SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
[x] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by
[ ] Soliciting Material Pursuant to Rule 14a-6(e)(2))
Section 240.14a-11(c)
or Section 240.14a-12
Barrett Business Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<PAGE>
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
BARRETT BUSINESS SERVICES, INC.
April 11, 1997
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Barrett Business Services, Inc., to be held at 2:00 p.m. on Wednesday, May
14, 1997, at The Benson Hotel, 309 S.W. Broadway, Portland, Oregon.
Matters to be presented for action at the meeting include the election
of directors, amendment of the Company's stock incentive plan, and ratification
of the selection of independent accountants.
We look forward to conversing with those of you who are able to attend
the meeting in person. Whether or not you can attend, it is important that you
sign, date and return your proxy as soon as possible. If you do attend the
meeting and wish to vote in person, you may withdraw your proxy and vote
personally.
Sincerely,
/s/ William W. Sherertz
William W. Sherertz
President and Chief
Executive Officer
<PAGE>
BARRETT BUSINESS SERVICES, INC.
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 14, 1997
----------------------------------------
You are invited to attend the annual meeting of stockholders of Barrett
Business Services, Inc., to be held at The Benson Hotel, 309 S.W. Broadway,
Portland, Oregon, on Wednesday, May 14, 1997, at 2:00 p.m., Pacific Time.
Only stockholders of record at the close of business on March 31, 1997,
will be entitled to vote at the meeting.
The meeting is being held to consider and act upon the following
matters:
1. Election of directors.
2. Approval of amendments to the Company's 1993 Stock Incentive Plan.
3. Approval of the appointment of Price Waterhouse LLP as independent
accountants for the current fiscal year ending December 31, 1997.
4. Such other business as may properly come before the meeting or any
adjournments thereof.
Please sign and date the accompanying proxy, and return it promptly in
the enclosed postage-paid envelope to avoid the expense of further solicitation.
If you attend the meeting, you may withdraw your proxy and vote your shares in
person.
By Order of the Board of Directors
/s/ Michael D. Mulholland
Michael D. Mulholland
Secretary
Portland, Oregon
April 11, 1997
<PAGE>
BARRETT BUSINESS SERVICES, INC.
4724 S.W. Macadam Avenue
Portland, Oregon 97201
(503) 220-0988
---------------
PROXY STATEMENT
---------------
1997 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of Barrett Business Services,
Inc. (the "Company"), to be voted at the annual meeting of stockholders to be
held on May 14, 1997, and any adjournments thereof. The proxy statement and
accompanying form of proxy were first mailed to stockholders on approximately
April 11, 1997.
VOTING, REVOCATION AND SOLICITATION OF PROXIES
When a proxy in the accompanying form is properly executed and
returned, the shares represented will be voted at the meeting in accordance with
the instructions specified in the spaces provided in the proxy. If no
instructions are specified, the shares will be voted FOR Items 1, 2, and 3 in
the accompanying Notice of Annual Meeting of Stockholders.
Stockholders may expressly abstain from voting on Items 2 and 3 by so
indicating on the proxy. Abstentions will have the effect of voting against Item
2, but will have no effect on the required vote on Item 3. Shares represented by
duly executed and returned proxies of brokers or other nominees which are
expressly not voted on Item 2 or 3 will have no effect on the required vote on
either matter.
Any proxy given pursuant to this solicitation may be revoked by the
person giving the proxy at any time prior to its exercise by written notice to
the Secretary of the Company of such revocation, by a later-dated proxy received
by the Company, or by attending the meeting and voting in person. The mailing
address of the Company's principal executive offices is 4724 S.W.
Macadam Avenue, Portland, Oregon 97201.
The solicitation of proxies will be made primarily by mail, but proxies
may also be solicited personally and by telegram or telephone by directors and
officers of the Company without additional compensation for such services.
Brokers and other persons holding shares in their names, or in the names of
nominees, will be reimbursed for their reasonable expenses in forwarding
soliciting materials to their principals and in obtaining authorization for the
execution of proxies. The Company has retained D.F. King & Co., Inc., to assist
in such solicitation for an estimated fee of $2,000 plus reimbursement for
certain expenses. All costs of solicitation of proxies will be borne by the
Company.
OUTSTANDING VOTING SECURITIES
The close of business on March 31, 1997, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the annual meeting. On the record date, the Company had outstanding 6,826,577
shares of Common Stock, $.01 par value ("Common Stock"), each share of which is
entitled to one vote at the meeting. Common Stock is the only outstanding voting
security of the Company. All references to shares of Common Stock and per share
prices in this proxy statement have been adjusted for the two-for-one stock
split paid in May 1994.
- 1 -
<PAGE>
ELECTION OF DIRECTORS
The directors of the Company are elected at the annual meeting of
stockholders in May to serve until the next annual meeting and until their
successors are elected and qualified. The Board has set the number of positions
on the Board at six. All of the nominees for election as directors are members
of the present Board.
A nominee will be elected if the nominee receives a plurality of the
votes cast by the shares entitled to vote in the election, provided that a
quorum is present at the meeting. Unless authority to vote for a director or
directors is withheld, the accompanying proxy will be voted FOR the election of
the nominees named below. If for some unforeseen reason a nominee should become
unavailable for election, the number of directors constituting the Board may be
reduced prior to the annual meeting or the proxy may be voted for the election
of such substitute nominee as may be designated by the Board.
The following table sets forth information with respect to each person
nominated for election as a director, including their ages as of February 28,
1997, business experience during the past five years, and directorships in other
corporations. There are no family relationships among the Company's directors
and officers.
DIRECTOR
NAME PRINCIPAL OCCUPATION(1) AGE SINCE
- ---- ----------------------------------------- --- --------
Robert R. Ames Retired Vice Chairman of First 56 1993
Interstate Bank of Oregon, N.A.
Jeffrey L. Beaudoin President and a director of Rose 42 1993
City Moving and Storage Co.,
Portland, Oregon.
Stephen A. Gregg Principal, The Alternare Group, 52 1995
a national provider of alternative
medicine services.
Anthony Meeker Vice President of Spears Benzak 57 1993
Salomon & Farrell, Inc., New York,
New York, an investment management firm.
Stanley G. Renecker Vice President - Acquisitions of The 42 1993
Campbell Group, Portland, Oregon,
a timberland management firm.
William W. Sherertz President and Chief Executive 51 1980
Officer of the Company.
- --------------
(1) During the past five years, the principal occupation and employment of each
director has been in the capacity set forth above except as follows:
(a) Mr. Ames currently is actively engaged in numerous real estate
development ventures. From 1992 to 1995, he was the Vice Chairman of
the Board of Directors of First Interstate Bank of Oregon, N.A. From
1983 to 1991, Mr. Ames served as President of the Bank.
(b) Mr. Gregg was Chairman and Chief Executive Officer of The Ethix
Corporation, a national provider of health care programs headquartered
in Portland, Oregon, from 1985 to 1994. Mr. Gregg is also a director of
Regent Assisted Living, Inc.
(c) Mr. Meeker was Treasurer of the State of Oregon from 1987 to 1993.
(d) Mr. Sherertz has acted as Chief Executive Officer of the Company since
1980. He was elected President of the Company in March 1993. Mr.
Sherertz also serves as Chairman of the Board of Directors.
- 2 -
<PAGE>
DIRECTORS' MEETINGS AND STANDING COMMITTEES
The standing committees of the Board include an audit committee and a
compensation committee. The Company does not have a standing nominating
committee, but the Board will consider suggestions submitted by stockholders for
proposed nominees for director. Any recommendations as to nominees for election
at the 1997 annual meeting should be submitted in writing by December 12, 1997,
to the Secretary of the Company at its principal executive offices and should
include the name, address and qualifications of each proposed nominee.
During 1996, the Board held eight meetings, the audit committee held
four meetings and the compensation committee held eight meetings. Each director
attended more than 75% of the aggregate of the total number of meetings of the
Board and the total number of meetings held by all committees of the Board on
which he served during 1996, except for Mr. Gregg, who attended approximately
70% of all such meetings.
The audit committee reviews services provided by the independent
accountants, makes recommendations concerning their engagement or discharge, and
reviews with management and the independent accountants the results of their
audit, the adequacy of internal accounting controls, and the quality of
financial reporting. The members of the audit committee are Mr. Renecker,
chairman, and Mr. Ames.
The compensation committee reviews the compensation of executive
officers of the Company and makes recommendations to the Board regarding salary
levels and other forms of compensation to be paid to executive officers. The
committee also administers the Company's 1993 Stock Incentive Plan (the
"Incentive Plan") and makes decisions as to grants of options and other
stock-based awards. The members of the compensation committee are Mr. Meeker,
chairman, Mr. Beaudoin, and Mr. Gregg.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee of the board of directors of
the Company during 1996 were Jeffrey L. Beaudoin, Stephen A. Gregg and Anthony
Meeker. During 1996, the Company provided services to Rose City Moving and
Storage Co., of which Mr. Beaudoin is President and a majority stockholder. The
Company recorded revenues and cost of revenues during 1996 related to such
services of $4,086,000 and $3,768,000, respectively. At December 31, 1996, the
Company's assets included trade accounts receivable totaling $126,000 with
respect to the above services; the highest amount of such receivables
outstanding at any time during 1996 was $191,000 as of February 29, 1996.
- 3 -
<PAGE>
STOCK OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
BENEFICIAL OWNERSHIP TABLE
The following table gives information regarding the beneficial
ownership of Common Stock as of February 28, 1997, by each director and certain
named executive officers and by all directors and executive officers of the
Company as a group. In addition, it gives information about each person or group
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock. Information as to beneficial stock ownership is based on data
furnished by the persons concerning whom such information is given. Unless
otherwise indicated, all shares listed as beneficially owned are held with sole
voting and dispositive powers.
