FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 0-20704
ACX TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1208699
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
16000 Table Mountain Parkway, Golden, Colorado 80403
(Address of principal executive offices) (Zip Code)
(303) 271-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
There were 28,134,356 shares of common stock outstanding as of
August 6, 1997.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ACX TECHNOLOGIES, INC.
CONSOLIDATED INCOME STATEMENT
(In thousands, except per share data)
Three months Six months
ended ended
June 30, June 30,
1997 1996 1997 1996
-------------------- --------------------
Net sales $186,777 $183,987 $360,235 $361,125
Costs and expenses:
Cost of goods sold 140,370 142,585 272,230 281,063
Marketing, general and
administrative 23,969 19,507 46,748 39,095
Research and development 4,499 3,771 8,416 7,394
Restructuring -- -- 2,280 --
------- ------- ------- -------
Total operating expenses 168,838 165,863 329,674 327,552
------- ------- ------- -------
Operating income 17,939 18,124 30,561 33,573
Other income - net 260 24 286 41
Interest expense - net (610) (2,182) (1,765) (3,788)
------- ------- ------- -------
Income from continuing
operations before
income taxes 17,589 15,966 29,082 29,826
Income tax expense 7,150 6,200 11,850 11,900
------- ------- ------- -------
Income from continuing
operations 10,439 9,766 17,232 17,926
------- ------- ------- -------
Discontinued operations:
Loss from discontinued
operations of Golden
Aluminum Company -- -- -- (5,033)
Loss on disposal of Golden
Aluminum Company -- -- -- (70,000)
------- ------- ------- --------
Net income (loss) $10,439 $ 9,766 $17,232 ($57,107)
======= ======= ======= ========
Net income (loss) per share
of common stock:
Continuing operations $ 0.36 $ 0.34 $ 0.60 $ 0.63
Discontinued operations -- -- -- (2.62)
------- ------- ------- -------
Net income (loss) per share $ 0.36 $ 0.34 $ 0.60 ($ 1.99)
======= ======= ======= =======
Weighted average shares
outstanding 28,928 28,813 28,854 28,645
======= ======= ======= =======
See Notes to Consolidated Financial Statements.
ACX TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
June 30, December 31,
1997 1996
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 67,289 $ 15,671
Accounts receivable 83,542 71,886
Inventories:
Finished 50,983 46,312
In process 30,631 28,837
Raw materials 28,279 26,371
-------- --------
Total inventories 109,893 101,520
-------- --------
Deferred tax asset 11,902 18,218
Other assets 24,584 11,571
Net current assets of discontinued
operations 2,425 53,052
-------- --------
Total current assets 299,635 271,918
Properties at cost less accumulated
depreciation and amortization of
$251,969 in 1997 and $234,248 in 1996 252,583 244,615
Note receivable 54,583 --
Goodwill, net 47,027 46,799
Other assets 32,656 49,860
Noncurrent assets of discontinued
operations -- 63,500
-------- --------
Total assets $686,484 $676,692
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $112,129 $117,292
Long-term debt 100,000 100,000
Accrued postretirement benefits 28,784 27,890
Other long-term liabilities 16,844 19,002
-------- --------
Total liabilities 257,757 264,184
Minority interest 13,269 14,605
Shareholders' equity
Preferred stock, non-voting, $0.01 par
value, 20,000,000 shares authorized and
no shares issued or outstanding -- --
Common stock, $0.01 par value
100,000,000 shares authorized and
28,049,000 and 27,934,000 issued and
outstanding at June 30, 1997, and
December 31, 1996 280 279
Paid-in capital 445,208 443,302
Retained earnings (30,039) (47,271)
Cumulative translation adjustment
and other 9 1,593
-------- --------
Total shareholders' equity 415,458 397,903
-------- --------
Total liabilities and shareholders'
equity $686,484 $676,692
======== ========
See Notes to Consolidated Financial Statements.
ACX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Six months ended
June 30,
1997 1996
----------------------
Cash flows from operating activities:
Net income (loss) $ 17,232 ($57,107)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Loss on disposal of discontinued
operations, net of tax -- 70,000
Depreciation and amortization 21,089 24,648
Change in deferred income taxes 19,523 603
Change in accrued postretirement
benefits 894 493
Change in current assets and
current liabilities 8,561 (43,586)
Change in deferred items and
other 2,412 (960)
-------- --------
Net cash provided by (used in)
operating activities 69,711 (5,909)
Cash flows used in investing activities (19,932) (30,986)
Cash flows provided by financing
activities 1,839 2,992
-------- --------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents 51,618 (33,903)
Balance at beginning of period 15,671 52,686
-------- --------
Balance at end of period $ 67,289 $ 18,783
======== ========
See Notes to Consolidated Financial Statements.
ACX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Discontinued Aluminum Operations
On March 1, 1997, the sale of Golden Aluminum Company (Golden
Aluminum) was completed for $70 million, of which $10 million was
paid at closing and $60 million is due within two years. In
addition, ACX Technologies, Inc. (the Company) retained a 3.6
percent equity interest in either Golden Aluminum or the
purchaser which increases by 0.3 percent for each month the
obligation remains unpaid after the one year anniversary of the
sale. In accordance with the purchase agreement, the purchaser
has the right to sell Golden Aluminum back to the Company during
the two year period in discharge of the $60 million obligation.
The initial payment of $10 million is non-refundable. Nearly all
of the working capital of Golden Aluminum, which was not part of
the sales agreement, has been liquidated during the first half of
1997.
Summarized results of discontinued operations are as follows:
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
------------------ -------------------
Revenues $ -- $38,550 $38,526 $71,243
======= ======= ======= =======
Loss from operations
before income taxes $ -- $ -- $ -- ($ 8,033)
Income tax benefit -- -- -- 3,000
------- ------- ------- -------
Net loss from operations
-- -- -- (5,033)
======= ======= ======= =======
Loss per common share $ -- $ -- $ -- ($ 0.18)
======= ======= ======= =======
Loss on disposal before
income taxes -- -- -- (92,000)
Loss on operations during
disposition period
before income taxes -- -- -- (18,000)
Income tax benefit -- -- -- 40,000
------- ------- ------- -------
Net loss on disposal of
discontinued operation $ -- $ -- $ -- ($70,000)
======= ======= ======= =======
Loss per common share $ -- $ -- $ -- ($ 2.44)
======= ======= ======= =======
The historical operating results and the loss on the sale of this
business have been segregated as discontinued operations for all
periods presented in the consolidated income statement. The
remaining assets and liabilities held for sale have been
separately identified as net current assets of discontinued
operations, which consist primarily of accounts receivable and
inventory, partially offset by accounts payable. The noncurrent
assets reported in the December 31, 1996 balance sheet are
composed primarily of the fixed assets of Golden Aluminum which
were subsequently sold on March 1, 1997. The non-current notes
receivable of $54.6 million reported in the June 30, 1997 balance
sheet represents the discounted obligation for the remaining
sales price of Golden Aluminum. The consolidated statement of
cash flows has not been restated for the discontinued operation
and, therefore, includes sources and uses of cash for Golden
Aluminum's operations.
Note 2. Restructuring Charges
During the first quarter of 1997, the Company adopted a plan to
exit the high-fructose corn syrup business and recorded severance
and exit costs of $2.3 million in conjunction with this plan.
