<PAGE> 1
As filed with the Securities and Exchange Commission on November 26, 1996
REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
BAY APARTMENT COMMUNITIES, INC.
(Exact name of Registrant as specified in its charter)
Maryland 77-0404318
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4340 STEVENS CREEK BOULEVARD, SUITE 275
SAN JOSE, CALIFORNIA 95129
(408) 983-1500
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
BAY APARTMENT COMMUNITIES, INC. -- 1994 STOCK INCENTIVE PLAN
(Full Title of the Plan)
--------------------
GILBERT M. MEYER
CHAIRMAN OF THE BOARD AND PRESIDENT
BAY APARTMENT COMMUNITIES, INC.
4340 STEVENS CREEK BOULEVARD, SUITE 275
SAN JOSE, CALIFORNIA 95129
(408) 983-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
With copies to:
DAVID W. WATSON, ESQ.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
Being Registered Registered (1) Offering Price Per Share Aggregate Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock 92,750 shares $27.75 (2) $ 2,573,813 $8,177
$.01 par value 764,250 shares 31.9375 (3) 24,408,235
==================================================================================================================================
</TABLE>
(1) Plus such additional number of shares as may be required pursuant to
the 1994 Stock Incentive Plan in the event of a stock dividend, reverse
stock split, split-up, recapitalization or other similar event.
(2) This estimate is made pursuant to Rule 457(h) under the Securities Act
of 1933, as amended ("the Securities Act"), solely for purposes of
determining the registration fee and is based upon the price at which
outstanding options may be exercised.
(3) This estimate is made pursuant to Rule 457(c) and (h) under the
Securities Act solely for purposes of determining the registration fee
and is based upon the market value of outstanding shares of Bay
Apartment Communities, Inc.'s common stock on November 19, 1996,
utilizing the average of the high and low sale prices as reported on
the New York Stock Exchange.
===============================================================================
<PAGE> 2
This Registration Statement on Form S-8 relates to 857,000 additional
shares of common stock, $.01 par value (the "Common Stock"), of Bay Apartment
Communities, Inc. (the "Company"), which may be issued under the Company's 1994
Stock Incentive Plan, as amended and restated (the "Plan"). The Company hereby
incorporates by reference the contents of the Registration Statement on Form
S-8, File No. 33-80249, filed with the Securities and Exchange Commission (the
"Commission") on December 11, 1995, covering 663,000 shares of Common Stock,
which have been previously issued pursuant to the Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference the documents listed in
(a) through (d) below, which have been previously filed with the Commission.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1996, June 30, 1996 and September 30,
1996;
(c) The Company's Current Report on Form 8-K dated May 6, 1996,
Current Report on Form 8-K dated May 23, 1996, as amended by
Current Report on Form 8-K/A dated May 23, 1996, Current
Report on Form 8-K dated July 5, 1996 and Current Report on
Form 8-K dated July 26, 1996;
(d) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission
on December 7, 1993, under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any
amendments or reports filed for the purpose of updating such
description.
In addition, all documents subsequently filed with the Commission by
the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereunder have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 8. EXHIBITS.
The following is a complete list of exhibits filed or incorporated by
reference as part of this registration statement.
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
24.1 Powers of Attorney (included on signature page of this
registration statement).
99.1 Bay Apartment Communities, Inc. -- 1994 Stock Incentive Plan, as
amended and restated.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on this 31st day of
October, 1996.
BAY APARTMENT COMMUNITIES, INC.