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP (2) CLASS
- ------------------------ ------------- -----
Robert R. Ames . . . . . . . . . 3,250 *
Michael K. Barrett . . . . . . . -- --
Jeffrey L. Beaudoin . . . . . . 9,150(3) *
Stephen A. Gregg . . . . . . . . 1,250 *
Christopher J. McLaughlin. . . . -- --
Anthony Meeker . . . . . . . . . 3,700 *
Michael D. Mulholland. . . . . . 22,125 *
Stanley G. Renecker. . . . . . . 3,250 *
Nancy B. Sherertz(1) . . . . . . 1,540,000(4) 22.6%
William W. Sherertz(1) . . . . . 1,834,592 26.6%
All directors and executive officers
as a group (10 persons). . . . . 1,888,442 27.2%
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* Less than 1% of the outstanding shares of Common Stock.
(1) The addresses of persons owning beneficially more than 5% of the
outstanding Common Stock are as follows: Nancy B. Sherertz, 27023 Rigby
Lot Road, Easton, Maryland 21601; and William W. Sherertz, 4724 S.W.
Macadam Avenue, Portland, Oregon 97201.
(2) Includes options to purchase Common Stock which are presently exercisable
or will become exercisable by April 30, 1997, as follows: Mr. Ames, 3,250
shares; Mr. Beaudoin, 3,250 shares; Mr. Gregg, 250 shares; Mr. Meeker,
3,250 shares; Mr. Mulholland, 22,125 shares; Mr. Renecker, 3,250 shares;
Mr. Sherertz, 70,275 shares; and all directors and executive officers as a
group, 116,275 shares.
(3) Includes 400 shares owned by Mr. Beaudoin's wife, as to which he shares
voting and dispositive powers.
(4) Ms. Sherertz disclaims beneficial ownership of 1,310 shares held by her
children.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 ("Section 16")
requires that reports of beneficial ownership of Common Stock and changes in
such ownership be filed with the Securities and Exchange Commission ("SEC") by
Section 16 "reporting persons," including directors, executive officers, and
certain holders of more than 10% of the outstanding Common Stock. To the
Company's knowledge, all Section 16 reporting requirements applicable to known
reporting persons were complied with for transactions and stock holdings during
1996, except that Nancy B. Sherertz, who beneficially owns more than 10% of the
outstanding Common Stock, filed one report and one amended report each reporting
one transaction after the required due date.
- 4 -
<PAGE>
APPROVAL OF AMENDMENTS TO 1993 STOCK INCENTIVE PLAN
DESCRIPTION OF AMENDMENTS TO THE INCENTIVE PLAN
On March 12, 1997, the Board adopted, subject to stockholder approval,
an amendment to the Company's 1993 Stock Incentive Plan (the "Incentive Plan")
to increase the number of shares of Common Stock which may be made the subject
of awards under the Incentive Plan by 500,000 to 1,300,000 shares, subject to
adjustment for changes in capitalization. The Incentive Plan provides for the
grant of stock options and other stock-based awards to the Company's employees,
non-employee directors, and outside consultants or advisers. At February 28,
1997, there were 152,616 shares available for future grants of awards under the
Incentive Plan. Shares subject to awards which expire or are otherwise
terminated will again become available for grants of new awards. No awards or
specific plans with respect thereto had been made regarding the additional
500,000 shares authorized by the amendment at the date of this proxy statement.
The Board also adopted, subject to stockholder approval, amendments to
the Incentive Plan intended to comply with certain requirements contained in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
which relates to the deductibility by the Company of certain executive
compensation for federal income tax purposes. Pursuant to the amendments, the
maximum number of shares subject to options or stock appreciation rights
("SARs") which may be granted to any individual participant under the Incentive
Plan during any calendar year may not exceed 200,000 shares.
At March 31, 1997, 17 employees and five non-employee directors held
awards under the Incentive Plan and represented the pool of persons considered
eligible to participate in the Incentive Plan at that date. The closing sale
price for the Common Stock reported by The Nasdaq Stock Market on March 31,
1997, was $14.50.
DESCRIPTION OF AWARDS UNDER THE INCENTIVE PLAN
The Incentive Plan is administered by the compensation committee of the
Board (the "Committee"). The types of awards (collectively referred to as
"Awards") that may be granted by the Committee under the Incentive Plan include:
Options. Options to purchase Common Stock may be incentive stock
options meeting the requirements of Section 422 of the Code, or nonqualified
options which are not eligible for such tax-favored treatment. Incentive stock
options may expire not more than ten years from the date of grant. The Incentive
Plan does not specify a maximum term for nonqualified options. The exercise
price per share must be not less than 100% of the fair market value of a share
of Common Stock on the date the option is granted for incentive stock options
and not less than 75% of such fair market value for nonqualified options. The
Incentive Plan also authorizes the issuance of nonqualified deferred
compensation options with an exercise price of not less than $.01 per share for
the purpose of deferring a specified amount of income for a recipient. The award
agreement relating to an option may, in the discretion of the Committee, provide
that if an option is exercised using previously-acquired shares in payment of
the exercise price, the recipient shall automatically be granted a replacement
option (a "reload option") for a number of shares equal to the number (or a
portion of the number) of shares surrendered with an exercise price equal to the
fair market value of the Common Stock on the date of grant.
Stock Appreciation Rights. A recipient of SARs will receive upon
exercise an amount equal to the excess (or specified portion thereof) of the
fair market value of a share of Common Stock on the date of exercise over the
base price, multiplied by the number of shares as to which the rights are
exercised. The base price will be designated by the Committee in the award
agreement and may be equal to, higher or lower than the fair market value of the
Common Stock on the date of grant. Payment may be in cash, in shares of Common
Stock, in the form of a deferred compensation option or in any other form
approved by
- 5 -
<PAGE>
the Committee. SARs may be granted in connection with options or other Awards or
may be granted as independent Awards.
Restricted Awards. Restricted Awards may take the form of restricted
shares or restricted units. Restricted shares are shares of Common Stock which
are subject to such limitations as the Committee deems appropriate, including
restrictions on sale or transfer. Restricted shares may be subject to forfeiture
in the event the recipient terminates employment or service as a consultant
during a specified period. Stock certificates representing restricted shares are
issued in the name of the recipient but are held by the Company until the
expiration of any restrictions. From the date of issuance of restricted shares,
the recipient is entitled to the rights of a stockholder with respect to such
shares, including voting and dividend rights.
Restricted units are awards of units equivalent in value to a share of
Common Stock, which similarly may be subject to forfeiture if the recipient
terminates employment or service as a consultant during a specified period. At
the expiration of such period, payment is made with respect to restricted units
in an amount equal to the value of the number of shares covered by the
restricted units. Payment may be in cash or unrestricted shares of Common Stock
or in any other form approved by the Committee.
Performance Awards. Performance Awards are granted in units equivalent
in value to a share of Common Stock. A performance Award is subject to
forfeiture if or to the extent the recipient fails to meet certain performance
goals during a designated performance cycle. Performance Awards earned by
attaining performance goals are paid at the end of a performance cycle in cash
or shares of Common Stock or in any other form approved by the Committee.
Other Stock-Based Awards. The Committee may grant other Awards that
involve payments or grants of shares of Common Stock or are measured by or in
relation to shares of Common Stock. The Incentive Plan provides flexibility to
design new types of stock-based or stock-related Awards to attract and retain
employees, directors and consultants in a competitive environment.
Non-Employee Director Options. Non-employee directors may only
receive Awards under the Incentive Plan as described under "Executive
Compensation--Directors' Compensation" below.
ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
In the event of a change in capitalization, the Committee may make such
proportionate adjustments in the aggregate number of shares for which Awards may
be granted under the Incentive Plan, the maximum number of shares which may be
awarded to any participant, and the number of shares covered by, and the
exercise or base price of, any outstanding Awards, as the Committee in its sole
discretion may deem appropriate.
DURATION, TERMINATION AND AMENDMENT OF THE INCENTIVE PLAN
The Incentive Plan will remain in effect until Awards have been granted
covering all available shares under the Incentive Plan or the Incentive Plan is
otherwise terminated by the Board. The Board may terminate the Incentive Plan at
any time, but any such termination will not affect any outstanding Awards. The
Board may also amend the Incentive Plan from time to time, but may not, without
stockholder approval, materially increase the benefits accruing to participants
under the Incentive Plan, materially increase the aggregate number of shares of
Common Stock which may be issued under the Incentive Plan, or materially modify
the requirements as to eligibility for participation in the Incentive Plan. The
Board may amend the Incentive Plan without stockholder approval to take into
account changes in certain laws and regulations.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS
The following discussion summarizes the principal anticipated federal
income tax consequences of grants of stock options under the Incentive Plan to
participants and to the Company.
Tax Consequences to Participants
Incentive Stock Options. Incentive stock options under the Incentive
Plan are intended to meet the requirements of Section 422 of the Code. No income
results to a participant upon the grant of an incentive stock option or upon the
issuance of shares when the option is exercised. The amount realized on the sale
or taxable exchange of such shares in excess of the exercise price will be
considered a capital gain, except that if such disposition occurs within one
year after exercise of the option or two years after grant of the option, the
participant will recognize compensation taxable at ordinary income tax rates
measured by the amount by which the lesser of (i) the fair market value on the
date of exercise or (ii) the amount realized on the sale of the shares, exceeds
the exercise price. For purposes of determining alternative minimum taxable
income, an incentive stock option is treated as a nonqualified option.
Nonqualified Options. No taxable income is recognized upon the grant of
a nonqualified option. In connection with the exercise of a nonqualified option,
a participant will generally realize compensation income (self-employment income
for non-employee directors) measured by the difference between the exercise
price and the fair market value of the shares acquired on the date of exercise.
The participant's cost basis in the acquired shares is the fair market value of
the shares on the exercise date. Any gain upon sale of the shares is capital
gain.
