Exhibit Index begins on sequential page number: 7
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
HIGHWOODS PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 56-1869557
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
3100 Smoketree Court 27604
Suite 600 (Zip Code)
Raleigh, North Carolina
(Address of principal
executive offices)
----------------------
HIGHWOODS PROPERTIES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
----------------------
Ronald P. Gibson Copy to:
President Brad S. Markoff
Highwoods Properties, Inc. Smith Helms Mulliss & Moore, L.L.P.
3100 Smoketree Court, Suite 600 2800 Two Hannover Square
Raleigh, North Carolina 27604 Raleigh, North Carolina 27601
(919) 872-4924 (919) 755-8700
(Name, address and telephone number of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
registered Registered Offering Price Per Unit(1)(2) Aggregate Offering Price(2) Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share............. 500,000 shares $29.1375 $14,568,750 $4,414.78
</TABLE>
- ---------------------------
(1) Offering prices vary with the market price of the Registrant's Common
Stock but is the lesser of 90% of the fair market value of the
Registrant's Common Stock on the Offering Date or the Exercise Date, as
defined in the plan.
(2) Computed pursuant to Rule 457(h) under the Securities Act of 1933 (as
amended) solely for the purpose of calculating the registration fee on
the basis of the average of the high and low prices of the Registrant's
Common Stock reported on the New York Stock Exchange on June 19, 1997.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents constituting the Prospectus of Highwoods Properties, Inc.
(the "Registrant" or the "Company") with respect to this Registration Statement
in accordance with Rule 428 promulgated pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), are kept on file at the offices of the
Registrant. The Registrant will provide without charge to participants in the
Company's 1997 Employee Stock Purchase Plan (the "Plan"), on the written or oral
request of any such person, a copy of any or all of the documents constituting
the Prospectus. Written requests for such copies should be directed to Director
of Human Resources, Highwoods Properties, Inc., 3100 Smoketree Court, Suite 600,
Raleigh, N.C. 27604. Telephone requests may be directed to (919) 872-4924.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") (File No. 1-13100) pursuant to the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference herein and in the Prospectus constituting a part of
this Registration Statement:
a. the Company's annual report on Form 10-K for the year ended
December 31, 1996;
b. the Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1997;
c. the description of the Common Stock of the Company included in
the Company's Registration Statement on Form 8-A, dated May 16,
1994; and
d. the Company's Current Reports on Form 8-K, dated January 9,
1997 (as amended by Form 8-K/A on February 7, 1997 and by Form
8-K/A on March 10, 1997) and February 12, 1997.
All documents subsequently filed by the Registrant or the Plan pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment that 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 herein and to be a part
hereof from the date of filing such reports and documents.
For purposes of this registration statement, any statement contained in
a report, document or appendix incorporated, or deemed to be incorporated, by
reference in this registration statement shall be deemed to be modified or
superseded to the extent that a statement contained in this registration
statement or in any subsequently filed report, document or appendix, which also
is or is deemed incorporated by reference, modifies or supersedes such statement
in such report, document or appendix. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this registration statement.
The Registrant will provide without charge to each person to whom the
Prospectus constituting a part of this Registration Statement is delivered, on
the written or oral request of any such person, a copy of any or all of the
documents incorporated herein and in the Prospectus by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Director of Human Resources, Highwoods Properties, Inc., 3100 Smoketree Court,
Suite 600, Raleigh, N.C. 27604. Telephone requests may be directed to (919)
872-4924.
ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable.
2
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's officers and directors are and will be indemnified
against certain liabilities in accordance with the Maryland General Corporations
Law (the "MGCL"), the Articles of Incorporation and bylaws of the Company and
the Partnership Agreement of Highwoods/Forsyth Limited Partnership (the
"Operating Partnership Agreement"). The Articles of Incorporation require the
Company to indemnify its directors and officers to the fullest extent permitted
from time to time by the MGCL. The MGCL permits a corporation to indemnify its
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reasons of their service in
those or other capacities unless it is established that the act or omission of
the director or officer was material to the matter giving rise to the proceeding
and was committed in bad faith or was the result of active and deliberate
dishonesty, or the director or officer actually received an improper personal
benefit in money, property or services, or in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful.