By: /s/ Gilbert M. Meyer
------------------------------------
Gilbert M. Meyer
Chairman of the Board and President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Gilbert M. Meyer and Max L. Gardner as his or her true and lawful
attorney-in-fact and agent, with full power of substitution, for him or her and
in his or her name, place and stead, in any and all capacities to sign any or
all amendments or post-effective amendments to this registration statement, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Commission, granting unto said attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or his or her
substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/S/ GILBERT M. MEYER Chairman of the Board, Chief October 29, 1996
- ---------------------------------- Executive Officer and President
GILBERT M. MEYER (Principal Executive Officer)
/S/ MAX L. GARDNER Director and Chief Operating October 29, 1996
- ---------------------------------- Officer
MAX L. GARDNER
/S/ GEOFFREY L. BAKER Director and Chief October 29, 1996
- ---------------------------------- Development and
GEOFFREY L. BAKER Acquisitions Officer
/S/ BRUCE A. CHOATE Director October 29, 1996
- ----------------------------------
BRUCE A. CHOATE
/S/ BRENDA J. MIXSON Director October 29, 1996
- ----------------------------------
BRENDA J. MIXSON
/S/ THOMAS H. NIELSEN Director October 29, 1996
- ----------------------------------
THOMAS H. NIELSEN
/S/ JOHN J. HEALY, JR. Director October 29, 1996
- ----------------------------------
JOHN J. HEALY, JR.
/S/ JEFFREY B. VAN HORN Chief Financial Officer October 31, 1996
- ---------------------------------- (Principal Financial
JEFFREY B. VAN HORN and Accounting Officer)
</TABLE>
S-1
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities being registered.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit
5.1 hereto).
24.1 Powers of Attorney (included on signature page of this
registration statement).
99.1 Bay Apartment Communities, Inc. -- 1994 Stock Incentive Plan,
as amended and restated.
S-1
<PAGE> 1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
November 25, 1996
Bay Apartment Communities, Inc.
4340 Stevens Creek Boulevard, Suite 275
San Jose, CA 95129
Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Bay Apartment
Communities, Inc., a Maryland corporation (the "Company"), in connection with
the registration on Form S-8, pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of 857,000 shares (the "Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"), which may
be issued pursuant to the Bay Apartment Communities, Inc.-1994 Stock Incentive
Plan, as amended and restated (the "Plan").
In connection with rendering this opinion, we have examined the Articles of
Incorporation and the Bylaws of the Company, each as amended to date; such
records of the corporate proceedings of the Company as we deemed material; a
registration statement on Form S-8 under the Securities Act relating to the
Shares (the "Registration Statement") and the prospectus contained therein (the
"Prospectus"); the Plan, as amended and restated to the date hereof; the option
agreements issued to certain officers, employees and Directors of the Company;
and such other certificates, receipts, records and documents as we considered
necessary for the purposes of this opinion.
We are attorneys admitted to practice in the Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America and the Maryland General Corporation Law.
Based upon the foregoing, we are of the opinion that when the Shares have
been issued and paid for in accordance with the terms of the Plan, the Shares
will be validly issued, fully paid and nonassessable shares of the Company's
Common Stock.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act and applicable requirements of state laws
regulating the offer and sale of securities, as to which we express no opinion.
<PAGE> 2
GOODWIN, PROCTER & HOAR LLP
Bay Apartment Communities, Inc.
November 25, 1996
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration of Bay
Apartment Communities, Inc. on Form S-8 (File No. 333- ), of our report dated
January 22, 1996, on our audits of the consolidated financial statements and
financial statement schedule of Bay Apartment Communities, Inc. as of December
31, 1995 and 1994, and for the year ended December 31, 1995, the period from
March 17, 1994 to December 31, 1994, and the period January 1, 1994 to March 16,
1994, for the Greenbriar Group, which report is included in the Annual Report on
Form 10-K, of our reports dated July 3, 1996, on our audits of the Historical
Summary of Gross Income and Direct Operating Expenses of Countrybrook Apartments
for the three months ended March 31, 1996, and the year ended December 31, 1995,
the Historical Summary of Gross Income and Direct Operating Expenses of Parkside
Commons Apartments for the three months ended March 31, 1996, and the year ended
December 31, 1995, the Historical Summary of Gross Income and Direct Operating
Expenses of Villa Marguerite Apartments for the three months ended March 31,
1996, and the year ended December 31, 1995, and the Historical Summary of Gross
Income and Direct Operating Expenses of Sunset Towers Apartments for the three
months ended March 31, 1996, and the year ended December 31, 1995, which reports
are included in the Current Report on Form 8-K, dated May 23, 1996, as amended
by the Current Report on Form 8-K/A dated May 23, 1996, and of our reports dated
July 30, 1996 and September 17, 1996 on our audits of the Historical Summary of
Revenues and Direct Operating Expenses of The Fountains Apartments and Channing
Heights Apartments for the year ended December 31, 1995, respectively, which
reports are included in the Current Report on Form 8-K dated July 26, 1996.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
November 25, 1996
<PAGE> 1
EXHIBIT 99.1
BAY APARTMENT COMMUNITIES, INC.
