<PAGE>
As filed with the Securities and Exchange Commission on March 10, 1997.
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MOUNTBATTEN, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2633708
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Thirty Three Rock Hill Road
Bala Cynwyd, Pennsylvania 19004
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
--------------------
MOUNTBATTEN, INC.
1995 EQUITY INCENTIVE PLAN FOR KEY EMPLOYEES
--------------------------------------------
(Full title of the plan)
--------------------
Kenneth L. Brier, President
Mountbatten, Inc.
Thirty Three Rock Hill Road
Bala Cynwyd, Pennsylvania 19004
---------------------------------------
(Name and address of agent for service)
(610) 664-2259
---------------------------------------
(Telephone number, including area code,
of agent for service)
--------------------
Copy to:
John W. Kauffman, Esquire
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103-7396
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered(1) price per share(2) offering price(2) registration fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 250,000 shares $8.00 $2,000,000 $607
par value $.001
========================================================================================================================
</TABLE>
(1) 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 Mountbatten, Inc. 1995
Equity Incentive Plan for Key Employees.
(2) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low sales prices of the Common Stock of the
Company on the Nasdaq Stock Market on March 4, 1997, or $8.00 per share.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Incorporation of Documents by Reference.
The following material is incorporated herein by reference:
(a) The Annual Report on Form 10-KSB of Mountbatten, Inc. (the
"Company") for the year ended December 31, 1995 as filed by the Company with the
Securities and Exchange Commission (the "Commission").
(b) The Quarterly Report on Form 10-QSB of the Company for the quarter
ended March 31, 1996 as filed by the Company with the Commission.
(c) The Quarterly Report on Form 10-QSB of the Company for the quarter
ended June 30, 1996 as filed by the Company with the Commission.
(d) The Quarterly Report on Form 10-QSB of the Company for the quarter
ended September 30, 1996 as filed by the Company with the Commission.
(e) The description of the Company's Common Stock set forth in the
Company's Registration Statement No. 33-78336 on Form SB-2, declared effective
with the Commission under the Securities Act of 1933, as amended, (the "Act") on
September 1, 1994, under the caption "Description of Securities," which is
incorporated by reference in response to Item 1 of the Company's Registration
Statement No. 0-24638 on Form 8-A declared effective with the Commission on
September 1, 1994 pursuant to Section 12(g) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act").
All reports or other documents filed pursuant to Sections 13, 14 and
15(d) of the Exchange Act subsequent to the date of this Registration Statement,
in each case filed by the Company prior to the filing of a post-effective
amendment that indicates that all securities offered have been sold or that
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 reports and documents. Any statement contained
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for the purposes of this
Registration Statement to the extent that a statement contained herein or in any
other subsequently filed document, which also is or is deemed to be incorporated
herein by reference, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
Item 2. Description of Securities.
No answer to this item is required because the class of securities to
be offered is registered under Section 12 of the Exchange Act.
II-2
<PAGE>
Item 3. Interests of Named Experts and Counsel.
The consolidated financial statements and schedules of the Company as
of December 31, 1995 and for each of the years in the two-year period ended
December 31, 1995 have been incorporated by reference herein and in this
Registration Statement in reliance upon the reports of Price Waterhouse LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The validity of the issuance of the shares of Common Stock registered
hereby will be passed upon for the Company by Duane, Morris & Heckscher,
Philadelphia, Pennsylvania.
Item 4. Indemnification of Directors and Officers.
As permitted by the provisions for indemnification of directors and
officers in the Pennsylvania Business Corporation Law (the "BCL"), which applies
to the Company, the Company's Bylaws provide for indemnification of directors
and officers for all expense, liability and loss (including without limitation
attorney's fees, judgments, fines, taxes, penalties and amounts paid in
settlement) reasonably incurred or suffered by such person in any threatened,
pending or completed action, suit or proceeding (including without limitation an
action, suit or proceeding by or in the right of the Company), whether civil,
criminal, administrative, investigative, or through arbitration, unless the act
or failure to act giving rise to the claim for indemnification is determined by
a court to have constituted willful misconduct or recklessness. The right to
indemnification provided in the Company's Bylaws includes the right to have the
expenses incurred by such person in defending any proceeding paid by the Company
in advance of the final disposition of the proceeding to the fullest extent
permitted by Pennsylvania law; provided that, if Pennsylvania law continues so
to require, the payment of such expenses incurred by such person in advance of
the final disposition of a proceeding may be made only upon delivery to the
Company of an undertaking, by or on behalf of such person, to repay all amounts
so advanced without interest if it is ultimately determined that such person is
not entitled to be indemnified under the Company's Bylaws or otherwise.