The Operating Partnership Agreement also provides for indemnification
of the Company and its officers, and directors to the same extent
indemnification is provided to officers and directors of the Company in its
Articles of Incorporation and limits the liability of the Company and its
officers and directors to the Operating Partnership and its partners to the same
extent liability of officers and directors of the Company to the Company and its
stockholders is limited under the Company's Articles of Incorporation.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed herewith:
Exhibit No. Description
4.1 Form of Common Stock Certificate**
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. regarding the
legality of the shares of Common Stock being registered
23.1 Consent of Smith Helms Mulliss & Moore L.L.P. (included in
Exhibit 5.1)
23.2 Consent of Ernst & Young, L.L.P.
99.1 Highwoods Properties, Inc. 1997 Employee Stock Purchase Plan
**Previously filed on Form S-11, File No. 33-76952, and incorporated herein by
reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
3
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement. Notwithstanding
the foregoing, any increase or decrease in
volume of securities offered (if the total
dollar value of securities offered would not
exceed that which was registered) and any
deviation from the low or high end of the
estimated maximum offering range may be
reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price
represent no more than a 20 percent change in
the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, that is incorporated by reference in the
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Raleigh, State of North Carolina, on June 20, 1997.
By: /s/ Ronald P. Gibson
Ronald P. Gibson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ O. Temple Sloan, Jr. Chairman of the Board of Directors June 20, 1997
- ---------------------------------------
O. Temple Sloan, Jr.
/s/ Ronald P. Gibson President, Chief Executive Officer and June 20, 1997
- ---------------------------------------
Ronald P. Gibson Director
/s/ William T. Wilson III Executive Vice President and Director June 20, 1997
- ---------------------------------------
William T. Wilson III
/s/ John L. Turner Vice Chairman of the Board of Directors June 20, 1997
- --------------------------------------- and Chief Investment Officer
John L. Turner
/s/ Gene H. Anderson Senior Vice President and Director June 20, 1997
- ---------------------------------------
Gene H. Anderson
/s/ John W. Eakin Senior Vice President and Director June 20, 1997
- --------------------------------------
John W. Eakin
/s/ Thomas W. Adler Director June 20, 1997
- --------------------------------------
Thomas W. Adler
/s/ William E. Graham, Jr. Director June 20, 1997
- ---------------------------------------
William E. Graham, Jr.
5
<PAGE>
/s/ L. Glenn Orr, Jr. Director June 20, 1997
- ---------------------------------------
L. Glenn Orr, Jr.
/s/ Willard H. Smith Jr. Director June 20, 1997
- --------------------------------------
Willard H. Smith Jr.
/s/ Stephen Timko Director June 20, 1997
- --------------------------------------
Stephen Timko
/s/ Carman J. Liuzzo Vice President, Chief Financial Officer June 20, 1997
- -------------------------------------- and Treasurer (Principal Accounting
Carman J. Liuzzo Officer)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
executive compensation committee of the Board of Directors of Highwoods
Properties, Inc. has duly caused this registration statement to be signed on
behalf of the Highwoods Properties, Inc. 1997 Employee Stock Purchase Plan by
the undersigned, thereunto duly authorized, in the City of Raleigh, State of
North Carolina, on June 20, 1997.
EXECUTIVE COMPENSATION COMMITTEE
/s/ Thomas W. Adler
-------------------------------
Thomas W. Adler
/s/ William E. Graham, Jr.
------------------------------
William E. Graham, Jr.
/s/ L. Glenn Orr, Jr.
------------------------------
L. Glenn Orr, Jr.
/s/ O. Temple Sloan, Jr.
-------------------------------
O. Temple Sloan, Jr.
6
<PAGE>
Exhibit Index
Exhibit No. Page
4.1. Form of Common Stock Certificate**
5.1 Opinion of Smith Helms Mulliss & Moore L.L.P.
regarding the legality of the shares of Common
Stock being registered
23.1 Consent of Smith Helms Mulliss & Moore L.L.P.
(included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
99.1 Highwoods Properties, Inc. 1997 Employee Stock
Purchase Plan
** Previously filed on Form S-11, File No. 33-76952, and incorporated herein
by reference.
7
<PAGE>
EXHIBIT 5.1
June 20, 1997
Highwoods Properties, Inc.