Payment of Exercise Price in Shares. The Committee may permit
participants to pay all or a portion of the exercise price using
previously-acquired shares of Common Stock. If an option is exercised and
payment is made in previously held shares, there is no taxable gain or loss to
the participant other than any gain recognized as a result of exercise of the
option, as described above.
Tax Consequences to the Company
To the extent participants qualify for capital gains treatment with
respect to the sale of shares acquired pursuant to exercise of an incentive
stock option, the Company will not be entitled to any tax deduction in
connection with incentive stock options. In the case of nonqualified stock
options, the Company will be entitled to receive a federal income tax deduction
at the same time and in the same amount as the amount which is taxable to
participants as ordinary income.
BOARD RECOMMENDATION AND VOTE REQUIRED
The Board recommends a vote FOR the proposed amendments to the
Incentive Plan. If a quorum is present at the annual meeting, the amendments
will be approved upon the affirmative vote of the holders of a majority of the
shares present, or represented by proxy, and entitled to vote upon the proposal
at the meeting. In the event the amendments are not approved by the
stockholders, the Incentive Plan will remain in effect as to the 800,000 shares
of Common Stock already subject to the plan.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years indicated the compensation
awarded or paid to, or earned by, the Company's chief executive officer and the
Company's other executive officers whose salary level and bonus in 1996 exceeded
$100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME AND PRINCIPAL SALARY BONUS OPTIONS(1)
POSITION YEAR ($) ($) (#)
- ------------------------- -------- --------- -------- ------------
William W. Sherertz . . . 1996 $144,000 -- 30,333
President and 1995 144,000 -- 70,000
Chief Executive Officer 1994 144,000 -- 77,000
Michael D. Mulholland . . 1996 127,500 $33,367 18,500
Vice President-Finance 1995 115,000 42,550 30,000
and Secretary; Chief 1994(2) 42,486 -- 20,000
Financial Officer
Christopher J. McLaughlin 1996 90,000 23,553 18,500
Vice President-Operations 1995 90,000 33,300 26,000
1994(3) 79,583 39,300 20,000
Michael K. Barrett. . . . 1996 80,000 20,936 --
Vice President - Business 1995(4) -- -- 50,000
Development
- --------------------
(1) Option grants do not include stock appreciation rights ("SARs").
(2) Mr. Mulholland joined the Company in August 1994 at an annual salary of
$115,000.
(3) Mr. McLaughlin became an executive officer during 1994; the amounts shown
are for the full fiscal year. Mr. McLaughlin resigned in February 1997.
(4) Mr. Barrett became an executive officer on December 27, 1995.
- 8 -
<PAGE>
STOCK OPTION DATA
The following table provides information as to options to purchase Common
Stock granted under the Incentive Plan to the named executive officers during
1996.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE GRANT DATE
GRANTED(1) IN FISCAL PRICE EXPIRATION PRESENT
(#) YEAR ($/SHARE) DATE VALUE($)(2)
----------- ----------- --------- ---------- -----------
William W.
<S> <C> <C> <C> <C> <C>
Sherertz . . . . 30,333 22.1% $15.00 7/15/2006 $244,484
Michael D.
Mulholland . . . 18,500 13.5 15.0625 2/12/2006 149,850
Christopher J.
McLaughlin . . . 18,500 13.5 15.0625 2/12/2006 149,850
Michael K.
Barrett. . . . . -- -- -- -- --
</TABLE>
(1) Options generally become exercisable cumulatively in four equal annual
installments beginning one year after the date of grant; provided that the
option will become exercisable in full upon the officer's death,
disability or retirement, or in the event of a change in control of the
Company. A change in control is defined in the option agreements to
include (i) any occurrence which would be required to be reported as such
by the proxy disclosure rules of the SEC, (ii) the acquisition by a person
or group (other than the Company or one of its employee benefit plans) of
30% or more of the combined voting power of its voting securities, (iii)
with certain exceptions, the existing directors' ceasing to constitute a
majority of the Board, (iv) certain transactions involving the merger, or
sale or transfer of a majority of the assets, of the Company, or (v)
approval by the stockholders of a plan of liquidation or dissolution of
the Company. The options include a feature which entitles an optionee who
tenders previously-acquired shares of Common Stock to pay all or part of
the exercise price of the option, to be granted a replacement option (a
"reload option") to purchase a number of shares equal to the number of
shares tendered with an exercise price equal to the fair market value of
the Common Stock on the date of grant. The option granted to Mr. Sherertz
is a reload option which became exercisable in full six months following
the date of grant. No SARs were granted by the Company during 1996.
(2) The values shown have been calculated based on the Black-Scholes option
pricing model and do not reflect the effect of restrictions on
transferability or vesting. The values were calculated based on the
following assumptions: (i) expectations regarding volatility of 41% were
based on monthly stock price data for the Company, (ii) the risk-free rate
of return (6.1%) was assumed to be the Treasury Bond rate whose maturity
corresponds to the expected term (7 years) of the option granted; and
(iii) no dividends on the Common Stock will be paid during the option
term. The values which may ultimately be realized will depend on the
market value of the Common Stock during the periods during which the
options are exercisable, which may vary significantly from the assumptions
underlying the Black-Scholes model.
-9-
<PAGE>
Information concerning exercises of stock options during 1996 and the
value of unexercised options held by the named executive officers at December
31, 1996, is summarized in the table below.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END (3)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. Sherertz 70,000 $595,000 22,442 137,391 $50,314 $428,899
Michael D. Mulholland -- -- 17,500 51,000 49,063 60,656
Christopher J. McLaughlin -- -- 19,500 49,000 96,500 83,969
Michael K. Barrett -- -- 12,500 37,500 10,938 32,813
</TABLE>
- -----------------------------------------
(1) The named executive officers did not exercise any SARs during 1996 and did
not hold any SARs at December 31, 1996.
(2) Represents the amount by which the fair market value of the Common Stock at
the date of exercise exceeded the exercise price.
(3) The values shown have been calculated based on the difference between
$15.25, which was the closing sale price of the Common Stock reported on The
Nasdaq Stock Market on December 31, 1996, and the per share exercise price
of unexercised options.
DIRECTORS' COMPENSATION
Under the standard arrangement in effect at the end of 1996, directors
(other than directors who are full-time employees of the Company, who do not
receive directors' fees) are entitled to receive a fee of $500 for each Board
meeting attended and each meeting of a committee of the Board attended other
than a committee meeting held on the same day as a Board meeting.
In June 1993, concurrently with the closing of the Company's initial
public offering, each person who was then a non-employee director of the Company
received a nonqualified option, as adjusted for the May 1994 two-for-one stock
split, to purchase 3,000 shares of the Company's Common Stock at an exercise
price of $3.50. Also, a nonqualified option for 1,000 shares of Common Stock is
granted automatically to each non-employee director whose term begins on or
continues after the date of each annual meeting of stockholders at an exercise
price equal to the fair market value of the Common Stock on the date of the
meeting. Accordingly, on May 16, 1996, Messrs. Ames, Beaudoin, Gregg, Meeker and
Renecker each received an option for 1,000 shares at an exercise price of $17.75
per share.
Payment of the exercise price of options granted to non-employee
directors may be in cash or in previously-acquired shares of Common Stock. Each
option includes a reload option feature to the extent that previously-acquired
shares are used to pay the exercise price. Non-employee director options (other
than reload options) become exercisable in four equal annual installments
beginning one year after the date of grant. Reload options become exercisable
six months following the date of grant. All options granted to a non-employee
director will be exercisable in full upon the director's death, disability or
retirement, or in the event of a change in control of the Company. The option
term will expire three months following the date upon which the holder ceases to
be a director other than by reason of death, disability or retirement; in the
event of death or disability, the option will expire one year thereafter, while
non-employee director options will expire five years after retirement.
- 10 -
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation committee (the "Committee") of the Board is composed
of three outside directors who provide disinterested administration of the
Company's stock-based Incentive Plan and act as an independent resource to the
Board in recommending executive salary levels and analyzing other proposed forms
of executive compensation.
The Company's overall approach to executive compensation is based on a
philosophy that combines a goal-driven annual cash compensation package with
equity incentives designed to build stock ownership among key employees. These
two key principles serve to align executives effectively with stockholder
interests by focusing management on financial goals necessary to enhance
stockholder value, as well as long-term growth, by strongly encouraging
significant ownership in the Company's stock.
Salaries. Base salaries for the Company's executive officers are
initially determined by evaluating the responsibilities of the position and the
experience of the individual, and by reference to the competitive marketplace
for management talent, including a comparison of base salaries for comparable
positions at comparably-sized companies or comparable companies within the
Company's industry. Annual salary adjustments are determined by evaluating the
competitive marketplace, the performance of the Company, the performance of the
executive particularly with respect to the individual's specific contribution to
the Company's success, and any increased responsibilities assumed by the
executive.
Annual Cash Incentive Bonuses. The Committee has developed a written
compensation policy to guide its compensation decisions with respect to the
executive officers of the Company below the level of president. It is the
Committee's belief that the stewardship provided by the executive officers is
best measured by the Company's return on equity. Accordingly, recommendations
for annual awards of cash incentive bonuses for 1996 were based upon a formula
with reference to the Company's return on stockholders' equity for the year
ended December 31, 1996 and the executive's then-current base salary.
Long-Term Incentive Compensation. The Company seeks to enhance and
foster its continued success by aligning executive officer financial interests
with long-term stockholder value. Annual awards of stock options were granted in
February 1996 to Messrs. Mulholland and McLaughlin in accordance with the
Company's written policy regarding executive compensation based on a formula
principally determined by the Company's return on stockholders' equity for the
year ended December 31, 1995.