Severance and outplacement costs of $0.9 million were paid in the
second quarter of 1997 to eliminate approximately 70 positions
held primarily by manufacturing and administrative employees.
The remaining charge of $1.4 million relates to various exit
costs which the Company expects to pay during the remainder of
1997.
During the fourth quarter of 1996, the Company recorded
restructuring charges of $2.4 million related to operations at
Golden Technologies. During the first six months of 1997,
approximately $0.7 million was paid in cash with respect to this
charge. Almost all of the remaining expected cash outlay of $1.3
million is expected to be paid during the third quarter of 1997.
Note 3. Adoption of New Accounting Standards
Statement of Financial Accounting Standards No. 128, "Earnings
per Share", was issued in February, 1997. The adoption of this
new accounting standard, which is required on December 31, 1997,
will result in the restatement of earnings per share for all
periods presented. Based on management's estimates, the adoption
of this standard is not expected to have a material effect on the
Company's financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General Business Overview
The operations of ACX Technologies, Inc. (the Company) consist of
two primary business segments conducted by Coors Ceramics Company
(Coors Ceramics) and Graphic Packaging Corporation (Graphic
Packaging). Coors Ceramics manufactures advanced technical
ceramic products while Graphic Packaging produces high-value
consumer and industrial flexible packaging and folding cartons.
In addition to its primary business units, the Company operates
Golden Technologies Company, Inc. (Golden Technologies), which
includes operations that assemble and distribute solar electric
systems primarily through its majority owned subsidiary
Photocomm, Inc., as well as operations which are developing
biodegradable polymers and operations that produce corn starch
and other food ingredients. Prior to 1997, Golden Technologies'
operations included the manufacture of high-fructose corn syrup
but in early 1997, the Company adopted a plan to exit this
business. Effective March 31, 1997, operations at the corn-wet
milling facility have been converted to producing corn starch
only.
Until early 1996, the Company operated Golden Aluminum Company
(Golden Aluminum) which produced aluminum flat rolled products
primarily for the aluminum can industry. In 1996, the Company's
Board of Directors adopted a plan to dispose of this business.
Effective March 1, 1997, the Company sold Golden Aluminum for $70
million, of which $10 million was paid at closing and $60 million
is due within two years. In accordance with the purchase
agreement, the purchaser has the right to sell Golden Aluminum to
the Company during the two year period in discharge of the $60
million obligation. The initial payment of $10 million is non-
refundable. Nearly all of the working capital of Golden Aluminum
on March 1, 1997 of $55 million, which was not part of the sales
agreement, has been liquidated during the first half of 1997.
The operating results of Golden Aluminum have been classified as
discontinued operations for all periods presented and,
consequently, the following discussion excludes any analysis of
the discontinued operations.
Results from Continuing Operations
Consolidated net sales for the three months ended June 30, 1997,
increased $2.8 million or 1.5 percent to $186.8 million, when
compared to net sales of $184.0 million reported in the second
quarter of 1996. A 6.0 percent increase in net sales at Graphic
Packaging and a 5.6 percent increase in net sales at Coors
Ceramics gave rise to the consolidated increase. This growth
resulted in quarterly net sales records for both companies.
Offsetting these increases were reduced sales at Golden
Technologies, which is no longer producing or selling high-
fructose corn syrup. When compared to the prior year six months
ended June 30, 1996, net sales dropped approximately $900,000 due
to the 1997 first quarter reduction in high-fructose corn syrup
sales and due to lower sales volumes of ceramic components sold
to the semiconductor processing industry.
Consolidated gross margin (gross profit as a percent of net
sales) for the three month period increased from 22.5 percent in
1996 to 24.8 percent in 1997 while the six month period
experienced a similar increase from 22.2 percent in 1996 to 24.4
percent in 1997. While Coors Ceramics and Graphic Packaging both
contributed to the gross margin improvements over the 1996
results, the elimination of the low margin corn syrup business at
Golden Technologies was the largest contributor to the
improvement in gross margin.
As a percent of sales, marketing, general and administrative
costs increased from approximately 11 percent for the three and
six month periods of 1996 to approximately 13 percent for the
1997 similar periods. The increase in these costs was primarily
attributable to increased sales activities at all three business
units, including the addition of Photocomm, Inc., which is
included in the Company's financial statements since the November
1996 acquisition of its controlling interest in Photocomm.
For the three months ended June 30, 1997, consolidated operating
income was $17.9 million compared to $18.1 million in the year-
ago second quarter. Increases in operating income at Coors
Ceramics were offset by additional losses at Golden Technologies,
while Graphic Packaging's 1997 operating results were flat
compared to 1996. These results include approximately $2 million
of additional charges taken in Graphic Packaging's 1997 second
quarter, related to the disposition of its Linearpak system and
severance costs related to several organizational changes. For
the six months ended June 30, 1997, consolidated operating income
decreased $3.0 million to $30.6 million compared to the first six
months of 1996. In addition to the second quarter charges at
Graphic Packaging of $2.0 million, restructuring charges of $2.3
million taken at Golden Technologies during the first quarter
plus additional spending for Golden Technologies' programmable-
life semi-works polymer plant accounts for a majority of this
decrease.
Interest expense - net for the second quarter and first half of
1997 was $0.6 million and $1.8 million, respectively, compared to
$2.2 million and $3.8 million in the 1996 similar periods.
Interest expense - net has been favorably impacted by additional
interest income in 1997 from investments and from imputed
interest on the note receivable received in the sale of Golden
Aluminum. Cash generated from the sale of Golden Aluminum and
the ensuing working capital liquidation have contributed to the
Company's increase in short-term, interest bearing investments.
The consolidated effective tax rate for second quarter and first
six months of 1997 was 40.7 percent. The effective tax rate of
the Company is higher than the statutory tax rate of 35 percent
because of state and foreign taxes, deductions that are not
deductible for tax purposes such as the amortization of goodwill,
and the lack of tax benefits from operating losses at the
Company's subsidiaries that are not consolidated for tax
purposes.
Liquidity and Capital Resources
The Company's liquidity is generated from both internal and
external sources and is used to fund short-term working capital
needs, capital expenditures and acquisitions. Internally
generated liquidity is measured by net cash from operations as
discussed below and working capital. At June 30, 1997, the
Company's working capital (excluding the net current assets of
the discontinued operation) was $185.1 million with a current
ratio of 2.7 to 1. The Company considers its working capital
sufficient to meet its anticipated short-term requirements. For
long-term requirements, the Company has access to a $125 million
unsecured, committed revolving credit facility which was unused
during the first half of 1997.
Net cash generated by operations for the first half of 1997 was
$69.7 million compared to cash used during the 1996 first half of
$5.9 million. Contributing to the improved cash position was the
liquidation of Golden Aluminum's working capital, offset in part
by the additional cash used to fund the operations of Golden
Aluminum through the date of sale. Year-to-date capital
expenditures for 1997 of $27.2 million net of $10.0 million in
proceeds from the Golden Aluminum sale accounted for the majority
of the net cash used in investing activities.