3100 Smoketree Court
Suite 600
Raleigh, North Carolina 27604
RE: REGISTRATION STATEMENT ON FORM S-8
500,000 SHARES OF COMMON STOCK, $0.01 PAR VALUE
1997 EMPLOYEE STOCK PURCHASE PLAN
Ladies and Gentlemen:
In connection with the possible offering and sale from time to time of
up to 500,000 shares of the common stock, $0.01 par value per share (the
"Shares"), of Highwoods Properties, Inc. (the "Corporation"), upon the terms and
conditions set forth in the Registration Statement on Form S-8 (the
"Registration Statement"), filed on June 20, 1997 by the Corporation with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and the prospectus constituting a part thereof (the "Prospectus"), we are of the
opinion that when (a) the Registration Statement shall become effective and (b)
the Shares have been sold upon the terms and conditions set forth in the
Registration Statement and the Prospectus, the Shares will be validly authorized
and legally issued, fully paid and nonassessable.
We hereby consent (1) to be named in the Registration Statement and in
the Prospectus as attorneys who will pass upon the legality of the Shares and
(2) to the filing of a copy of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ Smith Helms Mulliss & Moore, LLP
8
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333- ) pertaining to the 1997 Employee Stock Purchase
Plan of Highwoods Properties, Inc. of our report dated February 14, 1997 with
respect to the consolidated financial statements and schedule of Highwoods
Properties, Inc. included in its Annual Report on Form 10-K for the year
ended December 31, 1996, and our reports dated January 24, 1997 and January
25, 1997 with respect to the Combined Statements of Revenues and Certain
Expenses of Century Center and Anderson Properties, respectively included
in the Company's Current Report on Form 8-K dated January 9, 1997 (as
amended on Form 8-K/A dated February 7, 1997 and March 10, 1997).
/s/ ERNST & YOUNG LLP
Raleigh, North Carolina
June 19, 1997
9
<PAGE>
EXHIBIT 99.1
EXHIBIT A
HIGHWOODS PROPERTIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Highwoods Properties, Inc. (the "Company") hereby establishes an Employee
Stock Purchase Plan (the "Plan") granting Eligible Employees of the Company and
its Subsidiaries the opportunity to purchase Common Stock of the Company.
NOW, THEREFORE, the Company hereby establishes the Plan, the terms of which
are as follows:
SECTION 1. PURPOSE.
The purpose of this Plan is to give Eligible Employees of the Company and
its Subsidiaries, an opportunity to acquire shares of the Company's Common Stock
in order to increase their proprietary interest in the Company's success, to
encourage them to remain in the employ of the Company, and to continue to
promote the Company's best interests and enhance its long-term performance.
SECTION 2. DEFINITIONS.
Wherever used herein, the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
(a) "ADMINISTRATOR" means First Union National Bank of North Carolina, or
such other third-party administrator appointed by the Committee to maintain the
records of the Plan and conduct such other duties as may be further described
herein.
(b) "AVAILABLE SHARES" means the aggregate number of shares of Common Stock
which may be purchased by Eligible Employees under the Plan, as described in
Section 5.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee appointed by the Board and composed of
not less than three members of the Board to which the Board may delegate its
powers with respect to administration of the Plan pursuant to Section 6 hereof.
(f) "COMMON STOCK" means shares of the common stock of the Company, $.01
par value. Common stock hereunder includes both treasury stock and stock of
original issue.
(g) "COMPANY" means Highwoods Properties, Inc., a Maryland corporation.
(h) "COMPENSATION" means an Eligible Employee's regular base pay at the
rate in effect on the applicable Offering Date, but excludes any bonus, overtime
payment, sales commission or pre-tax contribution to any medical or retirement
plans qualified under Section 125 or 401(k) of the Code.
(i) "ELIGIBLE EMPLOYEE" means any individual who on any Offering Date is
employed by the Company or a Subsidiary on a regular full-time basis. A person
shall be considered employed on a regular full-time basis if he or she is
customarily employed by the Company or the Subsidiary, at least 20 hours per
week and is customarily employed for more than five 5 months per calendar year.
"Eligible Employee" shall not include any person who would own, immediately
after the Option was granted, stock possessing five percent or more of the total
combined voting power or value of any classes of stock of the Company, or any
Subsidiary. For purposes of this subsection 2(i), stock ownership of an
individual shall be determined under Section 424(d) of the Code, and stock that
the individual may purchase under outstanding options shall be treated as stock
owned by the individual.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(k) "EXERCISE DATE" means September 30, 1997, and any subsequent December
31, March 31, June 30 and September 30 thereafter during the term of the Plan.