1994 STOCK INCENTIVE PLAN
As Amended and Restated August 28, 1996
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Bay Apartment Communities, Inc.-1994 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Directors and other key persons of Bay Apartment
Communities, Inc. (the "Company") and its Subsidiaries upon whose judgment,
initiative and efforts the Company largely depends for the successful conduct of
its business to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company,
thereby stimulating their efforts on the Company's behalf and strengthening
their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Unrestricted Stock Awards and Performance
Share Awards.
"Board" means the Board of Directors of the Company.
"Cause" means and shall be limited to a vote of the Board of Directors
resolving that the participant should be dismissed as a result of (i) any
material breach by the participant of any agreement to which the participant and
the Company are parties, (ii) any act (other than retirement) or omission to act
by the participant which may have a material and adverse effect on the business
of the Company or any Subsidiary or on the participant's ability to perform
services for the Company or any Subsidiary, including, without limitation, the
commission of any crime (other than ordinary traffic violations), or (iii) any
material misconduct or neglect of duties by the participant in connection with
the business or affairs of the Company or any Subsidiary.
"Change of Control" is defined in Section 13.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Board or any Committee of the Board referred to
in Section 2.
<PAGE> 2
"Disability" means disability as set forth in Section 22(e)(3) of the
Code.
"Effective Date" means the date on which the Plan is approved by
shareholders as set forth in Section 15.
"Fair Market Value" on any given date means the last reported sale
price at which Stock is traded on such date or, if no Stock is traded on such
date, the most recent date on which Stock was traded, as reflected on the New
York Stock Exchange.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Non-Employee Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 8.
"Restricted Stock Award" mean Awards granted pursuant to Section 6.
"Stock" means the Common Stock, $.01 par value per share, of the
Company, subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the total combined voting power of all classes of
stock or other interests in one of the other corporations or entities in the
chain.
"Unrestricted Stock Award" means Awards granted pursuant to Section 7.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) Committee. The Plan shall be administered by all of the
Non-Employee Director members of the Compensation Committee of the Board, or a
committee of not less than two Non-Employee Directors performing similar
functions, as appointed by the
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Board from time to time. Each member of the Committee shall be an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder and a "non-employee director" within the meaning of Rule
16b-3(b)(3)(i) promulgated under the Act, or any successor definition under said
rule.
(b) Powers of Committee. The Committee shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the officers and other employees of the Company
and its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock Awards, Unrestricted Stock Awards and Performance
Shares, or any combination of the foregoing, granted to any one or more
participants;
(iii) to determine the number of shares to be covered by any
Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards
and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate the exercisability or vesting of all or any
portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend
the period in which Stock Options may be exercised;
(vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or
credit amounts constituting interest (at rates determined by the
Committee) or dividends or deemed dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
3
<PAGE> 4
connection with the Plan; and to otherwise supervise the administration
of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Awards. The Committee, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Committee's authority and duties with respect to Awards, including
the granting thereof, to individuals who are not subject to the reporting and
other provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. The Committee may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent with the
terms of the Plan.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Shares Issuable. The maximum number of shares of Stock reserved
and available for issuance under the Plan shall be 1,520,000. For purposes of
this limitation, the shares of Stock underlying any Awards which are forfeited,
cancelled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares may be issued up to such maximum number pursuant to any type
or types of Award, including Incentive Stock Options; provided, however, that
Stock Options with respect to no more than 300,000 shares of Stock may be
granted to any one individual participant during any one calendar year period.