Segment Information
Net sales and operating income for the second quarter and six
months of 1997 and 1996 are summarized by segment below:
Second Quarter Only
(In thousands)
Operating
Net Sales Income(Loss)
1997 1996 1997 1996
------------------ ------------------
Coors Ceramics $75,011 $71,027 $12,789 $11,947
Graphic Packaging 97,247 91,752 11,211 11,208
Golden Technologies 14,519 21,208 (4,213) (3,439)
Corporate -- -- (1,848) (1,592)
-------- -------- ------- -------
$186,777 $183,987 $17,939 $18,124
======== ======== ======= =======
Year-To-Date
(In thousands)
Operating
Net Sales Income(Loss)
1997 1996 1997 1996
------------------- -------------------
Coors Ceramics $146,427 $145,415 $24,237 $24,599
Graphic Packaging 183,084 174,117 19,159 18,764
Golden Technologies 30,724 41,593 (8,994) (6,109)
Corporate - - (3,841) (3,681)
-------- -------- ------- -------
$360,235 $361,125 $30,561 $33,573
======== ======== ======= =======
COORS CERAMICS
Coors Ceramics reported record net sales of $75.0 million for
the second quarter of 1997, up $4.0 million from 1996 second
quarter net sales of $71.0 million. Increased volume from the
petrochemical, automotive and telecommunications industries were
primarily responsible for the improvement. Operating income for
the 1997 second quarter also increased when compared to the 1996
similar period. The improvement of $0.8 million, or 7.0 percent,
resulted in operating income of $12.8 million for the 1997 second
quarter. Operating margins for the second quarter grew slightly,
from 16.8 percent in 1996 to 17.0 percent in 1997.
During the first six months of 1997, Coors Ceramics' net sales
increased $1.0 million to $146.4 million from $145.4 million in
the 1996 comparable period. First half 1997 sales to the
semiconductor processing markets were below the 1996 first six
months due to the slowdown in this industry which began in the
second quarter of 1996. Offsetting the semiconductor decrease
was improved automotive and pulp and paper volume. Operating
income for the 1997 year-to-date period declined 1.5 percent to
$24.2 million compared to the 1996 first six months. Operating
margins also dipped slightly, from 16.9 percent in 1996 to 16.5
percent in 1997. The lower mix of first half sales to the
semiconductor and telecommunications industries contributed to
these declines.
Coors Ceramics' management continues to focus on manufacturing
efficiencies, strategic acquisitions and broadening its materials
base to continue its upward momentum. The August 1, 1997
acquisition of the assets of Tetrafluor, Inc. is expected to
bring customer and process synergies to Coors Ceramics. Looking
ahead to the end of 1997, Coors Ceramics' level of success
continues to depend upon the strength of the U.S. and European
economies, the potential rebound of semiconductor processing and
telecommunications markets and the continued execution of its
advanced materials strategy.
GRAPHIC PACKAGING
Graphic Packaging's 1997 second quarter net sales of $97.2
million increased $5.5 million, or 6.0 percent over 1996 second
quarter net sales. Nearly all of Graphic Packaging's flexible
operations posted increased sales, primarily related to improved
volumes of confectionery and snack food packaging. In addition,
the acquisition of the Richmond facility continues to produce
benefits as increased sales to the tobacco industry also
contributed to Graphic Packaging's record quarter. Second
quarter 1997 operating income was unchanged from the 1996 similar
period at $11.2 million. However, the 1997 results include an
additional charge of approximately $2.0 million related to the
sale of the Linearpak system and to severance for several
organizational changes. Excluding this additional charge,
Graphic Packaging reported a 1997 second quarter operating margin
of over 13.5 percent and increased its operating income by more
than 17 percent. Increased plant utilization at several of the
flexible operations and improved product mix account for the
improved operating performance.
Graphic Packaging reported net sales of $183.1 million for the
first six months of 1997, an increase of $9.0 million or 5.2
percent over the 1996 first half. Operating income for the 1997
year-to-date period improved $0.4 million to $19.2 million. Year-
to-date 1997 net sales and operating income improvements came
from additional volume in several markets including tobacco,
confectionery, bakery, snack food and detergent. Offsetting the
increase in operating income was the additional $2.0 million of
charges taken in the second quarter, noted above.
Management expects Graphic Packaging's results for the remainder
of the year to remain solid, although the favorable product mix
and capacity utilization experienced in the second quarter of
1997 is not expected to continue at the same level on a regular
basis. In addition, Graphic Packaging results could be impacted
favorably or unfavorably as it continues to face the challenge of
obtaining significant sales volumes to fully utilize new
capabilities and capacity at its Franklin, Ohio facility.
GOLDEN TECHNOLOGIES
Golden Technologies reported net sales for the second quarter of
1997 of $14.5 million compared to the $21.2 million reported in
the year earlier period. The operating loss for the 1997 second
quarter was $4.2 million compared to the 1996 second quarter
operating loss of $3.4 million. Reduced sales are the result of
exiting the high-fructose corn syrup business during the first
quarter of 1997, offset in part by the net sales of Photocomm,
Inc., a controlling interest of which was acquired in November
1996. The increase in operating loss during the 1997 second
quarter relates primarily to additional costs associated with
development activities at Chronopol, Inc., the Company's
programmable-life polymer venture. The completion and scale-up
of Chronopol's semi-works facility has taken longer than
anticipated. The Company is currently continuing its
developmental efforts to determine and demonstrate the market
feasibility of the programmable-life polymer, while
simultaneously reviewing alternative strategies to reduce and
limit the ongoing financial impact of this project on the Company
through the end of 1997 and into 1998.
Net sales for the six months ended June 30, 1997, were $30.7
million compared to $41.6 million recorded in 1996. The
additional sales due to the acquisition of Photocomm, Inc. in
November 1996 were more than offset by the exit of the high-
fructose corn syrup business during the 1997 first quarter.
Operating loss for the first half of 1997 was $9.0 million,
compared to an operating loss of $6.1 million during the 1996
similar period. Restructuring charges of $2.3 million taken in
the first quarter of 1997 and the additional costs at Chronopol,
Inc., mentioned above, account for the majority of the additional
loss.
Forward-Looking Statements
Some of the statements in this Form 10-Q Quarterly Report, as
well as statements by the Company in periodic press releases,
oral statements made by the Company's officials to analysts and
shareholders in the course of presentations about the Company and
conference calls following quarterly earnings releases,
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Words or
phrases denoting the anticipated results of future events such as
"anticipate," "believe," "estimate," "will likely," "are expected
to," "will continue," "focus on," "intend to," "project," and
similar expressions that denote uncertainty are intended to
identify such forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied
by the forward-looking statements. Such factors include, among
other things, (i) general economic and business conditions; (ii)
changes in industries in which the Company does business, such as
beverage, telecommunications, automotive, semiconductor, pulp and
paper, and tobacco; (iii) the loss of major customers; (iv) the
loss of market share and increased competition in certain
markets; (v) industry shifts to alternative materials, such as
replacement of ceramics by plastics and competitors offering
products with characteristics similar to the Company's products;
(vi) changes in consumer buying habits; (vii) governmental
regulation including environmental laws; and (viii) other factors
over which the Company has little or no control.
