Plan shall include an additional 4,990,000 shares. Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
Subject to Section 6(b)(iv) below, if any shares of Stock that have
been optioned cease to be subject to a Stock Option, or if any such shares of
Stock that are subject to any Restricted Stock award, or Other Stock-Based
Award granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the participant in the form of Stock, such
shares shall again be available for distribution in connection with future
awards under the Plan, unless dividends have already been paid with respect to
such shares.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the
3
<PAGE> 4
aggregate number of shares reserved for issuance under the Plan, in the number
and option price of shares subject to outstanding Options granted under the
Plan, and in the number of shares subject to other outstanding awards granted
under the Plan as may be determined to be appropriate by the Committee, in its
sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option. The maximum number of
shares that may be awarded to any participant under Section 4 of this Plan will
be adjusted in the same manner as the number of shares subject to Options.
SECTION 4. Eligibility.
Officers and other key employees of the Company and its Subsidiaries
and Affiliates (but excluding members of the Committee and any person who
serves only as a director) who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and/or
its Subsidiaries and Affiliates are eligible to be granted awards under the
Plan. No officer or key employee shall be eligible to receive awards relative
to shares of Stock which exceed 1 million shares in any fiscal year.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the
Plan. Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights).
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be not less than 100% (or, in the case
of an employee who owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or
of any of its subsidiary or parent corporations, not less than 110%)
of the Fair Market Value of the Stock at grant, in the case of
Incentive Stock Options, and not less than 50% of the Fair Market
Value of the Stock at grant, in the case of Non-Qualified Stock
Options.
(b) Option Term. The term of each Stock Option shall be
fixed by the Committee, but no Stock Option shall be exercisable more
than ten years (or, in the case of Incentive Stock Options granted to
an employee who owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or
any of its subsidiary or parent corporations, more than five years)
after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable
at such time or times and subject to such terms and conditions as
shall be determined by the Committee at or after grant; provided,
however, that, except as provided in Section 5(f) and (g) and Section
9, unless otherwise determined by the Committee at or after grant, no
Stock Option shall be exercisable prior to the first anniversary date
of the granting of the Option. If the Committee provides, in its sole
discretion, that any Stock Option is exercisable only in installments,
the Committee may waive such installment exercise provisions at any
time at or after grant in whole or in part, based on such factors as
the Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise provisions apply under Section 5(c), Stock Options may be
exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company specifying the number
of shares to be purchased.
4
<PAGE> 5
Such notice shall be accompanied by payment in full of the purchase
price, either by check, note or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the optionee or, in the case of the exercise of a
Non-Qualified Stock Option or Restricted Stock subject to an award hereunder
(based, in each case, on the Fair Market Value of the Stock on the date the
Option is exercised, as determined by the Committee).
If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto) shall remain (or
be) restricted in accordance with the original terms of the Restricted Stock
award in question, and any additional Stock received upon the exercise shall be
subject to the same forfeiture provisions and other restrictions, unless
otherwise determined by the Committee, in its sole discretion, at or after
grant.
No shares of Stock shall be issued until full payment therefor has
been made. An optionee shall generally have the rights to dividends or other
rights of a shareholder with respect to shares subject to the Option when the
optionee has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in Section
14(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) Termination by Death. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent such option was exercisable at the time of death or on
such accelerated basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by the Committee),
by the legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of one year (or such other period
as the Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(g) Termination by Reason of Disability. Subject to Section 5(j),
if an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at
the time of termination or on such accelerated basis as the Committee may
determine at or after grant (or as may be determined in accordance with
procedures established by the Committee), for a period of three years (or such
other period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however, that, if the
optionee dies within such three-year period (or such other period as the
Committee shall specify at grant), any unexercised Stock Option held by such
optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of twelve months from the date of
such death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(h) Termination by Reason of Retirement. Subject to Section 5(j),
if an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held by
such optionee may thereafter be exercised by the optionee to the extent it was
exercisable at the time of such Retirement or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), for a period of three
years (or such other period as Committee may specify at grant) from the date of
such termination of employment or the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however, that, if the
optionee dies within such three-year period (or such other period as the
Committee may specify at grant), any unexercised Stock Option held by such
optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of twelve months from the date
of such death or until the expiration of the stated term of such
5
<PAGE> 6
Stock Option, whichever period is the shorter. In the event of termination of
employment by reason of Retirement, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, the option will thereafter be treated as a Non-Qualified Stock
Option.