Chief Executive Officer Compensation. While the Committee recognizes
that the financial performance of the Company has been excellent, it was the
recommendation of the Company's president, William W. Sherertz, to the Committee
that his salary level continued to be reasonable for 1996. It was Mr. Sherertz's
further recommendation that his incentive compensation continue to be tied to
the long-term enhancement of stockholder value and, accordingly, he declined to
accept an annual cash bonus for the third successive year. He also declined the
annual grant of a stock option by the Committee. It was the decision of the
Committee to accept Mr. Sherertz's recommendations.
The Committee's goal is to serve the interests of the Company's
stockholders by enabling the Company to attract, motivate, and retain the
caliber of management expertise necessary for the successful implementation of
the Company's strategic goals. The Committee believes that its objective was
successfully achieved during 1996.
COMPENSATION COMMITTEE
Anthony Meeker, Chair
Jeffrey L. Beaudoin
Stephen A. Gregg
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<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total return at the dates
indicated for the period from June 11, 1993, the date on which the Common Stock
became registered under the Securities Exchange Act of 1934, until December 31,
1996, for the Common Stock, the Standard & Poor's 500 Stock Index (the "S&P
500"), and for a group of the Company's peers in the staffing industry. In
addition, the graph has been prepared assuming (i) reinvestment of dividends and
(ii) investment of $100 in each of the S&P 500 and the peer group at the close
of business on June 10, 1993, and in the Common Stock at the public offering
price of $3.50 per share in the Company's initial public offering.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
BARRETT BUSINESS SERVICES, INC.
[graphic table]
12/31/91 12/31/92 12/31/93 12/31/94 12/30/95 12/29/96
-------- -------- -------- -------- -------- --------
Barrett
Business
Services,
Inc. $169.2 $344.6 $363.1 $375.4
S&P 500
Stocks $89.5 $96.3 $105.7 107.2 147.5 181.8
Self-
Determined
Peer Group 86.8 106.8 118.3 156.4 179.9 193.6
Companies in the Self-Determined Peer Group:
ADIA SERVICES INC CDI CORP
KELLY SERVICES INC MANPOWER INC
OLSTEN CORP ROBERT HALF INTERNATIONAL INC
STAFF BUILDERS INC NEW UNIFORCE TEMPORARY PERSONNEL INC
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
- 12 -
<PAGE>
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 06/11/93.
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected Price Waterhouse LLP as independent accountants
to examine the financial statements of the Company for the fiscal year ending
December 31, 1997. Although the appointment of accountants is not required to be
submitted to a vote of the stockholders, the Board has decided to ask the
stockholders to approve the appointment and recommends that you vote FOR
approval. If a majority of the shares of Common Stock represented at the annual
meeting does not vote to approve the appointment, the Board will reconsider the
appointment.
The Company expects representatives of Price Waterhouse LLP to be
present at the 1997 annual stockholders meeting and to be available to respond
to appropriate questions. The accountants will have the opportunity to make a
statement at the annual meeting if they desire to do so.
OTHER MATTERS
Management knows of no matters to be brought before the annual meeting
other than the election of directors, amendment of the Incentive Plan, and
ratification of the selection of accountants. However, if any other business
properly comes before the meeting, the persons named in the accompanying form of
proxy will vote or refrain from voting thereon in accordance with their judgment
pursuant to the discretionary authority given them in the proxy.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals submitted for inclusion in the 1998 proxy
materials and consideration at the 1998 annual meeting of stockholders must be
received by the Company by December 12, 1997. Any such proposal should comply
with the SEC's rules governing stockholder proposals submitted for inclusion in
proxy materials.
April 11, 1997 BARRETT BUSINESS SERVICES, INC.
- 13 -
<PAGE>
APPENDIX
BARRETT BUSINESS SERVICES, INC.
AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment. Barrett Business Services, Inc.
("Corporation"), hereby establishes the Barrett Business Services, Inc., 1993
Stock Incentive Plan (the "Plan"), effective as of March 1, 1993, subject to
shareholder approval as provided in Article 18. The Plan was previously amended
effective March 8, 1994, and is further amended and restated as set forth herein
effective March 12, 1997, subject to shareholder approval as provided in Article
16.
1.2 Purpose. The purpose of the Plan is to promote and advance
the interests of Corporation and its shareholders by enabling Corporation to
attract, retain, and reward key employees, directors, and outside consultants of
Corporation and its subsidiaries. It is also intended to strengthen the
mutuality of interests between such employees, directors, and consultants and
Corporation's shareholders. The Plan is designed to serve these purposes by
offering stock options and other equity-based incentive awards, thereby
providing a proprietary interest in pursuing the long-term growth,
profitability, and financial success of Corporation.
ARTICLE 2
DEFINITIONS
2.1 Defined Terms. For purposes of the Plan, the following
terms shall have the meanings set forth below:
"AWARD" means an award or grant made to a Participant of
Options, Stock Appreciation Rights, Restricted Awards, Performance Awards, or
Other Stock-Based Awards pursuant to the Plan.
"AWARD AGREEMENT" means an agreement as described in Section
6.4.
"BOARD" means the Board of Directors of Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any successor thereto, together with rules,
regulations, and interpretations promulgated thereunder. Where the context so
requires, any reference to a particular Code section shall be construed to refer
to the successor provision to such Code section.
"COMMITTEE" means the committee appointed by the Board to
administer the Plan
- 1 -
<PAGE>
as provided in Article 3 of the Plan.
"COMMON STOCK" means the $.01 par value Common Stock of
Corporation or any security of Corporation issued in substitution, exchange, or
lieu thereof.
"CONSULTANT" means any consultant or adviser to Corporation or
a Subsidiary selected by the Committee, who is not an employee of Corporation or
a Subsidiary.
"CONTINUING RESTRICTION" means a Restriction contained in
Sections 6.5(i), 17.4, 17.5, and 17.7 of the Plan and any other Restrictions
expressly designated by the Committee in an Award Agreement as a Continuing
Restriction.
"CORPORATION" means Barrett Business Services, Inc., a
Maryland corporation, or any successor corporation.
"DEFERRED COMPENSATION OPTION" means a Nonqualified Option
granted in lieu of a specified amount of other compensation pursuant to Section
7.8 of the Plan.
"DIRECTOR OPTIONS" means options granted to Non-Employee Board
Directors pursuant to Article 14 of the Plan, including Initial Director Options
and Annual Director Options.
"DISABILITY" means the condition of being permanently
"disabled" within the meaning of Section 22(e)(3) of the Code, namely being
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. However, the Committee may change the foregoing
definition of "Disability" or may adopt a different definition for purposes of
specific Awards.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute. Where the
context so requires, any reference to a particular section of the Exchange Act,
or to any rule promulgated under the Exchange Act, shall be construed to refer
to successor provisions to such section or rule.
"FAIR MARKET VALUE" means on any given date, the fair market
value per share of the Common Stock determined as follows:
(a) If the Common Stock is traded on an established securities
exchange, the mean between the reported high and low sale prices of
Common Stock as reported for such day by the principal exchange on
which Common Stock is traded (as determined by the Committee) or, if
Common Stock was not traded on such date, on the next preceding day on
which Common Stock was traded;
- 2 -
<PAGE>
(b) If trading activity in Common Stock is reported in the
NASDAQ National Market System, the mean between the reported high and
low sale prices of Common Stock as reported for such day by the NASDAQ
or, if Common Stock trades were not reported on such date, on the next
preceding day on which Common Stock trades were reported by the NASDAQ;
(c) If trading activity in Common Stock is reported in the
NASDAQ Bid and Asked Quotations, the mean between the bid price and
asked price quote for such day as reported by the NASDAQ or, if there
are no such quotes for Common Stock for such date, on the next
preceding day for which bid and asked price quotes for Common Stock
were reported by NASDAQ; or
(d) If there is no market for Common Stock or if trading
activities for Common Stock are not reported in one of the manners
described above, the fair market value shall be as determined by the
Committee.
"INCENTIVE STOCK OPTION" or "ISO" means any Option granted
pursuant to the Plan that is intended to be and is specifically designated in
its Award Agreement as an "incentive stock option" within the meaning of Section
422 of the Code.
"NON-EMPLOYEE BOARD DIRECTOR" means a member of the Board who
is not an employee of Corporation or any Subsidiary.
"NON-EMPLOYEE SUBSIDIARY DIRECTOR" means a member of the board
of directors of a Subsidiary who is neither an employee of Corporation or a
Subsidiary nor a member of the Board.
"NONQUALIFIED OPTION" or "NQO" means any Option, including a
Deferred Compensation Option, granted pursuant to the Plan that is not an
Incentive Stock Option.
"OPTION" means an ISO, an NQO, a Deferred Compensation Option,
or a Director Option.
"OTHER STOCK-BASED AWARD" means an Award as defined in Section
11.1.
"PARTICIPANT" means an employee or a Consultant of Corporation
or a Subsidiary, a Non-Employee Board Director, or a Non-Employee Subsidiary
Director who is granted an Award under the Plan.
"PERFORMANCE AWARD" means an Award granted pursuant to the
provisions of Article 10 of the Plan, the Vesting of which is contingent on
performance attainment.
- 3 -
<PAGE>
"PERFORMANCE CYCLE" means a designated performance period
pursuant to the provisions of Section 10.3 of the Plan.
"PERFORMANCE GOAL" means a designated performance objective
pursuant to the provisions of Section 10.4 of the Plan.
"PLAN" means this Barrett Business Services, Inc., 1993 Stock
Incentive Plan, as set forth herein and as it may be hereafter amended and from
time to time.
"REPORTING PERSON" means a Participant who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
"RESTRICTED AWARD" means a Restricted Share or a Restricted
Unit granted pursuant to Article 9 of the Plan.
"RESTRICTED SHARE" means an Award described in Section 9.1(a)
of the Plan.
"RESTRICTED UNIT" means an Award of units representing Shares
described in Section 9.1(b) of the Plan.