Shares issued under the Plan may be authorized but unissued shares or shares
reacquired by the Company.
(b) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options that can be granted to any one individual participant, (iii)
the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, and (iv) the price for each share subject to
any then outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options) as to which such Stock Options remain
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<PAGE> 5
exercisable. The adjustment by the Committee shall be final, binding and
conclusive. No fractional shares of Stock shall be issued under the Plan
resulting from any such adjustment, but the Committee in its discretion may make
a cash payment in lieu of fractional shares.
(c) Mergers. Upon consummation of a consolidation or merger or sale of
all or substantially all of the assets of the Company in which outstanding
shares of Stock are exchanged for securities, cash or other property of an
unrelated corporation or business entity or in the event of a liquidation of the
Company (in each case, a "Transaction"), the Board, or the board of directors of
any corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding Stock Options:
(i) provide that such Stock Options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options will terminate immediately prior to the consummation
of the Transaction unless exercised by the optionee within a specified period
following the date of such notice, and/or (iii) in the event of a business
combination under the terms of which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the business combination, make or provide for a cash payment to the optionees
equal to the difference between (A) the value (as determined by the Committee)
of the consideration payable per share of Stock pursuant to the business
combination (the "Merger Price") times the number of shares of Stock subject to
such outstanding Stock Options (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
outstanding Stock Options in exchange for the termination of such Stock Options.
In the event Stock Options will terminate upon the consummation of the
Transaction, each optionee shall be permitted, within a specified period
determined by the Committee, to exercise all non-vested Stock Options, subject
to the consummation of the Transaction.
(d) Substitute Awards. The Committee may grant Awards under the Plan
in substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, other
employees, Non-Employee Directors and key persons of the Company and its
Subsidiaries who are
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<PAGE> 6
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries and who are selected from time to time by the
Committee, in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after August
28, 2006.
(a) Stock Options Granted to Employees and Key Persons. The Committee
in its discretion may grant Stock Options to employees and key persons of the
Company or any Subsidiary. Stock Options granted to employees and key persons
pursuant to this Section 5(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall
be determined by the Committee at the time of grant but shall be not
less than 100% of Fair Market Value on the date of grant. If an
employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive Stock Option is
granted to such employee, the option price shall be not less than 110%
of Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more
than ten years after the date the option is granted. If an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation
and an Incentive Stock Option is granted to such employee, the term of
such option shall be no more than five years from the date of grant.
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(iii) Exercisability; Rights of a Shareholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the
grant date. The Committee may at any time accelerate the exercisability
of all or any portion of any Stock Option. An optionee shall have the
rights of a shareholder only as to shares acquired upon the exercise of
a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole
or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the
purchase price may be made by one or more of the following methods:
(A) In cash, by certified bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject
to restrictions under any Company plan and that have been held by
the optionee for at least six months, if permitted by the
Committee in its discretion. Such surrendered shares shall be
valued at Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as
a condition of such payment procedure. Payment instruments will be
received subject to collection.
The delivery of certificates representing shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the Stock
Option or applicable provisions of laws.
(v) Termination by Reason of Death. If any optionee's employment
(or other business relationship) by the Company and its Subsidiaries
terminates by reason of death, the Stock Option may thereafter be
exercised, to the extent exercisable at the date of death, by the legal
representative or legatee of the optionee, for a period of six months
(or such longer period as the Committee
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<PAGE> 8
shall specify at any time) from the date of death, or until the
expiration of the stated term of the Option, if earlier.
(vi) Termination by Reason of Disability.
(A) Any Stock Option held by an optionee whose employment
(or other business relationship) by the Company and its
Subsidiaries has terminated by reason of Disability may thereafter
be exercised, to the extent it was exercisable at the time of such
termination, for a period of twelve months (or such longer period
as the Committee shall specify at any time) from the date of such
termination of employment (or other business relationship), or
until the expiration of the stated term of the Option, if earlier.