These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-K
for the year ended December 31, 1996. The accompanying financial
statements have not been examined by independent accountants in
accordance with generally accepted auditing standards, but in the
opinion of management of ACX Technologies, such financial
statements include all adjustments necessary to summarize fairly
the Company's financial position and results of operations. All
adjustments made to the interim financial statements presented
are of a normal recurring nature. The results of operations for
the second quarter and six months ended June 30, 1997, may not be
indicative of results that may be expected for the year ending
December 31, 1997.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of shareholders of
the Company at the Annual Meeting of Shareholders held May 13,
1997.
a) The following members were elected to the Board of Directors
to hold office for a three year term:
Shares Shares Term
Nominee Voted For Withheld Expires
John D. Beckett 25,415,217 73,468 2000
John K. Coors 25,412,343 76,342 2000
William K. Coors 25,410,796 77,889 2000
The terms of office of the Company's other directors
continuing after the Annual Meeting, are as follows:
Term Expires
Jeffrey H. Coors 1998
John H. Mullin, III 1998
Joseph Coors, Jr. 1999
Richard P. Godwin 1999
John Hoyt Stookey 1999
b) The ACX Technologies, Inc. Equity Incentive Plan was amended
to add incentive stock options to the type of awards that may be
granted under the Plan and to increase the number of shares
available under the Plan. This proposal was approved by a vote
of 18,279,684 in favor, 4,556,956 against, 251,738 abstentions
and 2,400,307 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Document Description
3.1 Articles of Incorporation of Registrant.
(Incorporated by reference to Exhibit 3.1 to
Form 10 filed on October 6, 1992, file
No. 0-20704)
3.1A Articles of Amendment to Articles of
Incorporation of Registrant. (Incorporated by
reference to Exhibit 3.1A to Form 8 filed on
December 3, 1992, file No. 0-20704)
3.2 Bylaws of Registrant, as amended.
(Incorporated by reference to Exhibit 3.2 to
Form 10-Q filed on November 7, 1996, file
No. 0-20704)
4 Form of Stock Certificate of Common Stock.
(Incorporated by reference to Exhibit 4 to Form
10-K filed on March 7, 1996, file No. 0-20704)
10.9* ACX Technologies, Inc. Equity
Incentive Plan, as amended. (Incorporated by
reference to Exhibit A to the Proxy Statement
filed in connection with the May 13, 1997,
Annual Meeting of Shareholders)
10.10* ACX Technologies, Inc. Equity
Compensation Plan for Non-Employee Directors,
as amended.
27 Financial Data Schedule
* Management contracts or compensatory plans,
contracts or arrangements required to be filed as an
Exhibit pursuant to Item 14(c).
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended
June 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: August 6, 1997 By /s/Jed J. Burnham
-------------------------------
Jed J. Burnham
(Chief Financial Officer and
Treasurer)
Date: August 6, 1997 By /s/Gail A. Constancio
-------------------------------
Gail A. Constancio
(Controller and Principal
Accounting Officer)
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Exhibit 10.10
ACX TECHNOLOGIES, INC.
EQUITY COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS
Amended and Restated
Effective May 13, 1997
TABLE OF CONTENTS
Section 1 - Introduction 1
1.1 Introduction 1
1.2 Purposes 1
1.3 Effective Date 1
Section 2 - Definitions 1
2.1 Definitions 1
2.2 Gender and Number 3
Section 3 - Plan Administration 3
Section 4 - Stock Subject to the Plan 3
4.1 Number of Shares 3
4.2 Other Shares of Stock 4
4.3 Adjustments for Stock Split, Stock Dividend, Etc. 4
4.4 Other Distributions and Changes in Stock 4
4.5 General Adjustment Rules 5
4.6 Determination by the Committee, Etc. 5
Section 5 - Participation 5
5.1 In General 5
5.2 Restriction on Award Grants to Certain Individuals 5
Section 6 - Restricted Stock Awards 5
6.1 Minimum Grant of Restricted Stock 5
6.2 Elective Grant of Restricted Stock 5
6.3 Date of Grant, Number of Shares 6
6.4 Retention of Award, Termination 6
6.5 Restrictions 6
6.6 Lapse of Restrictions 7
6.7 Privileges of a Stockholder, Transferability 7
6.8 Enforcement of Restrictions 7
Section 6A - Grant of Options to Directors 7
6A.1 Grant 7
6A.2 Date of Grant 7
6A.3 Stock Option Certificates 7
6A.4 Shareholder Privileges 10
Section 6B - Grants to Subsidiary Directors 10
6B.1 Grant 10
6B.2 Stock Option Certificates 10
6B.3 Restricted Stock 11
6B.4 Shareholder Privileges 11
Section 7 - Reorganization or Change of Control 12
7.1 Reorganization 12
7.2 Change of Control 12
Section 8 - Rights of Directors 13
8.1 Retention as Director 13
8.2 Nontransferability 13
Section 9 - General Restrictions 14
9.1 Investment Representations 14
9.2 Compliance with Securities Laws 14
9.3 Changes in Accounting Rules 14
9.4 Withholding of Tax 14
Section 10 - Plan Amendment, Modification and Termination 14
Section 11 - Requirements of Law 15
11.1 Requirements of Law 15
11.2 Federal Securities Law Requirements 15
11.3 Governing Law 15
Section 12 - Duration of the Plan 15
ACX TECHNOLOGIES, INC.
EQUITY COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Amended and Restated
Effective May 13, 1997
Section 1
Introduction
1.1 Introduction. ACX Technologies, Inc., a Colorado
corporation (the "Company"), established the ACX Technologies,
Inc. Equity Compensation Plan for Non-Employee Directors (the
"Plan") for certain Directors (as defined below) of the Company.
The Plan, which provides for the grant of restricted stock awards
to Directors of the Company, was effective August 12, 1992. The
Plan was amended and restated in its entirety, effective November
11, 1992, January 21, 1994 and November 14, 1995. Pursuant to
the power granted in Section 10, the Company hereby amends and
restates the Plan in its entirety, effective May 13, 1997
1.2 Purposes. The purposes of the Plan are to
encourage the Directors and Subsidiary Directors to own shares of
the Company's stock and thereby to align their interests more
closely with the interests of the other shareholders of the
Company, to encourage the highest level of director performance
by providing the directors with a direct interest in the
Company's attainment of its financial goals, and to provide a
financial incentive that will help attract and retain the most
qualified directors.
1.3 Effective Date. The Effective Date of the Plan is
August 12, 1992. The Plan, each amendment to the Plan, and each
award granted under the Plan is conditioned on and shall be of no
force and effect until approval of the Plan by the holders of a
majority of the shares of voting stock of the Company, unless the
Company, on the advice of counsel determines that shareholder
approval is not necessary.
Section 2
Definitions
2.1 Definitions. The following terms shall have the
meanings set forth below:
(a) "Board" means the Board of Directors of the
Company.
(b) "Committee" means a committee consisting of
members of the Board, including the full Board, who are empowered
hereunder to take actions in the administration of the Plan. The
Committee shall be so constituted at all times as to permit the
Plan to comply with Rule 16b-3, or any successor rule promulgated
under the Securities Exchange Act of 1934. Members of the
Committee shall be appointed from time to time by the Board,
shall serve at the pleasure of the Board and may resign at any
time upon written notice to the Board.
(c) "Director" means a member of the Board who is
neither an officer nor an employee of the Company. For purposes
of the Plan, an employee is an individual whose wages are subject
to the withholding of federal income tax under Section 3401 of
the Internal Revenue Code, and an officer is an individual
elected or appointed by the Board or chosen in such other manner
as may be prescribed in the bylaws of the Company to serve as
such.