"RESTRICTION" means a provision in the Plan or in an Award
Agreement which limits the exercisability or transferability, or which governs
the forfeiture, of an Award or the Shares, cash, or other property payable
pursuant to an Award.
"RETIREMENT" means:
(a) For Participants who are employees, retirement from active
employment with Corporation and its Subsidiaries on or after age 65, or
such earlier retirement date as approved by the Committee for purposes
of the Plan;
(b) For Participants who are Non-Employee Board Directors or
Non-Employee Subsidiary Directors, retirement from the applicable board
of directors after attaining the maximum age (if any) specified in the
articles of incorporation or bylaws of the applicable corporation; or
(c) For Participants who are Consultants, termination of
service as a Consultant after attaining a retirement age specified by
the Committee for purposes of an Award to such Consultant.
However, the Committee may change the foregoing definition of "Retirement" or
may adopt a different definition for purposes of specific Awards.
- 4 -
<PAGE>
"SHARE" means a share of Common Stock.
"STOCK APPRECIATION RIGHT" or "SAR" means an Award to benefit
from the appreciation of Common Stock granted pursuant to the provisions of
Article 8 of the Plan.
"SUBSIDIARY" means a "subsidiary corporation" of Corporation,
within the meaning of Section 425 of the Code, namely any corporation in which
Corporation directly or indirectly controls 50 percent or more of the total
combined voting power of all classes of stock having voting power.
"VEST" or "VESTED" means:
(a) In the case of an Award that requires exercise, to be or
to become immediately and fully exercisable and free of all
Restrictions (other than Continuing Restrictions);
(b) In the case of an Award that is subject to forfeiture, to
be or to become nonforfeitable, freely transferable, and free of all
Restrictions (other than Continuing Restrictions);
(c) In the case of an Award that is required to be earned by
attaining specified Performance Goals, to be or to become earned and
nonforfeitable, freely transferable, and free of all Restrictions
(other than Continuing Restrictions); or
(d) In the case of any other Award as to which payment is not
dependent solely upon the exercise of a right, election, exercise, or
option, to be or to become immediately payable and free of all
Restrictions (except Continuing Restrictions).
2.2 Gender and Number. Except where otherwise indicated by the
context, any masculine or feminine terminology used in the Plan shall also
include the opposite gender; and the definition of any term in Section 2.1 in
the singular shall also include the plural, and vice versa.
ARTICLE 3
ADMINISTRATION
3.1 General. The Plan shall be administered by a Committee
composed as described in Section 3.2.
3.2 Composition of the Committee. The Committee shall be
appointed by the Board and shall consist of not less than a sufficient number of
Non-Employee Board Directors
- 5 -
<PAGE>
so as to qualify the Committee to administer the Plan as contemplated by Rule
16b-3 under the Exchange Act. The Board may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board. In the event that the Committee shall
cease to satisfy the requirements of Rule 16b-3, the Board shall appoint another
Committee satisfying such requirements.
3.3 Authority of the Committee. The Committee shall have full
power and authority (subject to such orders or resolutions as may be issued or
adopted from time to time by the Board) to administer the Plan in its sole
discretion, including the authority to:
(a) Construe and interpret the Plan and any Award Agreement;
(b) Promulgate, amend, and rescind rules and procedures
relating to the implementation of the Plan;
(c) Select the employees, Non-Employee Subsidiary Directors,
and Consultants who shall be granted Awards;
(d) Determine the number and types of Awards to be granted to
each such Participant;
(e) Determine the number of Shares, or Share equivalents, to
be subject to each Award;
(f) Determine the option price, purchase price, base price, or
similar feature for any Award; and
(g) Determine all the terms and conditions of all Award
Agreements, consistent with the requirements of the Plan.
Decisions of the Committee, or any delegate as permitted by the Plan, shall be
final, conclusive, and binding on all Participants.
3.4 Action by the Committee. A majority of the members of the
Committee shall constitute a quorum for the transaction of business. Action
approved by a majority of the members present at any meeting at which a quorum
is present, or action in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.
3.5 Delegation. Notwithstanding the foregoing, the Committee
may delegate to one or more officers of Corporation the authority to determine
the recipients, types, amounts, and terms of Awards granted to Participants who
are not Reporting Persons.
- 6 -
<PAGE>
3.6 Liability of Committee Members. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan, any Award, or any Participant.
3.7 Costs of Plan. The costs and expenses of administering the
Plan shall be borne by Corporation.
ARTICLE 4
DURATION OF THE PLAN AND SHARES SUBJECT TO THE PLAN
4.1 Duration of the Plan. The Plan is effective March 1, 1993,
subject to approval by Corporation's shareholders as provided in Article 18. The
Plan shall remain in effect until Awards have been granted covering all the
available Shares or the Plan is otherwise terminated by the Board. Termination
of the Plan shall not affect outstanding Awards.
4.2 Shares Subject to the Plan. The shares which may be made
subject to Awards under the Plan shall be Shares of Common Stock, which may be
either authorized and unissued Shares or reacquired Shares. No fractional Shares
shall be issued under the Plan. Subject to adjustment pursuant to Article 15,
the maximum number of Shares for which Awards may be granted under the Plan
shall be 1,300,000. If an Award under the Plan is canceled or expires for any
reason prior to having been fully Vested or exercised by a Participant or is
settled in cash in lieu of Shares or is exchanged for other Awards, all Shares
covered by such Awards shall be made available for future Awards under the Plan.
ARTICLE 5
ELIGIBILITY
5.1 Employees and Non-Employee Subsidiary Directors. Officers
and other key employees of Corporation and its Subsidiaries (including employees
who may also be directors of Corporation or a Subsidiary), Consultants, and
Non-Employee Subsidiary Directors who, in the Committee's judgment, are or will
be contributors to the long-term success of Corporation shall be eligible to
receive Awards under the Plan.
5.2 Non-Employee Board Directors. All Non-Employee Board
Directors shall be eligible to receive Director Options pursuant to Article 14
of the Plan.
ARTICLE 6
AWARDS
6.1 Types of Awards. The types of Awards that may be granted
under the Plan are:
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<PAGE>
(a) Options governed by Article 7 of the Plan;
(b) Stock Appreciation Rights governed by Article 8 of the
Plan;
(c) Restricted Awards governed by Article 9 of the Plan;
(d) Performance Awards governed by Article 10 of the Plan;
(e) Other Stock-Based Awards or combination awards governed by
Article 11 of the Plan; and
(f) Director Options governed by Article 14 of the Plan.
In the discretion of the Committee, any Award (other than a Director Option) may
be granted alone, in addition to, or in tandem with other Awards under the Plan.
6.2 General. Subject to the limitations of the Plan, the
Committee may cause Corporation to grant Awards to such Participants, at such
times, of such types, in such amounts, for such periods, with such option
prices, purchase prices, or base prices, and subject to such terms, conditions,
limitations, and restrictions as the Committee, in its discretion, shall deem
appropriate. Awards may be granted as additional compensation to a Participant
or in lieu of other compensation to such Participant. A Participant may receive
more than one Award and more than one type of Award under the Plan.
6.3 Nonuniform Determinations. The Committee's determinations
under the Plan or under one or more Award Agreements, including without
limitation, (a) the selection of Participants to receive Awards, (b) the type,
form, amount, and timing of Awards, (c) the terms of specific Award Agreements,
and (d) elections and determinations made by the Committee with respect to
exercise or payments of Awards, need not be uniform and may be made by the
Committee selectively among Participants and Awards, whether or not Participants
are similarly situated.
6.4 Award Agreements. Each Award shall be evidenced by a
written Award Agreement between Corporation and the Participant. Award
Agreements may, subject to the provisions of the Plan, contain any provision
approved by the Committee.
6.5 Provisions Governing All Awards. All Awards shall be
subject to the following provisions:
(a) Alternative Awards. If any Awards are designated in their
Award Agreements as alternative to each other, the exercise of all or
part of one Award automatically shall cause an immediate equal (or pro
rata) corresponding
- 8 -
<PAGE>
termination of the other alternative Award or Awards.
(b) Rights as Shareholders. No Participant shall have any
rights of a shareholder with respect to Shares subject to an Award
until such Shares are issued in the name of the Participant.
(c) Employment Rights. Neither the adoption of the Plan nor
the granting of any Award shall confer on any person the right to
continued employment with Corporation or any Subsidiary or the right to
remain as a director of or a Consultant to Corporation or any
Subsidiary, as the case may be, nor shall it interfere in any way with
the right of Corporation or a Subsidiary to terminate such person's
employment or to remove such person as a Consultant or as a director at
any time for any reason, with or without cause.
(d) Nontransferable. Each Award (other than Restricted Shares
after they Vest) shall not be transferable otherwise than by will or
the laws of descent and distribution and shall be exercisable (if
exercise is required) during the lifetime of the Participant, only by
the Participant or, in the event the Participant becomes legally
incompetent, by the Participant's guardian or legal representative.
(e) Termination Of Employment. The terms and conditions under
which an Award may be exercised, if at all, after a Participant's
termination of employment or service as a Non-Employee Subsidiary
Director or a Consultant shall be determined by the Committee and
specified in the applicable Award Agreement.
(f) Change in Control. The Committee, in its discretion, may
provide in any Award Agreement that in the event of a change in control
of Corporation (as the Committee may define such term in the Award
Agreement), as of the date of such change in control:
(i) All, or a specified portion of, Awards requiring
exercise shall become fully and immediately exercisable,
notwithstanding any other limitations on exercise;
(ii) All, or a specified portion of, Awards subject
to Restrictions shall become fully Vested; and
(iii) All, or a specified portion of, Awards subject
to Performance Goals shall be deemed to have been fully
earned.