(B) The Committee shall have sole authority and discretion
to determine whether a participant's employment (or other business
relationship) has been terminated by reason of Disability.
(C) Except as otherwise provided by the Committee at the
time of grant, the death of an optionee during a period provided
in this Section 5(a)(vi) for the exercise of a Non-Qualified Stock
Option shall extend such period for six months from the date of
death, subject to termination on the expiration of the stated term
of the Option, if earlier.
(vii) Termination for Cause. If any optionee's employment (or
other business relationship) by the Company and its Subsidiaries has
been terminated for Cause, any Stock Option held by such optionee shall
immediately terminate and be of no further force and effect; provided,
however, that the Committee may, in its sole discretion, provide that
such stock option can be exercised for a period of up to 30 days from
the date of termination of employment (or other business relationship)
or until the expiration of the stated term of the Option, if earlier.
(viii) Other Termination. Unless otherwise determined by the
Committee, if an optionee's employment (or other business relationship)
by the Company and its Subsidiaries terminates for any reason other
than death, Disability, or for Cause, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable
on the date of termination of employment (or other business
relationship), for three months (or such longer period as the Committee
shall specify at any time) from the date of termination of employment
(or other business relationship) or until the expiration of the stated
term of the Option, if earlier.
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(ix) Annual Limit on Incentive Stock Options. To the extent
required for "incentive stock option" treatment under Section 422 of
the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its
Subsidiaries become exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.
(x) Form of Settlement. Shares of Stock issued upon exercise of
a Stock Option shall be free of all restrictions under the Plan, except
as otherwise provided in this Plan.
(b) Reload Options. At the discretion of the Committee, Options
granted under the Plan may include a so-called "reload" feature pursuant to
which an optionee exercising an option by the delivery of a number of shares of
Stock in accordance with Section 5(a)(iv)(B) hereof would automatically be
granted an additional Option (with an exercise price equal to the Fair Market
Value of the Stock on the date the additional Option is granted and with the
same expiration date as the original Option being exercised, and with such other
terms as the Committee may provide) to purchase that number of shares of Stock
equal to the number delivered to exercise the original Option.
(c) Stock Options Granted to Non-Employee Directors.
(i) Automatic Grant of Options.
(A) Each Non-Employee Director who is serving as a Director
of the Company on the fifth business day after each annual meeting
of stockholders, beginning with the 1996 annual meeting of
stockholders, shall automatically be granted on such day a
Non-Qualified Stock Option to acquire 5,000 shares of Stock.
(B) The exercise price per share for the Stock covered by a
Stock Option granted under this Section 5(c) shall be equal to the
Fair Market Value of the Stock on the date the Stock Option is
granted.
(C) The Committee, in its discretion, may grant additional
Non-Qualified Stock Options to Non-Employee Directors.
(ii) Exercise; Termination; Non-transferability.
(A) Except as provided in Section 13, no Option granted
under Section 5(c) may be exercised before the first anniversary
of the date upon which it was granted; provided, however, that any
Option so granted
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shall become exercisable upon the termination of service of the
Non-Employee Director because of Disability or death. No Option
issued under this Section 5(c) shall be exercisable after the
expiration of ten years from the date upon which such Option is
granted.
(B) The rights of a Non-Employee Director in an Option
granted under Section 5(c) shall terminate six months after such
Director ceases to be a Director of the Company or the specified
expiration date, if earlier; provided, however, that if the
Non-Employee Director ceases to be a Director for Cause, the
rights shall terminate immediately on the date on which he ceases
to be a Director.
(C) Any Option granted to a Non-Employee Director and
outstanding on the date of his death may be exercised by the legal
representative or legatee of the optionee for a period of six
months from the date of death or until the expiration of the
stated term of the Option, if earlier.