(l) "FAIR MARKET VALUE" of Common Stock as of any date means the average of
the closing or last prices of the Common Stock on the New York Stock Exchange or
other comparable reporting system for the five consecutive trading days
immediately preceding such applicable date. Notwithstanding any provision of the
Plan to the contrary, no determination made with
A-1
<PAGE>
respect to the Fair Market Value of Common Stock subject to an Option shall be
inconsistent with Section 423 of the Code or regulations thereunder.
(m) "OFFERING DATE" means July 1, 1997, and any subsequent October 1,
January 1, April 1 and July 1 thereafter during the term of the Plan.
(n) "OFFERING PERIOD" means the period commencing on an Offering Date
hereunder and ending on the next following Exercise Date. The Board may change
the duration and/or frequency of Offering Periods without stockholder approval
if such change is announced at least 10 days prior to the scheduled beginning of
the Offering Period to be affected.
(o) "OPTION" means an option granted hereunder which will entitle an
Eligible Employee to purchase shares of Common Stock.
(p) "OPTION PRICE" means the lesser of 90% of the Fair Market Value per
share of Common Stock as of the applicable Offering Date or 90% of the Fair
Market Value per share of Common Stock on the applicable Exercise Date.
(q) "PLAN" means the Highwoods Properties, Inc. Employee Stock Purchase
Plan as set forth herein and as subsequently amended.
(r) "PURCHASE ACCOUNT" means the book entry account maintained by the
Company or Administrator to record the funds withheld from each Eligible
Employee's payroll for the purchase of Common Stock and to record the shares of
Common Stock credited to each Eligible Employee under the Plan.
(s) "SUBSIDIARY" or "SUBSIDIARIES" means the corporation or corporations
meeting the requirements of Section 424(f) of the Code.
SECTION 3. BASIS OF PARTICIPATION AND GRANTING OF OPTIONS.
(a) Each Eligible Employee on any Offering Date, commencing with the
Offering Date which occurs on or after July 1, 1997 and, subject to earlier
termination of the Plan pursuant to subsection 14(c) hereof, ending with the
last Offering Date on which shares of Common Stock are available for grant
within the limitation set forth in Section 5, is granted an Option hereunder
which will entitle him or her to purchase, at the Option Price per share
applicable to such Offering Date, the largest number of whole shares of Common
Stock that may be obtained by having deducted from such Eligible Employee's
Compensation for each payroll period in the applicable Offering Period an amount
not less than one percent of the Eligible Employee's Compensation nor more than
the lesser of 15% of the Eligible Employee's Compensation and $7,500.
(b) If the number of shares of Common Stock for which Options are granted
pursuant to subsection 3(a) exceeds the applicable number set forth in Section
5, then the Options granted under the applicable paragraph to all Eligible
Employees shall, in a nondiscriminatory manner which shall be consistent with
subsection 13(c), be reduced in proportion to their respective Compensation, and
the balance of payroll deductions credited to the Purchase Account of each
Eligible Employee shall be returned without interest to each Eligible Employee
as soon as practicable.
(c) Payment for Common Stock purchased under the Option shall be made only
by payroll deductions over a designated Offering Period.
(d) Each Option under the Plan shall be granted on the condition that (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Common Stock subject to such Option has
become effective and a copy of the Prospectus has been delivered to the Eligible
Employee and (ii) the shares of Common Stock issuable hereunder have been
approved for listing by the New York Stock Exchange.
SECTION 4. PURCHASE ACCOUNT.
Each Eligible Employee shall notify the Company, on such forms as shall be
provided by the Company, at least 10 days before the applicable Offering Date,
of the percentage of Compensation which the Eligible Employee wishes to have
withheld ratably from the Eligible Employee's Compensation during the Offering
Period; provided that not withstanding anything to the contrary herein, with
respect to the Offering Period commencing July 1, 1997 and ending September 30,
1997 (the "Initial Offering Period"), the Eligible Employee may so notify the
Company up to July 1, 1997 and payroll deductions will commence July 7, 1997.