(i) Other Termination. Unless otherwise determined by the
Committee (or pursuant to procedures established by the Committee) at or after
grant, if an optionee's employment by the Company and any Subsidiary or
Affiliate terminates for any reason other than death, Disability or Normal or
Early Retirement, the Stock Option shall thereupon terminate, except that such
Stock Option may be exercised, to the extent otherwise then exercisable, for
the lesser of three months or the balance of such Stock Option's term if the
optionee is involuntarily terminated by the Company and any Subsidiary or
Affiliate without Cause. For purposes of this Plan, "Cause" means a felony
conviction of a participant or the failure of a participant to contest
prosecution for a felony, or a participant's willful misconduct or dishonesty,
any of which is directly and materially harmful to the business or reputation
of the Company or any Subsidiary or Affiliate.
(j) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee (s) affected,
to disqualify any Incentive Stock Option under such Section 422.
To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement:
(i) if (x) a participant's employment is terminated by
reason of death, Disability or Retirement and (y) the portion of any
Incentive Stock Option that is otherwise exercisable during the
post-termination period specified under Section 5(f), (g) or (h),
applied without regard to the $ 100,000 limitation contained in
Section 422(d) of the Code, is greater than the portion of such option
that is immediately exercisable as an "incentive stock option" during
such post-termination period under Section 422, such excess shall be
treated as a Non-Qualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option is
accelerated by reason of a Change in Control, any portion of such
option that is not exercisable as an Incentive Stock Option by reason
of the $100,000 limitation contained in Section 422(d) of the Code
shall be treated as a Non-Qualified Stock Option.
(k) Buyout Provisions. The Committee may at any time offer to buy
out for a payment in cash, Stock, Deferred Stock or Restricted Stock an option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is made.
(1) Settlement Provisions. If the option agreement so provides at
grant or is amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the shares
to be issued with respect to the spread value of an exercised Option take the
form of Restricted Stock, which shall be valued on the date of exercise on the
basis of the Fair Market Value (as determined by the Committee) of such
Restricted Stock determined without regard to the deferral limitations and/or
forfeiture restrictions involved.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such rights may be granted either at
or after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
6
<PAGE> 7
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee
for such purpose. Upon such exercise, the optionee shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b). Stock
Options relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the Stock Options to
which they relate shall be exercisable in accordance with the
provisions of Section 5 and this Section 6 of the Plan; provided,
however, that any Stock Appreciation Right granted to an optionee
subject to Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") subsequent to the grant of the related Stock Option
shall not be exercisable during the first six months of its term. The
exercise of Stock Appreciation Rights held by optionees who are
subject to Section 16(b) of the Exchange Act shall comply with Rule
16(b)-3 thereunder, to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or shares
of Stock equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment. When
payment is to be made in shares, the number of shares to be paid shall
be calculated on the basis of the Fair Market Value of the shares on
the date of exercise. When payment is to be made in cash, such amount
shall be calculated on the basis of the average of the highest and
lowest quoted selling price, regular way, of the Stock on the New York
Stock Exchange during the applicable period referred to in Rule
16b-3(e) under the Exchange Act.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 of the Plan on the number of shares
of Stock to be issued under the Plan, but only to the extent of the
number of shares issued under the Stock Appreciation Right at the time
of exercise based on the value of the Stock Appreciation Right at such
time.