Unless the Committee specifically provides otherwise in the change in
control
- 9 -
<PAGE>
provision for a specific Award Agreement, Awards shall become
exercisable, become Vested, or become earned as of a change in control
date only if, or to the extent, such acceleration in the
exercisability, Vesting, or becoming earned of the Awards does not
result in an "excess parachute payment" within the meaning of Section
280G(b) of the Code. The Committee, in its discretion, may include
change in control provisions in some Award Agreements and not in
others, may include different change in control provisions in different
Award Agreements, and may include change in control provisions for some
Awards or some Participants and not for others.
(g) Conditioning or Accelerating Benefits. The Committee, in
its discretion, may include in any Award Agreement a provision
conditioning or accelerating the Vesting of an Award or the receipt of
benefits pursuant to an Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events
including, without limitation, a change in control of Corporation
(subject to the foregoing paragraph (f)), a sale of all or
substantially all the property and assets of Corporation, or an event
of the type described in Section 15 of this Plan.
(h) Payment of Purchase Price and Withholding. The Committee,
in its discretion, may include in any Award Agreement a provision
permitting the Participant to pay the purchase or option price, if any,
for the Shares or other property issuable pursuant to the Award, or the
Participant's federal, state, or local tax, or tax withholding,
obligation with respect to such issuance in whole or in part by any one
or more of the following:
(i) By delivering previously owned Shares (including
Restricted Shares, whether or not vested);
(ii) By surrendering outstanding other Vested Awards
under the Plan denominated in Shares or in Share equivalent
units;
(iii) By reducing the number of Shares or other
property otherwise Vested and issuable pursuant to the Award;
(iv) By delivering to Corporation a promissory note
payable on such terms and over such period as the Committee
shall determine;
(v) By delivery (in a form approved by the Committee)
of an irrevocable direction to a securities broker acceptable
to the Committee:
- 10 -
<PAGE>
(A) To sell Shares subject to the Option and
to deliver all or a part of the sales proceeds to
Corporation in payment of all or a part of the option
price and taxes or withholding taxes attributable to
the issuance; or
(B) To pledge Shares subject to the Option
to the broker as security for a loan and to deliver
all or a part of the loan proceeds to Corporation in
payment of all or a part of the option price and
taxes or withholding taxes attributable to the
issuance; or
(vi) In any combination of the foregoing or in any
other form approved by the Committee.
If Restricted Shares are surrendered in full or partial payment of the
purchase or option price of Shares issuable under an Award, a
corresponding number of the Shares issued upon exercise of the Award
shall be Restricted Shares subject to the same Restrictions as the
surrendered Restricted Shares. Shares withheld or surrendered as
described above shall be valued based on their Fair Market Value on the
date of the transaction. Any Shares withheld or surrendered with
respect to a Reporting Person shall be subject to such additional
conditions and limitations as the Committee may impose to comply with
the requirements of the Exchange Act.
(i) Reporting Persons. With respect to all Awards granted to
Reporting Persons:
(i) Awards requiring exercise shall not be
exercisable until at least six months after the date the Award
was granted, except in the case of the death or Disability of
the Participant; and
(ii) Shares issued pursuant to any other Award may
not be sold by the Participant for at least six months after
acquisition, except in the case of the death or Disability of
the Participant;
provided, however, that (unless an Award Agreement provides otherwise)
the limitation of this Section 6.5(i) shall apply only if or to the
extent required by Rule 16b-3 under the Exchange Act. Award Agreements
for Awards to Reporting Persons shall also comply with any future
restrictions imposed by such Rule 16b-3.
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(j) Service Periods. At the time of granting Awards, the
Committee may specify, by resolution or in the Award Agreement, the
period or periods of service performed or to be performed by the
Participant in connection with the grant of the Award.
ARTICLE 7
OPTIONS
7.1 Types of Options. Options granted under the Plan may be in
the form of Incentive Stock Options or Nonqualified Options (including Deferred
Compensation Options and Director Options). The grant of each Option and the
Award Agreement governing each Option shall identify the Option as an ISO or an
NQO. In the event the Code is amended to provide for tax-favored forms of stock
options other than or in addition to Incentive Stock Options, the Committee may
grant Options under the Plan meeting the requirements of such forms of options.
7.2 General. Options shall be subject to the terms and
conditions set forth in Article 6 and this Article 7 and Award Agreements
governing Options shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
7.3 Option Price. Each Award Agreement for Options shall state
the option exercise price per Share of Common Stock purchasable under the
Option, which shall not be less than:
(a) $.01 per share in the case of a Deferred Compensation
Option;
(b) 75 percent of the Fair Market Value of a Share on the date
of grant for all other Nonqualified Options (except Director Options);
or
(c) 100 percent of the Fair Market Value of a Share on the
date of grant for all Incentive Stock Options.
7.4 Option Term. The Award Agreement for each Option shall
specify the term of each Option, which may be unlimited or may have a specified
period during which the Option may be exercised, as determined by the Committee.
7.5 Time of Exercise. The Award Agreement for each Option
shall specify, as determined by the Committee:
(a) The time or times when the Option shall become exercisable
and whether the Option shall become exercisable in full or in graduated
amounts based on: (i) continuation of employment over a period
specified in the Award
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Agreement, (ii) satisfaction of performance goals or criteria specified
in the Award Agreement, or (iii) a combination of continuation of
employment and satisfaction of performance goals or criteria;
(b) Such other terms, conditions, and restrictions as to when
the Option may be exercised as shall be determined by the Committee;
and
(c) The extent, if any, that the Option shall remain
exercisable after the Participant ceases to be an employee, Consultant,
or director of Corporation or a Subsidiary.
An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
shall be accelerated or otherwise modified (i) in the event of the death,
Disability, or Retirement of the Participant, or (ii) upon the occurrence of a
change in control of Corporation. The Committee may, at any time in its
discretion, accelerate the time when all or any portion of an outstanding Option
becomes exercisable.
7.6 Special Rules for Incentive Stock Options. In the case of
an Option designated as an Incentive Stock Option, the terms of the Option and
the Award Agreement shall conform with the statutory and regulatory requirements
specified pursuant to Section 422 of the Code, as in effect on the date such ISO
is granted. ISOs may be granted only to employees of Corporation or a
Subsidiary. ISOs may not be granted under the Plan after ten years following the
date specified in Section 4.1, unless the ten-year limitation of Section
422(b)(2) of the Code is removed or extended.
7.7 Restricted Shares. In the discretion of the Committee, the
Shares issuable upon exercise of an Option may be Restricted Shares if so
provided in the Award Agreement for the Option.
7.8 Deferred Compensation Options. The Committee may, in its
discretion, grant Deferred Compensation Options with an option price less than
Fair Market Value to provide a means for deferral to future dates of
compensation otherwise payable to a Participant. The option price shall be
determined by the Committee subject to Section 7.3(a) of the Plan. The number of
Shares subject to a Deferred Compensation Option shall be determined by the
Committee, in its discretion, by dividing the amount of compensation to be
deferred by the difference between the Fair Market Value of a Share on the date
of grant and the option price of the Deferred Compensation Option. Amounts of
compensation deferred with Deferred Compensation Options may include amounts
payable under Awards granted under the Plan or under any other compensation
program or arrangement of Corporation as permitted by the Committee. The
Committee shall grant Deferred Compensation Options only if it reasonably
determines that the recipient of such an Option is not likely to be deemed to be
in constructive
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receipt for income tax purposes of the income being deferred.
7.9 Reload Options. The Committee, in its discretion, may
provide in an Award Agreement for an Option that in the event all or a portion
of the Option is exercised by the Participant using previously acquired Shares,
the Participant shall automatically be granted (subject to the available pool of
Shares subject to grants of Awards as specified in Section 4.2 of the Plan) a
replacement Option (with an option price equal to the Fair Market Value of a
Share on the date of such exercise) for a number of Shares equal to (or equal to
a portion of) the number of shares surrendered upon exercise of the Option. Such
reload Option features may be subject to such terms and conditions as the
Committee shall determine, including without limitation, a condition that the
Participant retain the Shares issued upon exercise of the Option for a specified
period of time.
7.10 Limitation on Number of Shares Subject to Options. In no
event may Options for more than 200,000 Shares be granted to any individual
under the Plan during any calendar year.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 General. Stock Appreciation Rights shall be subject to the
terms and conditions set forth in Article 6 and this Article 8 and Award
Agreements governing Stock Appreciation Rights shall contain such additional
terms and conditions, not inconsistent with the express terms of the Plan, as
the Committee shall deem desirable.
8.2 Nature of Stock Appreciation Right. A Stock Appreciation
Right is an Award entitling a Participant to receive an amount equal to the
excess (or, if the Committee shall determine at the time of grant, a portion of
the excess) of the Fair Market Value of a Share of Common Stock on the date of
exercise of the SAR over the base price, as described below, on the date of
grant of the SAR, multiplied by the number of Shares with respect to which the
SAR shall have been exercised. The base price shall be designated by the
Committee in the Award Agreement for the SAR and may be the Fair Market Value of
a Share on the grant date of the SAR or such other higher or lower price as the
Committee shall determine.
8.3 Exercise. A Stock Appreciation Right may be exercised by a
Participant in accordance with procedures established by the Committee. The
Committee may also provide that a SAR shall be automatically exercised on one or
more specified dates or upon the satisfaction of one or more specified
conditions. In the case of SARs granted to Reporting Persons, exercise of the
SAR shall be limited by the Committee to the extent required to comply with the
applicable requirements of Rule 16b-3 under the Exchange Act.
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8.4 Form of Payment. Payment upon exercise of a Stock
Appreciation Right may be made in cash, in installments, in Shares, by issuance
of a Deferred Compensation Option, or in any combination of the foregoing, or in
any other form as the Committee shall determine.
8.5 Limitation on Number of Stock Appreciation Rights. In no
event may more than 200,000 Stock Appreciation Rights be granted to any
individual under the Plan during any calendar year.