(d) "Fair Market Value" means the average of the
highest and lowest prices of the Stock as reported on the New
York Stock Exchange ("NYSE") on a particular date. If there are
no Stock transactions on such date, the Fair Market Value shall
be determined as of the immediately preceding date on which there
were Stock transactions. If the price of the Stock is not
reported on NYSE, the Fair Market Value of the Stock on the
particular date shall be as determined by the Committee using a
reference comparable to the NYSE system. If, upon exercise of an
Option, the exercise price is paid by a broker's transaction as
provided in subsection 6A.3(g)(ii)(c) or subsection 6B.2(g), the
Fair Market Value, for purposes of the exercise, shall be the
price at which the Stock is sold by the broker.
(e) "Internal Revenue Code" means the Internal
Revenue Code of 1986, as it may be amended from time to time.
(f) "Option" means a right to purchase Stock at a
stated price for a specified period of time. All options granted
under the Plan shall be "non-qualified stock options" whose grant
is not intended to fall under the provisions of Section 422 of
the Code.
(g) "Option Price" means the price at which
shares of Stock subject to an Option may be purchased, as
determined in accordance with subsection 6A.3(b) or subsection
6B.2(b).
(h) "Restricted Stock Award" means an award of
Stock granted to a Director or Subsidiary Director pursuant to
Section 6 or Section 6B that is subject to certain restrictions
imposed in accordance with the provisions of the Plan.
(i) "Stock" means the $0.01 par value Common
Stock of the Company.
(j) "Subsidiary" means a corporation, more than
50% of the stock of which is owned by the Company, or a
corporation, more than 50% of the stock of which is owned by a
Subsidiary.
(k) "Subsidiary Director" means a member of the
board of directors of a Subsidiary, who is neither an officer or
employee of the Subsidiary nor an officer, employee, or director
of the Company. For purposes of the Plan, an employee is an
individual whose wages are subject to the withholding of federal
income tax under Section 3401 of the Internal Revenue Code, and
an officer is an individual elected or appointed by the board of
directors of the Subsidiary or chosen in such other manner as may
be prescribed in the bylaws of the Subsidiary to serve as such.
2.2 Gender and Number. Except when otherwise
indicated by the context, the masculine gender shall also include
the feminine gender, and the definition of any term herein in the
singular shall also include the plural.
Section 3
Plan Administration
The Committee shall be responsible for the
administration of the Plan. However, the Committee shall have no
authority, discretion or power to select the Directors who will
receive Restricted Stock Awards or Options, determine the
Restricted Stock Awards to be granted pursuant to the Plan, the
number of shares of Stock to be issued thereunder or the time at
which such Restricted Stock Awards are to be granted, determine
the number of shares subject to an Option granted to a Director,
establish the duration and nature of Restricted Stock Awards or
Options or alter any other terms or conditions specified in the
Plan, except in the sense of administering the Plan subject to
the provisions of the Plan. However, as to Subsidiary Directors,
the Committee shall have the sole discretion and authority to
select the Subsidiary Directors to whom Options shall be granted,
the number of shares subject to the Options, the Option Price,
the period and manner in which an Option becomes exercisable, and
all terms and conditions of the Options to the extent not
otherwise specified in the Plan. Subject to the foregoing
limitations, the Committee, by majority action thereof, is
authorized to interpret the Plan, prescribe, amend and rescind
rules and regulations relating to the Plan, provide for
conditions and assurances deemed necessary or advisable to
protect the interests of the Company and make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express
provisions of the Plan. No member of the Committee shall be
liable for any action or determination made in good faith. The
determinations, interpretations and other actions of the
Committee pursuant to the provisions of the Plan shall be binding
and conclusive for all purposes and on all persons.
Section 4
Stock Subject to the Plan
4.1 Number of Shares. Fifty Thousand shares of Stock
are authorized for issuance under the Plan in accordance with the
provisions of the Plan and subject to such restrictions or other
provisions as the Committee may from time to time deem necessary.
This authorization may be increased from time to time by approval
of the Board and by the shareholders of the Company if, in the
opinion of counsel for the Company, such shareholder approval is
required. Shares of Stock that are issued as Restricted Stock
Awards and that may be issued on the exercise of Options shall be
applied to reduce the maximum number of shares of Stock remaining
available for use under the Plan. The Company shall at all times
during the term of the Plan retain as authorized and unissued
Stock at least the number of shares from time to time required
under the provisions of the Plan or otherwise assure itself of
its ability to perform its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that
are subject to an Option that expires or for any reason is
terminated unexercised shall automatically become available for
use under the Plan. Any shares of Stock that are subject to a
Restricted Stock Award and that are forfeited and any shares of
Stock that are withheld for the payment of taxes or received by
the Company as payment of the exercise price of an Option shall
be available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc.
If the Company shall at any time increase or decrease the number
of its outstanding shares of Stock or change in any way the
rights and privileges of such shares by means of the payment of a
stock dividend or any other distribution upon such shares payable
in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the
Stock, then in relation to the Stock that is affected by one or
more of the above events, the numbers, rights and privileges of
the following shall be increased, decreased or changed in like
manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of
Stock as to which Restricted Stock Awards and Options may be
granted under the Plan; and (ii) the shares of the Stock then
included in each outstanding Restricted Stock Award and Option
granted hereunder.
4.4 Other Distributions and Changes in Stock. If
(a) the Company shall at any time distribute with
respect to the Stock assets or securities of persons other than
the Company (excluding cash or distributions referred to in
Section 4.3),
(b) the Company shall at any time grant to the
holders of its Stock rights to subscribe pro rata for additional
shares or for any other securities of the Company, or
(c) there shall be any other change (except as
described in Section 4.3) in the number or kind of outstanding
shares of Stock or of any other stock or securities into which
the Stock shall be changed or for which it shall have been
exchanged,
and if the Committee shall in its discretion determine that the
event described in subsection (a), (b), or (c) above equitably
requires an adjustment in the number or kind of shares subject to
a Restricted Stock Award or Option or the taking of any other
action by the Committee, including without limitation, the
setting aside of any property for delivery to the Participant
upon the exercise of an Option or the full vesting of a
Restricted Stock Award, then such adjustments shall be made, or
other action shall be taken, by the Committee and shall be
effective for all purposes of the Plan and on each outstanding
Restricted Stock Award or Option that involves the particular
type of stock for which a change was effected. Notwithstanding
the foregoing provisions of this Section 4.4, a Participant
holding Stock received as a Restricted Stock Award shall have the
right to receive all amounts, including cash and property of any
kind, distributed with respect to the Stock after the grant of
such Restricted Stock Award upon the Participant's becoming a
holder of record of the Stock.
4.5 General Adjustment Rules. No adjustment or
substitution provided for in this Section 4 shall require the
Company to issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Restricted Stock
Award and Option shall be limited by deleting any fractional
share. In the case of any such substitution or adjustment
appropriate adjustments shall be made to Restricted Stock Awards
and Options to reflect any such substitution or adjustment.
4.6 Determination by the Committee, Etc. Adjustments
under this Section 4 shall be made by the Committee, whose
determinations with regard thereto shall be final and binding
upon all parties thereto.
Section 5
Participation
5.1 In General. Each Director shall receive
Restricted Stock Awards and Options on the terms and conditions
set forth under the Plan. Each Director shall, if required by
the Committee, enter into an agreement with the Company, in such
form as the Committee shall determine and which is consistent
with the provisions of the Plan. In the event of any
inconsistency between the provisions of the Plan and any such
agreement entered into hereunder, the provisions of the Plan
shall govern. Each Subsidiary Director who is selected by the
Committee for participation shall receive a grant of Options or
Restricted Stock Award pursuant to Section 6B.