Each Eligible Employee shall authorize the Company and its Subsidiaries to
withhold from the Eligible Employee's after-tax compensation, beginning as soon
as practicable following the making of the election described in this Section 4
and continuing throughout the duration of the Offering Period unless terminated
sooner under Section 7. All withheld amounts may be used by the Company for
general corporate purposes. The Company or Administrator shall maintain a record
of each Eligible Employee's funds in the Eligible Employee's Purchase Account.
Such funds so accumulated within said Purchase
A-2
<PAGE>
Account may be returned to an Eligible Employee or beneficiary without interest
or applied toward the purchase of Common Stock only pursuant to the provisions
contained in this Plan.
SECTION 5. MAXIMUM LIMITATIONS.
The aggregate number of shares of Common Stock available for grant as
Options pursuant to this Plan shall not exceed 500,000, subject to adjustment
pursuant to Section 10 hereof. Shares of Common Stock granted pursuant to the
Plan may be either authorized but unissued shares or shares now or hereafter
held in the treasury of the Company. In the event that any Option granted
pursuant to subsection 3(a) expires or is terminated, surrendered or canceled
without being exercised, in whole or in part, for any reason, the number of
shares of Common Stock theretofore subject to such Option shall again be
available for grant as an Option pursuant to subsection 3(a) and shall not
reduce the aggregate number of shares of Common Stock available for grant as
such Options as set forth in the first sentence of this Section.
SECTION 6. ADMINISTRATION.
The Plan shall be administered by the Board, which, to the extent it shall
determine, may delegate its powers with respect to the administration of the
Plan (except its powers under subsection 14(c)) to the Committee. If the Board
chooses to appoint a Committee, references hereinafter to the Board (except in
subsection 14(c)) shall be deemed to refer to the Committee. Subject to the
express provisions of the Plan, the Board may interpret the Plan, prescribe,
amend and rescind rules and regulations relating to it, correct any defect or
omission or reconcile any inconsistency in the Plan, determine the terms and
provisions of the Options granted hereunder, determine and change the Offering
Periods, Offering Dates and Exercise Dates (except as otherwise limited herein)
and make all other determinations necessary or advisable for the administration
of the Plan. The determinations of the Board on all matters regarding the Plan
shall be conclusive. A member of the Board shall only be liable for any action
taken or determination made in bad faith.
SECTION 7. TERMS OF OPTIONS.
(a) Each Option shall, unless sooner expired pursuant to subsection 7(b),
(c) or (d), be exercised on the Exercise Date for the applicable Offering
Period. Each Option not exercised during an Offering Period shall expire on the
Exercise Date for the applicable Offering Period.
(b) An Eligible Employee may at any time at least 21 days before an
Exercise Date (or such other date as may be selected by the Committee) terminate
the Option in its entirety by written notice of such termination delivered in
the manner set forth in subsection 14(i). Such termination shall become
effective upon receipt of such notice by the Company or Administrator. As soon
as practical following such notice, all funds then in the Eligible Employee's
Purchase Account shall be returned to the Eligible Employee without interest and
the Eligible Employee's Purchase Account closed, and all rights and privileges
of the Eligible Employee granted pursuant to this Plan and the Option granted
hereunder shall be terminated. Such Eligible Employee may again elect to
participate in the Plan on the next Offering Date pursuant to Sections 3 and 4.
(c) An Option shall expire on the first to occur of the Exercise Date for
the applicable Offering Period and the date that the employment of the Eligible
Employee with the Company and its Subsidiaries terminates (as determined by the
Board) for any reason other than death or disability. In the event that the
Option expires because of termination of employment, all funds then on deposit
in the Eligible Employee's Purchase Account shall be returned without interest
to the Eligible Employee and the Eligible Employee's Purchase Account closed.
(d) An Option shall expire on the Exercise Date for the applicable Offering
Period if the Eligible Employee becomes disabled (as determined by the Board) or
dies during an Offering Period. The Eligible Employee's Purchase Account at the
date of such Eligible Employee's disability or death shall become the basis of
the exercise of the Option under Section 8.
SECTION 8. MANNER OF EXERCISE OF OPTIONS AND PAYMENT FOR COMMON STOCK.
(a) Except as provided in subsection 7(b), (c) or (d), each Eligible
Employee's Option shall be exercised automatically on the Exercise Date of each
Offering Period, and the maximum number of shares of Common Stock will be
purchased by the Administrator for each Eligible Employee with the entire
proceeds of each Eligible Employee's Purchase Account. The Common Stock
purchased under this Section 8 may be either treasury stock or stock of original
issue, in the discretion and at the direction of the Company.