(D) Options granted under this Section 5(c) may be exercised
only by written notice to the Company specifying the number of
shares to be purchased. Payment of the full purchase price of the
shares to be purchased may be made by one or more of the methods
specified in Section 5(a)(iv). An optionee shall have the rights
of a shareholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
(iii) Limited to Non-Employee Directors. The provisions of this
Section 5(c) shall apply only to Options granted or to be granted to
Non-Employee Directors, and shall not be deemed to modify, limit or
otherwise apply to any other provision of this Plan or to any Option
issued under this Plan to a participant who is not a Non-Employee
Director of the Company. To the extent inconsistent with the provisions
of any other Section of this Plan, the provisions of this Section 5(c)
shall govern the rights and obligations of the Company and Non-Employee
Directors respecting Options granted or to be granted to Non-Employee
Directors.
(d) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Committee may permit the optionee to transfer, without consideration for the
transfer, his Non-Qualified Stock Options to members of his immediate family, to
trusts for the benefit of such family members, to partnerships in which such
family members are the only partners, or to charitable organizations,
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provided that the transferee agrees in writing with the Company to be bound by
all of the terms and conditions of this Plan and the applicable option
agreement.
SECTION 6. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Award. The Committee may grant
Restricted Stock Awards to any participant. A Restricted Stock Award is an Award
entitling the recipient to acquire, at no cost or for a purchase price
determined by the Committee, shares of Stock subject to such restrictions and
conditions as the Committee may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. In addition, a Restricted Stock Award may be granted to an employee
by the Committee in lieu of a cash bonus due to such employee pursuant to any
other plan of the Company.
(b) Acceptance of Award. A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within 60 days (or such shorter time
period as the Committee may specify) following the award date by making payment
to the Company, if required, in cash, by certified bank check or other
instrument or form of payment acceptable to the Committee in an amount equal to
the specified purchase price, if any, of the shares covered by the Award and by
executing and delivering to the Company a written instrument that sets forth the
terms and conditions of the Restricted Stock in such form as the Committee shall
determine.
(c) Rights as a Shareholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a shareholder with respect to the
Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Stock Award. Unless the
Committee shall otherwise determine, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until such shares
are vested as provided in Section 6(e) below.
(d) Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment (or
other business relationship) by the Company and its Subsidiaries for any reason
(including death, retirement, Disability, and for Cause), the Company shall have
the right, at the discretion of the Committee, to repurchase shares of
Restricted Stock with respect to which conditions have not lapsed at their
purchase price, or to require forfeiture of such shares to the Company if
acquired at no cost, from the participant or the participant's legal
representative. The Company must exercise such right of repurchase or forfeiture
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not later than the 90th day following such termination of employment (or other
business relationship), unless otherwise specified in the written instrument
evidencing the Restricted Stock Award.
(e) Vesting of Restricted Stock. The Committee at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested."
(f) Waiver, Deferral and Reinvestment of Dividends. The written
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
SECTION 7. UNRESTRICTED STOCK AWARDS
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its
sole discretion, grant (or sell at a purchase price determined by the Committee)
an Unrestricted Stock Award to any participant which will entitle such
participant to receive shares of Stock free of any restrictions under the Plan
("Unrestricted Stock"). Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past services or other valid
consideration, or in lieu of any cash compensation due to such participant.
(b) Elections to Receive Unrestricted Stock In Lieu of Compensation.
Upon the request of a participant and with the consent of the Committee, each
such participant may, pursuant to an advance written election delivered to the
Company no later than the date or dates specified by the Committee, receive a
portion of the cash compensation otherwise due to such participant in
Unrestricted Stock either currently or on a deferred basis.
(c) Restrictions on Transfers. The right to receive Unrestricted Stock
on a deferred basis may not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution.
SECTION 8. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Shares. A Performance Share Award is an
award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan.