5.2 Restriction on Award Grants to Certain
Individuals. Notwithstanding the foregoing provisions of Section
5.1, the Committee shall not grant any Restricted Stock Award or
Option to any lineal descendant of Adolph Coors, Jr. without
first consulting with counsel to the Company as to the effect of
any such grant on the possible status of the Company as a
"personal holding company" within the mean of Section 542 of the
Internal Revenue Code.
Section 6
Restricted Stock Awards
6.1 Minimum Grant of Restricted Stock. Each Director
shall receive twenty percent of the value of his annual retainer
as a director in the form of a Restricted Stock Award (the
"Minimum Grant").
6.2 Elective Grant of Restricted Stock.
(a) Beginning in 1994, each Director may make an
annual election (the "Election") to receive any or all of the
remaining cash balance of his annual retainer as a director in
the form of a Restricted Stock Award (the "Elective Grant"). The
Minimum Grant and the Elective Grant are referred to collectively
as the "Grants". The Election must be in writing and must be
delivered to the Secretary of the Company no later than the day
before the last business day of the month during which the annual
meeting of shareholders of the Company is held.
(b) For the period commencing on December 28,
1992, and ending with the annual meeting of the Company's
shareholders in April 1994, a Director may elect to receive an
Elective Grant by giving written notice to the Secretary of the
Company no later than the last business day of January 1993. A
Director who becomes a Director after January 1993 may elect to
receive an Elective Grant by giving written notice to the
Secretary of the Company no later than the last business day of
the month in which the Director is elected to the Board.
(c) All Elections made by a Director pursuant to
this Section 6.2 shall be irrevocable.
6.3 Date of Grant, Number of Shares.
(a) The Minimum Grant for the first year, the
period commencing on December 28, 1992 and ending with the annual
meeting of the Company's shareholders in April 1994, shall be
made on the last business day of January 1993. A Director who
becomes a member of the Board after January 1993 and before the
annual meeting of the Company's shareholders in April 1994 shall
receive the Minimum Grant on the last business day of the month
in which the Director is elected to the Board. Beginning in
1994, the Minimum Grant shall be made on the last business day of
the month in which the annual meeting of shareholders is held.
Beginning in 1994 and prior to 1997, the Elective Grant shall be
made on the first business day that is at least six months and
one day following the date of the Minimum Grant. Beginning in
1997, the Elective Grant shall be made on the last day of the
month in which the annual meeting of shareholders is held.
(b) The total number of shares of Stock included
in each such Restricted Stock Award shall be determined by
dividing the amount of the Director's retainer that is to be paid
in restricted stock by the Fair Market Value of a share of stock
on the date of grant. In no event shall the Company be required
to issue fractional shares. Whenever under the terms of this
Section 6 a fractional share of Stock would otherwise be required
to be issued, an amount in lieu thereof shall be paid in cash
based upon the Fair Market Value of such fractional share.
6.4 Retention of Award, Termination. If a Director's
services as a Board member are terminated at any time, for any
reason, before the date of the annual meeting of the shareholders
of the Corporation next following the Minimum and Elective
Grants, all of the shares of Stock granted pursuant to the
Minimum and Elective Grants shall be forfeited.
6.5 Restrictions. Except as otherwise provided in the
Plan, shares of Stock received pursuant to a Restricted Stock
Award may not be sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of until the restrictions
applicable to such Stock have lapsed pursuant to Section 6.6.
6.6 Lapse of Restrictions. All restrictions on Stock
covered by Restricted Stock Awards for a year shall lapse upon
the date of the annual meeting of the shareholders of the
Corporation next following the Minimum Grant.
6.7 Privileges of a Stockholder, Transferability. A
Director shall have all voting, dividend, liquidation and other
rights with respect to Stock in accordance with its terms
received by him as a Restricted Stock Award under this Section 6.
A Director's right to sell, encumber or otherwise transfer Stock
after restrictions applicable to such Stock have lapsed shall be
subject to the limitations of Section 8.2.
6.8 Enforcement of Restrictions. The Committee shall
cause a legend to be placed on the Stock certificates issued
pursuant to each Restricted Stock Award referring to the
restrictions imposed in the Plan and, in addition, may in its
sole discretion require one or more of the following methods of
enforcing such restrictions:
(a) Requiring the Director to keep the Stock
certificates, duly endorsed, in the custody of the Company while
the restrictions remain in effect; or
(b) Requiring that the Stock certificates, duly
endorsed, be held in the custody of a third party while the
restrictions remain in effect.
Section 6A
Grant of Options to Directors
6A.1 Grant. Each Director who is elected to the Board
by the shareholders of the Company for a three year term shall be
granted an Option to purchase 1,000 shares of Stock. If the term
for which the Director is elected is two years, the number of
shares subject to the Option shall be 666 shares, and if the
terms for which the Director is elected is one year, the number
of shares subject to the Option shall be 333. If insufficient
shares are available for grant to each Director following the
Directors' election to the Board, the number of shares subject to
each Option shall be reduced pro rata.
6A.2 Date of Grant. The Options shall be granted as of
the last business day of the month in which the shareholders'
meeting at which the Director was elected was held (the "Grant
Date").
6A.3 Stock Option Certificates. Each Option granted to
a Director under the Plan shall be evidenced by a written stock
option certificate. A stock option certificate shall be issued
by the Company in the name of the Director to whom the Option is
granted and shall incorporate and conform to the conditions set
forth in this Section 6A.3.
(a) Number. Each Director shall receive under
the Plan Options to purchase the number of shares of Stock
specified in Section 6A.1, subject to adjustment as provided in
Section 4. Such grants shall be effective at the time specified
in Section 6A.2.
(b) Price. The Option Price for each share of
Stock covered by the Option shall be the Fair Market Value of the
Stock on the date of grant, subject to adjustment as provided in
Section 4.
(c) Vesting. An Option covering 1,000 shares
shall vest in increments as follows commencing on the first
anniversary of the Grant Date:
Number of
Anniversary Shares
First 333
Second 333
Third 334
An option covering 666 shares shall vest as to an increment of
333 shares on the first anniversary of the Grant Date and as to
the remaining increment of 333 shares on the second anniversary
of the Grant Date. An Option covering 333 shares shall vest as
to all 333 shares on the first anniversary of the Grant Date.
Except as set forth in Sections 7.1 and 7.2, the Option shall not
be exercisable as to any shares as to which the continuous
service requirement has not been satisfied, regardless of the
circumstances under which the Director ceased to be a director.
The number of shares as to which the Option may be exercised
shall be cumulative, so that once the Option becomes exercisable
as to any shares it shall continue to be exercisable as to those
shares until expiration or termination of the Option as provided
below.
(d) Duration of Options. Each vested increment
shall be exercisable for a period of six years (the "Option
Period") after it vests, unless terminated sooner pursuant to
subsection (e) below or fully exercised prior to the end of such
period.
(e) Termination of Service, Death, Etc. The
Option shall terminate in the following circumstances if the
Director ceases to be a director:
(i) If the Director is removed from the
Board during the Option Period for cause, the Option shall be
void thereafter for all purposes.
(ii) If the Director ceases to be a member
of the Board for any other reason, the Option shall be
exercisable for a period of three years following the termination
to the extent the Option was vested on the date the Director's
services as a director cease.