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<PAGE>
(b) Upon the written request of an Eligible Employee (or beneficiary, as
described in subsection 9(b)) following any Offering Period, the Administrator
shall deliver (or cause to be delivered) a certificate for the whole shares
purchased under subsection 8(a) to such Eligible Employee (or beneficiary). If
the number of shares purchased is not a whole number of shares, the number of
shares reflected on such certificate shall be rounded down to the next whole
number and the Company shall pay the difference to such Eligible Employee in
cash. Any remaining shares in such Eligible Employee's Purchase Account will
continue to be credited to such Eligible Employee's Purchase Account.
(c) An Eligible Employee may not make additional cash payments into such
Eligible Employee's Purchase Account.
SECTION 9. TRANSFERABILITY AND DESIGNATION OF BENEFICIARY.
(a) No Option may be transferred, assigned, pledged, or hypothecated
(whether by operation of law or otherwise), except as provided by will or the
applicable laws of descent or distribution, and no Option shall be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of an Option, or levy of attachment
or similar process upon the Option not specifically permitted herein shall be
null and void and without effect. An Option may be exercised only by the
Eligible Employee during his or her lifetime, or pursuant to subsection 7(c), by
his or her beneficiary (as described in subsection 9(b)), estate or the person
who acquires the right to exercise such Option upon his or her death by bequest
or inheritance.
(b) Each Eligible Employee may file a written designation of beneficiary
who is to receive any stock or cash in the event that such Eligible Employee
dies after the end of an Offering Period but before the issuance of the shares
or during an Offering Period but before the respective Exercise Date.
SECTION 10. ADJUSTMENT PROVISIONS.
The aggregate number of shares of Common Stock with respect to which
Options may be granted, the aggregate number of shares of Common Stock subject
to each outstanding Option, and the Option Price per share of each Option may
all be appropriately adjusted as the Board may determine for any increase or
decrease in the number of shares of issued Common Stock resulting from a
subdivision or consolidation of shares, whether through reorganization,
recapitalization, stock split-up, stock distribution or combination of shares,
or the payment of a share dividend or other increase or decrease in the number
of such shares outstanding effected without receipt of consideration by the
Company. Adjustments under this Section 10 shall be made according to the sole
discretion of the Board, and its decision shall be binding and conclusive.
SECTION 11. DISSOLUTION, MERGER AND CONSOLIDATION.
In the event of (i) the adoption of a plan of merger, consolidation, share
exchange or similar transaction of the Company with any other corporation as a
result of which the holders of the Common Stock of the Company in the aggregate
would receive less than 50% of the voting capital stock of the surviving or
resulting corporation; (ii) the approval by the Board of an agreement providing
for the sale or transfer (other than as security for obligations of the Company)
by the Company of a majority of the stock of a significant subsidiary of the
Company or substantially all of the assets of the Company or of a significant
subsidiary of the Company; (iii) the acquisition of more than 20% of the
Company's voting capital stock by any person within the meaning of Section
13(d)(3) of the Exchange Act, other than a person, or group including a person,
who beneficially owned, as of the most recent Offering Date, more than 5% of the
Company's securities, in the absence of a prior expression of approval of the
Board; (iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's stockholders, of each new director was approved by the vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of the period; or (v) any other change in control of the Company
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A under the Exchange Act, then any Option granted
hereunder during the then-current Option Period shall remain exercisable until
the Exercise Date of the then-current Option Period, subject to all of the terms
hereof not inconsistent with this Section 11.
Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Company or the consummation of a merger or
consolidation in which the stockholders of the Company receive less than 50% of
the voting capital stock of the surviving or resulting corporation, each Option
granted under the Plan shall terminate, but the Eligible Employee shall have the
right, following the adoption of a plan of dissolution or liquidation or a plan
of merger or consolidation and in any event prior to such dissolution,
liquidation, merger or consolidation, to exercise his Option to purchase Common
Stock on the Exercise Date of the then-current Option Period, subject to all of
the other terms hereof not inconsistent with this Section 11.
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The grant of an Option pursuant to this Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or to dissolve, liquidate or sell, or transfer all or any part of
the business or assets.
SECTION 12. CONDITIONS SUBSEQUENT TO EFFECTIVE DATE.