(v) In its sole discretion, the Committee may grant
"Limited" Stock Appreciation Rights under this Section 6, i.e., Stock
Appreciation Rights that become exercisable only in the event of a
Change in Control and/or a Potential Change in Control, subject to
such terms and conditions as the Committee may specify at grant. Such
Limited Stock Appreciation Rights shall be settled solely in cash.
Limited Stock Appreciation Rights granted to persons subject to
Section 16(b) of the Exchange Act shall not be exercisable if the
exercise thereof would create a liability on the part of the grantee
to the Company under Section 16(a) of the Exchange Act.
(vi) The Committee, in its sole discretion, may also
provide that, in the event of a Change in Control and/or a Potential
Change in Control, the amount to be paid upon the exercise of a Stock
Appreciation Right or Limited Stock Appreciation Right shall be based
on the Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
7
<PAGE> 8
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to or in tandem with other awards granted under the
Plan and/or cash awards made outside the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the price
(if any) to be paid by the recipient of Restricted Stock (subject to Section
7(b)), the time or times within which such awards may be subject to forfeiture,
and all other terms and conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the
Committee may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with
respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be equal to or less than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a
period of 60 days (or such shorter period as the Committee may specify
at grant) after the award date, by executing a Restricted Stock Award
Agreement and paying whatever price (if any) is required under Section
7(b)(i).
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock award, the participant shall have
delivered a stock power, endorsed in blank, relating to the Stock
covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or
such other factors or criteria as the Committee may determine, in its
sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), the participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder of the Company,
including the right to vote the shares, and the right to receive any
cash dividends. The Committee, in its sole discretion, as determined
at the time of award, may permit or require the payment of cash
dividends to be deferred and, if the Committee so determines,
reinvested, subject to Section 14(e), in additional Restricted Stock
to the extent shares are available under Section 3, or otherwise
reinvested. Pursuant to Section 3 above, Stock dividends issued with
respect to Restricted Stock shall be treated as additional shares of
8
<PAGE> 9
Restricted Stock that are subject to the same restrictions and other
terms and conditions that apply to the shares with respect to which
such dividends are issued.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a participant's
employment with the Company and any Subsidiary or Affiliate for any
reason during the Restriction Period, all shares still subject to
restriction will vest, or be forfeited, in accordance with the terms
and conditions established by the Committee at or after grant.
(iv) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction
Period, certificates for an appropriate number of unrestricted shares
shall be delivered to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Company and service of
the participant, the Committee may provide, in its sole discretion, for a
tandem performance-based or other award designed to guarantee a minimum value,
payable in cash or Stock to the recipient of a Restricted Stock award, subject
to such performance, future service, deferral and other terms and conditions as
may be specified by the Committee.
SECTION 8. Other Stock-Based Awards.
(a) Administration. Other awards of Stock and other awards that
are valued in whole or in part by reference to, or are otherwise based on,
Stock ("Other Stock-Based Awards"), including, without limitation, performance
shares, convertible preferred stock, convertible debentures, exchangeable
securities and Stock awards or options valued by reference to Book Value or
subsidiary performance, may be granted either alone or in addition to or in
tandem with Stock Options, Stock Appreciation Rights or Restricted Stock
granted under the Plan.
Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Stock to be awarded pursuant to
such awards, and all other conditions of the awards. The Committee may also
provide for the grant of Stock upon the completion of a specified performance
period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant
to this Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 10(b)(v) below, shares subject to awards made under this
Section 8 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period
lapses.
(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient of an
award under this Section 8 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend equivalents with
respect to the number of shares covered by the award, as determined at the time
of the award by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Stock or otherwise reinvested.
(iii) Any award under Section 8 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, waive in whole or in part any or all of the remaining limitations
imposed hereunder (if any) with respect to any or all of an award under this
Section 8.
9
<PAGE> 10
(v) Each award under this Section 8 shall be confirmed by, and
subject to the terms of, an agreement or other instrument by the Company and by
the participant.