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Performance Share Awards may be granted under the Plan to any participants,
including those who qualify for awards under other performance plans of the
Company. The Committee in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals applicable
under each such Award, the periods during which performance is to be measured,
and all other limitations and conditions applicable to the awarded Performance
Shares; provided, however, that the Committee may rely on the performance goals
and other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance
Share Award shall have the rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a stock certificate evidencing the acquisition of
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the written instrument evidencing the Performance Share
Award (or in a performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee
at any time prior to termination of employment (or other business relationship),
a participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment (or other business
relationship) by the Company and its Subsidiaries for any reason (including
death, Disability and for Cause).
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 11, amend any or all of the goals, restrictions or conditions
imposed under any Performance Share Award.
SECTION 9. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to
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be withheld with respect to such income. The Company and its Subsidiaries shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(b) Payment in Shares. Subject to approval by the Committee, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.
SECTION 10. TRANSFER, LEAVE OF ABSENCE, ETC
For purposes of the Plan, the following events shall not be deemed a
termination of employment (or other business relationship):
(a) a transfer to the employment (or other business relationship) of
the Company from a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another Subsidiary; or
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment (or other business relationship) is guaranteed either by a statute
or by contract or under the policy pursuant to which the leave of absence was
granted or if the Committee otherwise so provides in writing.
SECTION 11. AMENDMENTS AND TERMINATION
The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding Award (or provide
substitute Awards at the same or reduced exercise or purchase price or with no
exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan) for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder's consent. To the extent
required by the Code to ensure that Options granted hereunder qualify as
Incentive Stock Options, Plan amendments shall be subject to approval by the
Company's stockholders.
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SECTION 12. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 13. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section
13:
(a) Each Stock Option shall automatically become fully exercisable
notwithstanding any provision to the contrary herein.
(b) Restrictions and conditions on Restricted Stock Awards and
Performance Share Awards shall automatically be deemed waived, and the
recipients of such Awards shall become entitled to receipt of the Stock subject
to such Awards unless the Committee shall otherwise expressly provide at the
time of grant.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Act (other than the Company, any of its Subsidiaries, any
trustee, fiduciary or other person or entity holding securities under
any employee benefit plan of the Company or any of its Subsidiaries),
together with all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing
40% or more of either (A) the combined voting power of the Company's
then outstanding securities having the right to vote in an election of
the Company's Board of Directors ("Voting Securities") or (B) the then
outstanding shares of Stock of the Company (in either such case other
than as a result of the acquisition of securities directly from the
Company); or
(ii) persons who, as of the date of the closing of the Company's
initial public offering, constitute the Company's Board of Directors
(the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a
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majority of the Board, provided that any person becoming a director of
the Company subsequent to the Closing of the Company's initial public
offering whose election or nomination for election was approved by a
vote of at least a majority of the Incumbent Directors shall, for
purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 50% of the
voting stock of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Stock or other Voting Securities outstanding, increases (x)
the proportionate number of shares of Stock beneficially owned by any person to
40% or more of the shares of Stock then outstanding or (y) the proportionate
voting power represented by the Voting Securities beneficially owned by any
person to 40% or more of the combined voting power of all then outstanding
Voting Securities; provided, however, that if any person referred to in clause
(x) or (y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 14. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The Committee
may require each person acquiring shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
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(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 15. EFFECTIVE DATE OF PLAN
This Plan has been amended and restated as of August 28, 1996 (except
the provisions contained in Section 5(c), which were amended on January 26,
1996) to reflect, in addition to other changes, an increase of 857,000 shares
reserved and available for issuance under the Plan.
SECTION 16. GOVERNING LAW
This Plan shall be governed by Maryland law except to the extent such
law is preempted by federal law.
DATE OF APPROVAL OF INITIAL PLAN BY
SHAREHOLDERS: February 15, 1994
DATE OF APPROVAL OF AMENDED AND RESTATED
PLAN BY BOARD OF DIRECTORS: August 28, 1996
DATE OF APPROVAL OF AMENDED AND RESTATED
PLAN BY SHAREHOLDERS: ____________________
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