The Plan is subject to the approval of the Plan by the holders of a
majority of the outstanding shares of Common Stock of the Company within twelve
(12) months before or after the date of adoption of the Plan by the Board. The
Plan shall be null and void and of no effect if the foregoing condition is not
fulfilled.
SECTION 13. LIMITATION ON OPTIONS.
Notwithstanding any other provisions of the Plan:
(a) All Eligible Employees shall have the same rights and privileges under
the Plan, except that the amount of Common Stock which may be purchased under
Options granted pursuant to Section 3, shall bear a uniform relationship to the
compensation of Eligible Employees. All rules and determinations of the Board in
the administration of the Plan shall be uniformly and consistently applied to
all persons in similar circumstances.
(b) The term of said Plan shall be for a period of 10 years commencing on
July 1, 1997 and ending on December 31, 2007 unless terminated earlier by the
exhaustion of the Available Shares pursuant to Section 3 or 5 or as provided in
subsection 14(c).
(c) As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent that, at the time of any such
exercise, the shares are being purchased only for an investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such representation is required by any applicable
provisions of law.
SECTION 14. MISCELLANEOUS.
(a) LEGAL AND OTHER REQUIREMENTS. The obligations of the Company to sell
and deliver Common Stock under the Plan shall be subject to all applicable
foreign or domestic laws, regulations, rules and approvals, including, but not
by way of limitation, the effectiveness of a registration statement under the
Securities Act and the requirements of any stock exchange upon which the shares
of Common Stock may be listed if deemed necessary or appropriate by the Company.
Certificates for shares of Common Stock issued hereunder may be legended as the
Board shall deem appropriate.
(b) NO OBLIGATION TO EXERCISE OPTIONS. The granting of an Option shall
impose no obligation upon an Eligible Employee to exercise such Option unless
such Eligible Employee affirmatively elects to purchase Common Stock through
payroll withholding as described in Section 4.
(c) TERMINATION AND AMENDMENT OF PLAN. The Board, without further action on
the part of the stockholders of the Company, may from time to time alter, amend
or suspend the Plan or any Option granted hereunder or may at any time terminate
the Plan, except that it may not (except to the extent provided in Section 10):
(i) change the total number of shares of Common Stock available for grant under
the Plan; (ii) extend the duration of the Plan; (iii) increase the maximum term
of Options; (iv) change the Option Price; or (v) change the class of Eligible
Employees. No action taken by the Board under this subsection 14(c) may
materially and adversely affect any outstanding Option without the consent of
the holder thereof.
(d) APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
(e) WITHHOLDING TAXES. Upon the exercise of any Option under the Plan, the
Company shall have the right to require the Eligible Employee to remit to the
Company an amount sufficient to satisfy all federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
shares of Common Stock.
(f) RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or any agreement
entered into pursuant to the Plan shall confer upon any Eligible Employee the
right to continue in the employment of the Company or any Subsidiary or affect
any right which the Company or any Subsidiary may have to terminate the
employment of such Eligible Employee.
(g) RIGHTS AS A STOCKHOLDER. No Eligible Employee shall have any right as a
stockholder unless and until certificates for shares of Common Stock are issued
to him or her.
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(h) LEAVES OF ABSENCE AND DISABILITY. The Board shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by or disability of any Eligible
Employee. Without limiting the generality of the foregoing, the Board shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan, and (ii)
the impact, if any, of any such leave of absence on Options under the Plan
theretofore granted to any Eligible Employee who takes such leave of absence.
(i) NOTICES. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered on the date it is delivered (i) to the
Administrator at First Union National Bank of North Carolina, 230 South Tryon
Street, Charlotte, North Carolina 27288-1179, or (ii) three business days after
it is sent by registered or certified mail, postage prepaid, addressed to the
Company, Attention: Director of Human Resources, at its principal office at 3100
Smoketree Court, Suite 600, Raleigh, N.C. 27604; and shall be deemed delivered
to an Eligible Employee (i) on the date it is personally delivered to him or her
or (ii) three (3) business days after it is sent by registered or certified
mail, postage prepaid, addressed to him or her at the last address shown for him
or her on the records of the Company or of any Subsidiary.
(j) APPLICABLE LAW. All questions pertaining to the validity, construction
and administration of the Plan and Options granted hereunder shall be determined
in conformity with the laws of the state of Maryland.
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