(f) Transferability, Exercisability. Each Option
granted under the Plan shall not be transferable by a Director
other than by will or the laws of descent and distribution and
shall be exercisable during the Director's lifetime only by the
Director or, in the event of disability or incapacity, by the
Director's guardian or legal representative. Notwithstanding any
other provision of the Plan, no Option may be exercised unless
and until the amended and restated Plan is approved by the
shareholders of the Company in accordance with Section 1.3.
(g) Exercise, Payments, Etc.
(i) The method for exercising each Option
granted shall be by delivery to the Corporate Secretary of the
Company of written notice specifying the number of shares with
respect to which the Option is exercised and payment of the
Option Price. The notice shall be in a form satisfactory to the
Committee and shall specify the particular Option (or portion
thereof) that is being exercised and the number of shares with
respect to which the Option is being exercised. The exercise of
the Option shall be deemed effective upon receipt of such notice
by the Corporate Secretary and payment to the Company. If
requested by the Company, such notice shall contain the
Director's representation that he or she is purchasing the Stock
for investment purposes only and his or her agreement not to sell
any stock so purchased in any manner that is in violation of the
Securities Act of 1933, as amended, or any applicable state law.
Such restrictions, or notice thereof, shall be placed on the
certificates representing the Stock so purchased. The purchase
of Stock pursuant to the Option shall take place at the principal
office of the Company upon delivery of such notice, at which time
the purchase price of the Stock shall be paid in full by any of
the methods set forth in Section 6A.3(g)(ii) or a combination
thereof. A properly executed certificate or certificates
representing the Stock shall be delivered to the Holder upon
payment therefor.
(ii) The exercise price shall be paid by any of
the following methods or any combination of such methods, at the
option of the Director:
(A) cash;
(B) certified or cashier's check, payable to
the order of the Company;
(C) delivery to the Company of a properly
executed notice of exercise together with irrevocable
instructions to a broker to deliver promptly to the Company the
amount of the sale or all or a portion of the Stock from the
broker to the Director necessary to pay the purchase price of the
Stock; or
(D) delivery to the Company of certificates
representing the number of shares of Stock then owned by the
Director, the Fair Market Value of which equals the price of the
Stock to be purchased pursuant to the Option, properly endorsed
for transfer to the Company. No Option may be exercised by
delivery to the Company of certificates representing Stock that
has been held by the Director for less than six months or such
other period as shall be sufficient for the Company to avoid, if
possible, the recognition of expense with respect to the Option
for accounting purposes. The exercise date shall be the day of
delivery of the certificates for the Stock used as payment of the
Option Price.
6A.4 Shareholder Privileges. No Director shall have
any rights as a shareholder with respect to any shares of Stock
covered by an Option until the Director becomes the holder of
record of such Stock, and no adjustments shall be made for
dividends or other distributions or other rights as to which
there is a record date preceding the date such Director becomes
the holder of record of such Stock, except as provided in Section
4.
Section 6B
Grants to Subsidiary Directors
6B.1 Grant. Coincident with or following designation
for participation in the Plan, a Subsidiary Director may be
granted one or more Options and/or Restricted Stock Awards. In
no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of shares of Stock
for which any other Option may be exercised.
6B.2 Stock Option Certificates. Each Option granted to
a Subsidiary Director under the Plan shall be evidenced by a
written stock option certificate. A stock option certificate
shall be issued by the Company in the name of the Subsidiary
Director to whom the Option is granted and shall incorporate and
conform to the conditions set forth in this Section 6B.2.
(a) Number of Shares. Each stock option
certificate shall state that it covers a specified number of
shares of the Stock, as determined by the Committee.
(b) Price. The price at which each share of
Stock covered by an Option may be purchased shall be determined
in each case by the Committee and set forth in the stock option
certificate, but in no event shall the price be less than 100
percent of the Fair Market Value of the Stock on the date the
Option is granted.
(c) Duration of Options; Restrictions on
Exercise. Each stock option certificate shall state the period
of time, determined by the Committee, within which the Option may
be exercised by the Subsidiary Director (the "Option Period"),
and shall also set forth any installment or other restrictions on
Option exercise during such period, if any, as may be determined
by the Committee; however, no Option may be exercised for at
least six months after the date of grant.
(d) Termination of Service, Death, Disability,
Etc. The Option shall terminate at the times provided in Section
6A.3(e).
(e) Transferability, Exercisability. Each Option
shall not be transferable by the Option Holder except by will or
pursuant to the laws of descent and distribution, and shall be
exercisable during the Option Holder's lifetime only by him or
her, or in the event of disability or incapacity, by his or her
guardian or legal representative.
(f) Exercise, Payments, Etc. The Option shall be
subject to the same exercise and payment terms as provided in
Section 6A.3(g).
(g) Date of Grant. An option shall be considered
as having been granted on the date specified in the grant
resolution of the Committee.
6B.3 Restricted Stock.
(a) Date of Grant, Number of Shares. The
Committee shall determine the number of shares of Restricted
Stock to be granted to a Subsidiary Director and shall determine
the Date of Grant.
(b) Restrictions. The restrictions shall be
determined by the Committee and need not be identical for all
awards. The restrictions shall lapse at the time or times
established by the Committee. Except as otherwise provided in
the Plan, shares of Stock received pursuant to a Restricted Stock
Award may not be sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of until the restrictions
applicable to such Stock have lapsed pursuant to this subsection
6B.3(b).
(c) Retention of Award Termination. If a
Subsidiary Director's services as a board member are terminated
at any time, for any reason, before the Restricted Stock Award is
fully vested, all of the unvested shares shall be forfeited.
(d) Enforcement of Restrictions. The Committee
shall cause a legend to be placed on the Stock certificates
issued pursuant to each Restricted Stock Award referring to the
restrictions imposed in the Plan and, in addition, may in its
sole discretion require one or more of the following methods of
enforcing such restrictions:
(i) Requiring the Subsidiary Director to
keep the Stock certificates, duly endorsed, in the custody of the
Company while the restrictions remain in effect; or
(ii) Requiring that the Stock certificates,
duly endorsed, be held in the custody of a third party while the
restrictions remain in effect.
6B.4 Shareholder Privileges. No Subsidiary Director
shall have any rights as a shareholder with respect to any shares
of Stock covered by an Option until the Subsidiary Director
becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date such
Subsidiary Director becomes the holder of record of such Stock,
except as provided in Section 4. A Subsidiary Director shall
have all voting, dividend, liquidation and other rights with
respect to Stock in accordance with its terms received by him as
a Restricted Stock Award under this Section 6B. A Subsidiary
Director's right to sell, encumber or otherwise transfer Stock
after restrictions applicable to such Stock have lapsed shall be
subject to the limitations of Section 8.2.