(vi) Stock (including securities convertible into Stock) issued on
a bonus basis under this Section 8 may be issued for no cash consideration.
Stock (including securities convertible into Stock) purchased pursuant to a
purchase right awarded under this Section 8 shall be priced at least 50% of the
Fair Market Value of the Stock on the date of grant.
SECTION 9. Change in Control Provisions.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 9(b) or
(2) a "Potential Change in Control" as defined in Section 9(c),
but only if and to the extent so determined by the Committee or the Board at or
after grant (subject to any right of approval expressly reserved by the
Committee or the Board at the time of such determination), the following
acceleration and valuation provisions shall apply:
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Stock Appreciation Rights) outstanding for at
least six months and any Stock Option awarded under the Plan not
previously exercisable and vested shall become fully exercisable and
vested.
(ii) The restrictions and deferral limitations applicable
to any Restricted Stock, and Other Stock-Based Awards, in each case
to the extent not already vested under the Plan, shall lapse and such
shares and awards shall be deemed fully vested.
(iii) Except as otherwise provided in Section 9(a)(iv)
below, the value of all outstanding Stock Options, Stock Appreciation
Rights, Restricted Stock, and Other Stock-Based Awards, in each case
to the extent vested, shall, unless otherwise determined by the
Committee in its sole discretion at or (except in the case of an
Incentive Stock Option) after grant but prior to any Change in
Control, be cashed out on the basis of the "Change in Control Price"
as defined in Section 9(d) as of the date such Change in Control or
such Potential Change in Control is determined to have occurred or
such other date as the Committee may determine prior to the Change in
Control.
(iv) In the case of any Options, Stock Appreciation
Rights, Restricted Stock and Other Stock-Based Awards held by any
person subject to Section 16(b) of the Exchange Act, the value of all
such Options, Stock Appreciation Rights, Restricted Stock or Other
Stock-Based Awards, in each case to the extent that they have been
held for at least six months, shall, unless otherwise determined by
the Committee in its sole discretion, be cashed out on the basis of
the Change in Control Price as of the date of such Change in Control
or such Potential Change in Control is determined to have occurred.
The Committee shall have the right (a) to cause any right to receive
the Change in Control Price to be cancelled with respect to all or any
grantee(s) who are subject to Section 16(b) of the Exchange Act if
payment of the Change in Control Price to such grantee(s) would cause
liability under Section 16 of the Exchange Act, and (B) to determine
whether the Change in Control Price shall be paid in cash or in shares
of capital stock to grantees who are subject to Section 16(b) of the
Exchange Act.
(b) Definition of "Change in Control". For purposes of Section
9(a), a "Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, other than
the Company or a wholly-owned subsidiary thereof or any employee
benefit plan of the Company or any of its Subsidiaries, becomes the
beneficial owner of the Company's securities having 20% or more of the
combined voting power of the then outstanding securities of the
10
<PAGE> 11
Company that may be cast for the election of directors of the Company
(other than as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or
(ii) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions less than a majority of the combined voting power of the
then outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election of
the directors of the Company or such other corporation or entity after
such transaction are held in the aggregate by the holders of the
Company's securities entitled to vote generally in the election of
directors of the Company immediately prior to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
shareholders, of each director of the Company first elected during
such period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were directors of
the Company at the beginning of any such period.
(c) Definition of Potential Change in Control. For purposes of
Section 9(a), a "Potential Change in Control" means the happening of any one of
the following:
(i) The approval by shareholders of an agreement by the
Company, the consummation of which would result in a Change in Control
of the Company as defined in Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Company or
a Subsidiary or any Company employee benefit plan (including any
trustee of such plan acting as such trustee)) of securities of the
Company representing 5% or more of the combined voting power of the
Company's outstanding securities and the adoption by the Board of
Directors of a resolution to the effect that a Potential Change in
Control of the Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange Composite Index, or paid or
offered in any bona fide transaction related to a potential or actual Change in
Control of the Company at any time during the 60 day period immediately
preceding the occurrence of the Change in Control (or, where applicable, the
occurrence of the Potential Change in Control event), in each case as
determined by the Committee except that, in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on transactions reported for the date on which the optionee
exercises such Stock Appreciation Rights (or Limited Stock Appreciation Rights)
or, where applicable, the date on which a cashout occurs under Section 9 (a)
(iii) or Section 9(a)(iv), as applicable.