ARTICLE 9
RESTRICTED AWARDS
9.1 Types of Restricted Awards. Restricted Awards granted
under the Plan may be in the form of either Restricted Shares or Restricted
Units.
(a) Restricted Shares. A Restricted Share is an Award of
Shares transferred to a Participant subject to such terms and
conditions as the Committee deems appropriate, including, without
limitation, restrictions on the sale, assignment, transfer, or other
disposition of such Restricted Shares and may include a requirement
that the Participant forfeit such Restricted Shares back to Corporation
upon termination of Participant's employment (or service as a
Non-Employee Subsidiary Director or a Consultant) for specified reasons
within a specified period of time or upon other conditions, as set
forth in the Award Agreement for such Restricted Shares. Each
Participant receiving a Restricted Share shall be issued a stock
certificate in respect of such Shares, registered in the name of such
Participant, and shall execute a stock power in blank with respect to
the Shares evidenced by such certificate. The certificate evidencing
such Restricted Shares and the stock power shall be held in custody by
Corporation until the Restrictions thereon shall have lapsed.
(b) Restricted Units. A Restricted Unit is an Award of units
(with each unit having a value equivalent to one Share) granted to a
Participant subject to such terms and conditions as the Committee deems
appropriate, and may include a requirement that the Participant forfeit
such Restricted Units upon termination of Participant's employment (or
service as a Non-Employee Subsidiary Director or a Consultant) for
specified reasons within a specified period of time or upon other
conditions, as set forth in the Award Agreement for such Restricted
Units.
9.2 General. Restricted Awards shall be subject to the terms
and conditions of Article 6 and this Article 9 and Award Agreements governing
Restricted Awards shall contain such additional terms and conditions, not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
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9.3 Restriction Period. Award Agreements for Restricted Awards
shall provide that Restricted Awards, and the Shares subject to Restricted
Awards, may not be transferred, and may provide that, in order for a Participant
to Vest in such Restricted Awards, the Participant must remain in the employment
(or remain as a Non-Employee Subsidiary Director or a Consultant) of Corporation
or its Subsidiaries, subject to relief for reasons specified in the Award
Agreement, for a period commencing on the grant date of the Award and ending on
such later date or dates as the Committee may designate at the time of the Award
(the "Restriction Period"). During the Restriction Period, a Participant may not
sell, assign, transfer, pledge, encumber, or otherwise dispose of Shares
received under or governed by a Restricted Award grant. The Committee, in its
sole discretion, may provide for the lapse of restrictions in installments
during the Restriction Period. Upon expiration of the applicable Restriction
Period (or lapse of Restrictions during the Restriction Period where the
Restrictions lapse in installments) the Participant shall be entitled to
settlement of the Restricted Award or portion thereof, as the case may be.
Although Restricted Awards shall usually Vest based on continued employment (or
service as a Non-Employee Subsidiary Director or a Consultant) and Performance
Awards under Article 10 shall usually Vest based on attainment of Performance
Goals, the Committee, in its discretion, may condition Vesting of Restricted
Awards on attainment of Performance Goals as well as continued employment (or
service as a Non-Employee Subsidiary Director or a Consultant). In such case,
the Restriction Period for such a Restricted Award shall include the period
prior to satisfaction of the Performance Goals.
9.4 Forfeiture. If a Participant ceases to be an employee (or
Consultant or Non-Employee Subsidiary Director) of Corporation or a Subsidiary
during the Restriction Period for any reason other than reasons which may be
specified in an Award Agreement (such as death, Disability, or Retirement) the
Award Agreement may require that all non-Vested Restricted Awards previously
granted to the Participant be forfeited and returned to Corporation.
9.5 Settlement of Restricted Awards.
(a) Restricted Shares. Upon Vesting of a Restricted Share
Award, the legend on such Shares will be removed and the Participant's stock
power will be returned and the Shares will no longer be Restricted Shares. The
Committee may also, in its discretion, permit a Participant to receive, in lieu
of unrestricted Shares at the conclusion of the Restriction Period, payment in
cash, installments, or by issuance of a Deferred Compensation Option equal to
the Fair Market Value of the Restricted Shares as of the date the Restrictions
lapse.
(b) Restricted Units. Upon Vesting of a Restricted Unit Award,
a Participant shall be entitled to receive payment for Restricted Units in an
amount equal to the aggregate Fair Market Value of the Shares covered by such
Restricted Units at the expiration of the Applicable Restriction Period. Payment
in settlement of a Restricted Unit shall be made as soon as practicable
following the conclusion of the applicable Restriction Period in cash, in
installments, in Shares equal to the number of Restricted Units, by issuance of
a Deferred Compensation
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Option, or in any other manner or combination of such methods as the Committee,
in its sole discretion, shall determine.
9.6 Rights as a Shareholder. A Participant shall have, with
respect to unforfeited Shares received under a grant of Restricted Shares, all
the rights of a shareholder of Corporation, including the right to vote the
shares, and the right to receive any cash dividends. Stock dividends issued with
respect to Restricted Shares shall be treated as additional Shares covered by
the grant of Restricted Shares and shall be subject to the same Restrictions.
ARTICLE 10
PERFORMANCE AWARDS
10.1 General. Performance Awards shall be subject to the terms
and conditions set forth in Article 6 and this Article 10 and Award Agreements
governing Performance Awards shall contain such other terms and conditions not
inconsistent with the express provisions of the Plan, as the Committee shall
deem desirable.
10.2 Nature of Performance Awards. A Performance Award is an
Award of units (with each unit having a value equivalent to one Share) granted
to a Participant subject to such terms and conditions as the Committee deems
appropriate, including, without limitation, the requirement that the Participant
forfeit such Performance Award or a portion thereof in the event specified
performance criteria are not met within a designated period of time.
10.3 Performance Cycles. For each Performance Award, the
Committee shall designate a performance period (the "Performance Cycle") with a
duration to be determined by the Committee in its discretion within which
specified Performance Goals are to be attained. There may be several Performance
Cycles in existence at any one time and the duration of Performance Cycles may
differ from each other.
10.4 Performance Goals. The Committee shall establish
Performance Goals for each Performance Cycle on the basis of such criteria and
to accomplish such objectives as the Committee may from time to time select.
Performance Goals may be based on (i) performance criteria for Corporation, a
Subsidiary, or an operating group, (ii) a Participant's individual performance,
or (iii) a combination of both. Performance Goals may include objective and
subjective criteria. During any Performance Cycle, the Committee may adjust the
Performance Goals for such Performance Cycle as it deems equitable in
recognition of unusual or nonrecurring events affecting Corporation, changes in
applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
10.5 Determination of Awards. As soon as practicable after the
end of a Performance Cycle, the Committee shall determine the extent to which
Performance Awards have been earned on the basis of performance in relation to
the established Performance Goals.
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10.6 Timing and Form of Payment. Settlement of earned
Performance Awards shall be made to the Participant as soon as practicable after
the expiration of the Performance Cycle and the Committee's determination under
Section 10.5, in the form of cash, installments, Shares, Deferred Compensation
Options, or any combination of the foregoing or in any other form as the
Committee shall determine.
ARTICLE 11
OTHER STOCK BASED AND COMBINATION AWARDS
11.1 Other Stock-Based Awards. The Committee may grant other
Awards under the Plan pursuant to which Shares are or may in the future be
acquired, or Awards denominated in or measured by Share equivalent units,
including Awards valued using measures other than the market value of Shares.
Other Stock-Based Awards are not restricted to any specified form or structure
and may include, without limitation, Share purchase warrants, other rights to
acquire Shares, and securities convertible into or redeemable for Shares. Such
Other Stock-Based Awards may be granted either alone, in addition to, or in
tandem with, any other type of Award granted under the Plan.
11.2 Combination Awards. The Committee may also grant Awards
under the Plan in tandem or combination with other Awards or in exchange of
Awards, or in tandem or combination with, or as alternatives to, grants or
rights under any other employee plan of Corporation, including the plan of any
acquired entity. No action authorized by this section shall reduce the amount of
any existing benefits or change the terms and conditions thereof without the
Participant's consent.
ARTICLE 12
DEFERRAL ELECTIONS
The Committee may permit a Participant to elect to defer
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise, earn out, or Vesting of an
Award made under the Plan. If any such election is permitted, the Committee
shall establish rules and procedures for such payment deferrals, including, but
not limited to: (a) payment or crediting of reasonable interest or other growth
or earnings factor on such deferred amounts credited in cash, (b) the payment or
crediting of dividend equivalents in respect of deferrals credited in Share
equivalent units, or (c) granting of Deferred Compensation Options.
ARTICLE 13
DIVIDEND EQUIVALENTS
Any Awards may, at the discretion of the Committee, earn
dividend equivalents. In respect of any such Award which is outstanding on a
dividend record date for Common
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Stock, the Participant may be credited with an amount equal to the amount of
cash or stock dividends that would have been paid on the Shares covered by such
Award, had such covered Shares been issued and outstanding on such dividend
record date. The Committee shall establish such rules and procedures governing
the crediting of dividend equivalents, including the timing, form of payment,
and payment contingencies of such dividend equivalents, as it deems are
appropriate or necessary.
ARTICLE 14
NON-EMPLOYEE BOARD DIRECTORS
14.1 General. Awards shall be made to Non-Employee Board
Directors only pursuant to this Article 14. All Non-Employee Board Directors
shall receive Initial Director Options and Annual Director Options. No person,
including the members of the Board or the Committee, shall have any discretion
as to the selection of eligible recipients or the determination of the type,
amount, or terms of Awards pursuant to this Article 14.
14.2 Eligibility. The persons eligible to receive Awards
pursuant to this Article 14 are all Non-Employee Board Directors of Corporation.