Indemnification under such provisions continues as to a person who has ceased to
be a director or officer of the Company and inures to the benefit of his or her
heirs, executors and administrators. The Bylaws for the Company also avail
directors of the Pennsylvania law limiting directors' liability for monetary
damages for any action taken or any failure to take any action to those cases
where they have breached their fiduciary duty under the BCL and such breach
constitutes self-dealing, willful misconduct or recklessness, provided, however,
that this limitation does not apply to the responsibilities or liabilities of a
director pursuant to any criminal statute, or to the liabilities of a director
for payment of taxes pursuant to local, Pennsylvania or federal law.
II-3
<PAGE>
Item 5. Exemption from Registration Claimed.
No answer to this item is required because no restricted securities are
to be reoffered or resold pursuant to this Registration Statement.
Item 6. Exhibits.
(4) Mountbatten, Inc. 1995 Equity Incentive Plan for Key Employees.
(5) Opinion of Duane, Morris & Heckscher.
(23)(A) Consent of Duane, Morris & Heckscher (included in their opinion filed
as Exhibit 5).
(23)(B) Consent of Price Waterhouse LLP.
(24) Power of Attorney (see page II-6 of this Registration Statement).
Item 7. Undertakings.
The registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement 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;
(b) that for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offer
thereof; and
(c) 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.
The undersigned registrant hereby further undertakes that, for purposes
of determining any liability under the Act, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby further undertakes that, insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Commission such indemnification is
II-4
<PAGE>
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.
II-5
<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 Bala Cynwyd, Pennsylvania on March 10, 1997.
MOUNTBATTEN, INC.
By: /s/ Kenneth L. Brier
--------------------------------
Kenneth L. Brier, President
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Kenneth L. Brier and Joel D. Cooperman,
and each or either of them, as such person's true and lawful attorneys-in-fact
and agents, with full power of substitution, for such person, and in such
person's 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 Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents 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 such person might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth L. Brier President, Chief Executive February 10, 1997
- -------------------------------------- Officer and a Director (prin-
Kenneth L. Brier cipal executive officer)
/s/ Ted A. Drauschak Executive Vice President, February 10, 1997
- -------------------------------------- Secretary and a Director
Ted A. Drauschak
/s/ Joel D. Cooperman Vice President, Finance, February 10, 1997
- -------------------------------------- Treasurer and Chief Finan-
Joel D. Cooperman cial Officer (principal finan-
cial and accounting officer)
/s/ J. Michael Adams Director February 11, 1997
- --------------------------------------
J. Michael Adams
/s/ Thomas P. Garry Director February 10, 1997
- --------------------------------------
Thomas P. Garry
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit No. Exhibit Reference
<C> <C> <C>
(4) Mountbatten, Inc. 1995 Equity Incentive Plan File herewith
for Key Employees
(5) Opinion of Duane, Morris & Heckscher. Filed herewith
(23)(A) Consent of Duane, Morris & Heckscher (included in
their opinion filed as Exhibit 5).
(23)(B) Consent of Price Waterhouse LLP. Filed herewith
(24) Power of Attorney (see Page II-6 of this Registration
Statement).
</TABLE>
II-7
<PAGE>
EXHIBIT (4)
MOUNTBATTEN, INC.
1995 EQUITY INCENTIVE PLAN
FOR KEY EMPLOYEES
MOUNTBATTEN, INC., a corporation organized under the laws of the
Commonwealth of Pennsylvania, hereby sets forth the 1995 Equity Incentive Plan
for Key Employees. The Plan permits the grant of stock options, stock
appreciation rights, limited stock appreciation rights, restricted stock and
restricted unit awards. The Committee of the Board of Directors that administers
the Plan may select and grant to key employees of the Company and its
Affiliates, the type of option, stock appreciation right or award which the
Company determines to be most effective in advancing the interests of the
Company through the motivation and retention of those key employees upon whose
judgment, initiative and continued efforts the Company is largely dependent for
the successful conduct of its business.