SECTION 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of
an optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted Stock award or Other Stock-Based
Award theretofore granted, without the optionee's or participant's consent, or
which, without the approval of the Company's stockholders, would:
(a) except as expressly provided in this Plan, increase
the total number of shares reserved for the purpose of the Plan;
(b) change the pricing terms of Sections 5(a) or 9(a);
(c) change the employees or class of employees eligible
to participate in the Plan; or
11
<PAGE> 12
(d) extend the maximum option period under Section 5(b)
of the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Stock or payments in lieu of or with respect
to awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 12. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent to and
agree with the Company in writing that the optionee or participant is acquiring
the shares without a view to distribution thereof. The certificates for such
shares may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable Federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of
the Company or any Subsidiary or Affiliate any right to continued employment
with the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to
be withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company and its Subsidiaries or Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or other types of Plan awards) at
the time of any dividend payment shall only be permissible if sufficient
12
<PAGE> 13
shares of Stock are available under Section 3 for such reinvestment (taking
into account then outstanding Stock Options, Stock Purchase Rights and other
Plan awards).
(f) In addition to any other restrictions on transfer that may be
applicable under this Plan or the applicable award agreement, no Option, Stock
Appreciation Right, Restricted Stock award (while the shares remain
restricted), Other Stock-Based Award or other right issued under the Plan is
transferrable by the participant other than by will or by the laws of descent
and distribution.
(g) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Tennessee.
SECTION 13. Effective Date of Amended and Restated Plan.
The Plan as amended and restated shall be effective upon adoption by
the Board.
SECTION 14. Term of Plan.
No Incentive Stock Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the earlier of the date the Plan was originally
approved by the Board or the date of shareholder approval of the Plan, but
Incentive Stock Options granted prior to such tenth anniversary may extend
beyond that date. No Non-Qualified Stock Option, Stock Appreciation Right,
Restricted Stock award or Other Stock-Based Award shall be granted on or after
April 19, 2004, but Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock awards or Other Stock-Based Awards granted prior to such date
may extend beyond such date.
13
<PAGE> 1
Bass, Berry & Sims
First American Center
Nashville, Tennessee 37238
EXHIBIT 5
June 13, 1995
Service Merchandise Company, Inc.
7100 Service Merchandise Drive
Brentwood, TN 37027
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentleman:
We have acted as your counsel in connection with the preparation of a
Registration Statement on Form S-8 (the "Registration Statement") covering
4,990,000 shares of Common Stock, par value $.50 per share, of Service
Merchandise Company, Inc., a Tennessee corporation (the "Company"), issuable
under the Company's Amended and Restated 1989 Employee Stock Incentive Plan, as
amended through April 19, 1995 (the "Plan").
In connection with this opinion, we have examined and relied on such
records, documents and other instruments as in our judgment are necessary or
appropriate in order to express the opinions hereinafter set forth and have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified photostatic copies.
Based on the foregoing and such other matters as we have deemed
relevant, we are of the opinion that the shares of Common Stock issuable by the
Company pursuant to the Plan, when issued and delivered in the manner and on
the terms set forth in the Plan, will be validly issued, fully paid and
nonassessable.
We hereby consent to the inclusion of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Bass, Berry & Sims
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Service Merchandise Company, Inc. on Form S-8 of our report dated January 26,
1995, appearing in the Annual Report on Form 10-K of the Service Merchandise
Company, Inc. for the year ended January 1, 1995.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Nashville, Tennessee
June 8, 1995