14.3 Definitions. For purposes of this Article 14, the
following terms shall have the meanings set forth below:
"ANNUAL MEETING DATE" means the date of Corporation's regular
annual meeting of shareholders.
"OFFERING DATE" means the closing date of Corporation's
initial public offering of Shares pursuant to a registration statement which has
become effective under the Securities Act of 1933.
14.4 Initial Director Options.
(a) Grant of Initial Director Options. As of the Offering
Date, each Non-Employee Board Director who is a member of the Board on the
Offering Date shall be granted automatically an Initial Director Option to
purchase 1,500 Shares.
(b) Option Price. The option purchase price for each Initial
Director Option shall be equal to the public offering price of a Share.
(c) Terms of Initial Director Option. Each Initial Director
Option shall have the terms and conditions specified in the form of Award
Agreement attached to this Plan as Appendix A.
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14.5 Annual Director Options.
(a) Grant of Annual Director Options. As of each Annual
Meeting Date, each Non-Employee Board Director whose term begins on or continues
after that Annual Meeting Date shall be granted automatically an Annual Director
Option to purchase 500 Shares.
(b) Option Price. The option exercise price for each Annual
Director Option shall be equal to the Fair Market Value of a Share as of the
Annual Meeting Date.
(c) Terms of Annual Director Options. Each Annual Director
Option shall have the terms and conditions specified in the form of Award
Agreement attached to this Plan as Appendix A.
ARTICLE 15
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.
15.1 Plan Does Not Restrict Corporation. The existence of the
Plan and the Awards granted under the Plan shall not affect or restrict in any
way the right or power of the Board or the shareholders of Corporation to make
or authorize any adjustment, recapitalization, reorganization, or other change
in Corporation's capital structure or its business, any merger or consolidation
of the Corporation, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting Corporation's capital stock or the
rights thereof, the dissolution or liquidation of Corporation or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding.
15.2 Adjustments by the Committee. In the event of any change
in capitalization affecting the Common Stock of Corporation, such as a stock
dividend, stock split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of reorganization, or any other
change affecting the Common Stock, such proportionate adjustments, if any, as
the Committee, in its sole discretion, may deem appropriate to reflect such
change, shall be made with respect to the aggregate number of Shares for which
Awards in respect thereof may be granted under the Plan, the maximum number of
Shares which may be sold or awarded to any Participant, the number of Shares
covered by each outstanding Award, and the base price or purchase price per
Share in respect of outstanding Awards. The Committee may also make such
adjustments in the number of Shares covered by, and price or other value of any
outstanding Awards in the event of a spin-off or other distribution (other than
normal cash dividends), of Corporation assets to shareholders.
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<PAGE>
ARTICLE 16
AMENDMENT AND TERMINATION
Without further approval of Corporation's shareholders, the
Board may at any time terminate the Plan, or may amend it from time to time in
such respects as the Board may deem advisable, except that the Board may not,
without approval of the shareholders, make any amendment which would (i)
materially increase the benefits accruing to Participants under the Plan, (ii)
materially increase the aggregate number of shares of Common Stock which may be
issued under the Plan (except for adjustments pursuant to Article 15 of the
Plan), or (iii) materially modify the requirements as to eligibility for
participation in the Plan. Without further shareholder approval, the Board may
amend the Plan to take into account changes in applicable securities, federal
income tax laws, and other applicable laws. Further, should the provisions of
Rule 16b-3, or any successor rule, under the Exchange Act be amended, the Board,
without further shareholder approval, may amend the Plan as necessary to comply
with any modifications to such rule. The provisions of Article 14 may not be
amended more than once every six months, other than to conform with changes in
the Code or in Rule 16b-3 under the Exchange Act.
ARTICLE 17
MISCELLANEOUS
17.1 Tax Withholding. Corporation shall have the right to
deduct from any settlement of any Award under the Plan, including the delivery
or vesting of Shares, any federal, state, or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other action as
may be necessary in the opinion of Corporation to satisfy all obligations for
the payment of such taxes. The recipient of any payment or distribution under
the Plan shall make arrangements satisfactory to Corporation for the
satisfaction of any such withholding tax obligations. Corporation shall not be
required to make any such payment or distribution under the Plan until such
obligations are satisfied.
17.2 Unfunded Plan. The Plan shall be unfunded and Corporation
shall not be required to segregate any assets that may at any time be
represented by Awards under the Plan. Any liability of Corporation to any person
with respect to any Award under the Plan shall be based solely upon any
contractual obligations that may be effected pursuant to the Plan. No such
obligation of Corporation shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of Corporation.
17.3 Payments to Trust. The Committee is authorized to cause
to be established a trust agreement or several trust agreements whereunder the
Committee may make payments of amounts due or to become due to Participants in
the Plan.
17.4 Annulment of Awards. Any Award Agreement may provide that
the grant
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of an Award payable in cash is revocable until cash is paid in settlement
thereof or that grant of an Award payable in Shares is revocable until the
Participant becomes entitled to the certificate in settlement thereof. In the
event the employment (or service as a Non-Employee Subsidiary Director or a
Consultant) of a Participant is terminated for cause (as defined below), any
Award which is revocable shall be annulled as of the date of such termination
for cause. For the purpose of this Section 17.4, the term "for cause" shall have
the meaning set forth in the Participant's employment agreement, if any, or
otherwise means any discharge (or removal) for material or flagrant violation of
the policies and procedures of Corporation or for other job performance or
conduct which is materially detrimental to the best interests of Corporation, as
determined by the Committee.
17.5 Engaging in Competition With the Corporation. Any Award
Agreement may provide that, if a Participant terminates employment (or service
as a Non-Employee Subsidiary Director or a Consultant) with Corporation or a
Subsidiary for any reason whatsoever, and within a period of time (as specified
in the Award Agreement) after the date thereof accepts employment with any
competitor of (or otherwise engages in competition with) Corporation, the
Committee, in its sole discretion, may require such Participant to return to
Corporation the economic value of any Award that is realized or obtained
(measured at the date of exercise, Vesting, or payment) by such Participant at
any time during the period beginning on the date that is six months prior to the
date of such Participant's termination of employment (or service as a
Non-Employee Subsidiary Director or a Consultant) with Corporation.
17.6 Other Corporation Benefit and Compensation Programs.
Payments and other benefits received by a Participant under an Award made
pursuant to the Plan shall not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination indemnity or severance
pay law of any state or country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan
or similar arrangement provided by Corporation or a Subsidiary unless expressly
so provided by such other plan or arrangements, or except where the Committee
expressly determines that an Award or portion of an Award should be included to
accurately reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of cash compensation. Awards under the
Plan may be made in combination with or in tandem with, or as alternatives to,
grants, awards, or payments under any other Corporation or Subsidiary plans,
arrangements, or programs. The Plan notwithstanding, Corporation or any
Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain, and reward
employees and directors for their service with Corporation and its Subsidiaries.
17.7 Securities Law Restrictions. No Shares shall be issued
under the Plan unless counsel for Corporation shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Shares delivered under the Plan may be subject to such
stop-transfer orders and other restrictions as the Committee may deem
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<PAGE>
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable federal or state securities law. The Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
17.8 Governing Law. Except with respect to references to the
Code or federal securities laws, the Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the state of
Maryland.
ARTICLE 18
SHAREHOLDER APPROVAL
The adoption of the Plan and the grant of Awards under the
Plan are expressly subject to the approval of the Plan by Corporation's
shareholders holding a majority of Corporation's outstanding Shares.
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PROXY
BARRETT BUSINESS SERVICES, INC.
1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William W. Sherertz and Jeffrey L.
Beaudoin as proxies, each with power to act alone and with power of
substitution, and hereby authorizes them to represent and to vote all the
shares of common stock of Barrett Business Services, Inc., which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to
be held on Wednesday, May 14, 1997, at 2:00 p.m., or any adjournments thereof:
(Continued and to be signed on reverse)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
Robert R. Ames Stephen A. Gregg Stanley G. Renecker
Jeffrey L. Beaudoin Anthony Meeker William W. Sherertz
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
----------------------------------------------------------------
2. PROPOSAL TO AMMEND THE COMPANY'S 1993 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF PRICE WATERHOUSE LLP as independent
accountants for the fiscal year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon any other matters which may properly come before
the meeting.
<PAGE>
Please mark your votes as indicated in this example: [X].
The shares represented by this proxy when properly executed
will be voted in the manner directed herein by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3. If any other
matters properly come before the meeting, the persons named
as proxies will vote in accordance with their best
judgment.
The undersigned acknowledges receipt of the 1997 Notice of
Annual Meeting and accompanying Proxy Statement and revokes
all prior proxies for said meeting.
Please sign exactly as your name appears hereon. If the
shares are jointly held, each joint owner named should
sign. When signing as attorney, personal representative,
administrator, or other fiduciary, please give full title.
If a corporation, please sign in full corporate name by
authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- ---------------------------------- Date: -------------------------, 1997
Signature(s)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
MEMORANDUM
Date: April 11, 1997
To: Participants in the Barrett Business Services, Inc. Employees'
Savings Plan
From: Mike Mulholland
Subject: Proxy solicitation in connection with May 14, 1997 annual meeting
of stockholders
================================================================================
The enclosed material, which consists of:
-- 1996 annual report
-- Proxy statement
-- Proxy card
-- Return envelope
is being provided to you as a participant of Barrett's 401(k) plan, which owns
shares of the Company's common stock. Pursuant to the Plan Document and Trust
Agreement, you are entitled to vote the shares held for your account in the Plan
on the proposals outlined in the accompanying proxy statement.
After you have considered the enclosed information, please mark your votes on
the proxy card, sign the card and return it in the postage-paid envelope. Your
vote will be compiled with those of other Plan participants and conveyed to the
Company's stock transfer agent by the Plan's trustee, Smith Barney Shearson
Trust Company.