Section 7
Reorganization or Change of Control
7.1 Reorganization. If the Company is merged or
consolidated with another corporation (other than a merger or
consolidation in which the Company is the continuing corporation
and which does not result in any reclassification or change of
outstanding stock), or if all or substantially all of the assets
or more than 50 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or
person (other than a sale or conveyance in which the Company
continues as a holding company of an entity or entities that
conduct the business or businesses formerly conducted by the
Company), or in case of a reorganization (other than a
reorganization under the United States Bankruptcy Code) including
a divisive reorganization under Section 355 of the Code, or
liquidation of the Company, the Committee, or the board of
directors of any corporation assuming the obligations of the
Company, shall, as to the Plan and outstanding Restricted Stock
Awards and Options, either (i) make appropriate provision for the
adoption and continuation of the Plan by the acquiring or
successor corporation and for the protection of any such
outstanding Restricted Stock Awards and Options by the
substitution on an equitable basis of appropriate stock of the
Company or of the merged, consolidated or otherwise reorganized
corporation which will be issuable with respect to the Stock,
provided that no additional benefits shall be conferred upon the
Directors and Subsidiary Directors holding such Restricted Stock
Awards and Options as a result of such substitution and the
excess of the aggregate Fair Market Value of the shares subject
to such Options immediately before such substitution over the
Option Price thereof, or (ii) accelerate the restriction period
for any outstanding Restricted Stock Awards so that all
restrictions applicable to Restricted Stock Awards shall lapse
prior to any such event and, upon written notice to the Directors
and Subsidiary Directors, provide that all unexercised Options
must be exercised within a specified number of days of the date
of such notice or they will be terminated. In the latter event,
the Committee shall accelerate the exercise dates of outstanding
Options.
7.2 Change of Control
(a) In General. Upon a change in control of the
Company as defined in subsection 7.2(c), then (i) all Options
shall become immediately exercisable in full during the remaining
term thereof, and shall remain so, whether or not the individuals
to whom such Option have been granted remain Directors or
Subsidiary Directors; and (ii) all restrictions with respect to
outstanding Restricted Stock Awards shall immediately lapse.
(b) Limitation on Payments. If the provisions of
this Section 7.2 would result in the receipt by any Director or
Subsidiary Director of a payment within the meaning of Section
280G of the Code and the regulations promulgated thereunder and
if the receipt of such payment by any Director or Subsidiary
Director would, in the opinion of independent tax counsel of
recognized standing selected by the Company, result in the
payment of such Director or Subsidiary Director of any excise tax
provided for in Sections 280G and 4999 of the Code, then the
amount of such payment shall be reduced to the extent required,
in the opinion of independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the
Committee, in its sole discretion, may authorize the payment of
all or any portion of the amount of such reduction to the
Director or Subsidiary Director.
(c) Definition. For purposes of the Plan, a
"change in control" shall mean any of the following:
(i) The acquisition of or the ownership of
50 percent or more of the total Stock of the Company then issued
and outstanding, by any person, or group of affiliated persons,
or entities not affiliated with the Company as of the Effective
Date of this Plan, without the consent of the Board of Directors,
or
(ii) The election of individuals
constituting a majority of the Board of Directors who were not
either (A) members of the Board of Directors prior to the
election or (B) recommended to the shareholders by management of
the Company, or
(iii) A legally binding and final vote of
the shareholders of the Company in favor of selling all or
substantially all of the assets of the Company.
Section 8
Rights of Directors
8.1 Retention as Director. Nothing contained in the
Plan or in any Restricted Stock Award or Option granted under the
Plan shall interfere with or limit in any way the right of the
shareholders of the Company to remove any Director from the Board
or a Subsidiary Director from the board of directors of a
Subsidiary, pursuant to the bylaws of the Company or Subsidiary,
nor confer upon any Director or Subsidiary Director any right to
continue in the service of the Company or Subsidiary.
8.2 Nontransferability. No right or interest of any
Director or Subsidiary Director in a Restricted Stock Award
(prior to the completion of the restriction period applicable
thereto) or Option, granted pursuant to the Plan, shall be
assignable or transferable during the lifetime of the Director or
Subsidiary Director, either voluntarily or involuntarily, or
subjected to any lien, directly or indirectly, by operation of
law, or otherwise, including execution, levy, garnishment,
attachment, pledge or bankruptcy. In the event of a Director's
or a Subsidiary Director's death, the Director's or Subsidiary
Director's rights and interests in Restricted Stock Awards and
Options shall, to the extent provided in Section 6, be
transferable by testamentary will or the laws of descent and
distribution. If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the
Plan is disabled from caring for his affairs because of mental
condition, physical condition or age, payment due such person may
be made to, and such rights shall be exercised by, such person's
guardian, conservator or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the
Committee of such status.
Section 9
General Restrictions
9.1 Investment Representations. The Company may
require any person to whom a Restricted Stock Award or Option is
granted, as a condition of receiving such Restricted Stock Award
or of exercising such Option, to give written assurances in
substance and form satisfactory to the Company and its counsel to
the effect that such person is acquiring the Stock subject to the
Restricted Stock Award or Option for his own account for
investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with
Federal and applicable state securities laws.
9.2 Compliance with Securities Laws. Each Restricted
Stock Award and Option shall be subject to the requirement that,
if at any time counsel to the Company shall determine that the
listing, registration or qualification of the shares subject to
such Restricted Stock Award or Option upon any securities
exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance of shares
thereunder, such Restricted Stock Award or Option may not be
accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply
for or to obtain such listing, registration or qualification.
9.3 Changes in Accounting Rules. Notwithstanding any
other provision of the Plan to the contrary, if, during the term
of the Plan, any changes in the financial or tax accounting rules
applicable to Restricted Stock Awards or Options shall occur
which, in the sole judgment of the Committee, may have a material
adverse effect on the reported earnings, assets or liabilities of
the Company, the Committee shall have the right and power to
modify as necessary any then outstanding Restricted Stock Awards
and Options as to which the applicable restrictions have not been
satisfied.
9.4 Withholding of Tax. To the extent required by
applicable law and regulation, each Director and Subsidiary
Director must arrange with the Company for the payment of any
federal, state or local income or other tax applicable to the
Restricted Stock Award granted hereunder or the exercise of an
Option granted hereunder before the Company shall be required to
deliver to the Director or Subsidiary Director a certificate for
such Stock free and clear of all restrictions under this Plan.
Section 10
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to
time may amend or modify the Plan provided, however, that no
amendment or modification may become effective without approval
of the amendment or modification by the shareholders if
shareholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the
Company, on the advice of counsel, determines that shareholder
approval is otherwise necessary or desirable.
No amendment, modification or termination of the Plan
shall in any manner adversely affect any Restricted Stock Awards
or Options theretofore granted under the Plan without the consent
of the Director holding such Restricted Stock Awards or Options.
Section 11
Requirements of Law
11.1 Requirements of Law. The issuance of stock and
the payment of cash pursuant to the Plan shall be subject to all
applicable laws, rules and regulations.
11.2 Federal Securities Law Requirements. Restricted
Stock Awards and Options granted hereunder shall be subject to
all conditions required under Rule 16b-3 to qualify the
Restricted Stock Award or Option for any exception from the
provisions of Section 16(b) of the 1934 Act available under that
Rule. Such conditions shall be set forth in the agreement or
stock option certificate with the Director or Subsidiary Director
that describes the Restricted Stock Award or Option.
11.3 Governing Law. The Plan and all agreements
hereunder shall be construed in accordance with and governed by
the laws of the State of Colorado.
Section 12
Duration of the Plan
The Plan shall terminate at such time as may be
determined by the Board of Directors, and no Restricted Stock
Award or Option shall be granted after such termination.
Restricted Stock Awards outstanding at the time of the Plan
termination shall become free of restrictions in accordance with
their terms. Options outstanding at the time of the Plan
termination shall continue for the duration of the Option Term
applicable to the Option.
Dated:____________________
ATTEST: ACX TECHNOLOGIES, INC.
__________________________ By:_________________________