1. DEFINITIONS
Whenever the following terms are used in the Plan they shall have the
meaning specified below unless the context clearly indicates to the contrary.
"Affiliate" shall mean any corporation in which the Company owns,
directly or indirectly, 25% or more of the voting stock.
"Award" shall mean an award of restricted stock or restricted units
granted under the provisions of Section 5 of the Plan.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean a change in the power to direct or cause
the direction of the management and policies of the Company arising from (1) any
"person" or "group" (as such terms are used in Sections 13(d)(3) and 14(d) of
the Exchange Act), becoming the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities, other than a person or group who, as of the date of the
adoption of this Plan by the Board of Directors of the Company, is known by the
Company to be the beneficial owner, directly or indirectly, of securities of the
Company representing 10% or more of the combined voting power of the Company's
outstanding securities, or (2) more than 50% of the assets of the Company being
disposed of by the Company pursuant to a partial or complete liquidation of the
Company, a sale of assets (including stock of a subsidiary or subsidiaries) of
the Company or otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include such section, any
<PAGE>
valid regulation promulgated thereunder and any comparable provision of any
future legislation amending, supplementing or superseding such section.
"Committee" shall mean the committee appointed by the Board (pursuant
to Section 2(a) of the Plan) to administer the Plan.
"Company" shall mean Mountbatten, Inc., a Pennsylvania corporation.
"Director" shall mean a member of the Board.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Employee" shall mean any salaried, full-time employee of the Company,
or of any corporation which is then an Affiliate, whether such employee is so
employed at the time the Plan is adopted or becomes so employed subsequent to
the adoption of the Plan.
"Exercise Price" shall mean: (i) in the case of an Option, the Fair
Market Value per Share upon the date of grant; and (ii) in the case of a Right,
the Fair Market Value per Share upon the date of grant.
"Fair Market Value" shall be the last sales price of Shares quoted by
the automated quotation system of the National Association of Securities
Dealers, Inc. ("Nasdaq") for the date in question, as published in The Wall
Street Journal. If no sale prices are quoted with respect to the Shares by
Nasdaq for such date, the next preceding date for which such sale prices are
quoted shall be used.
"Grantee" shall mean an Employee to whom an Award is granted.
"Incentive Stock Option" shall mean an Option designated as such by the
Committee which meets the requirements of Section 422 of the Code.
"LSAR" shall mean a limited stock appreciation right awarded under the
provisions of Section 7 hereof.
"Option" shall mean an option to purchase Shares granted under the
provisions of Section 4 of the Plan and, where applicable, shall include an
Incentive Stock Option.
"Optionee" shall mean an Employee to whom an Option or Right is
granted.
"Plan" shall mean this 1995 Equity Incentive Plan for Key Employees.
"Related" shall mean: (i) in the case of a Right, a Right which is
granted in connection with, and to the extent exercisable, in whole or in part,
in lieu of, an Option or another Right; and (ii) in the case of an Option, an
Option with respect to which and to the extent a Right exercisable, in whole or
in part, in lieu thereof, has been granted.
<PAGE>
"Restricted Stock Award" shall mean an award of restricted Shares
granted under the provisions of Section 5(d) of the Plan.
"Restricted Unit Award" shall mean an Award of restricted units granted
under the provisions of Section 5(e) of the Plan.
"Retirement" shall mean a Termination of Employment by reason of the
Employee's retirement at or after the Employee's earliest permissible retirement
date pursuant to and in accordance with his or her employer's regular retirement
plan or practice.
"Right" shall mean any Stock Appreciation Right or LSAR granted under
the Plan.
"Secretary" shall mean the Corporate Secretary or an Assistant
Secretary of the Company.
"Shares" shall mean shares of the Company's Common Stock, $.001 par
value per share.
"Stock Appreciation Right" shall mean a Right granted under the
provisions of Section 6 of the Plan.
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
"Termination of Employment" shall mean a cessation of the
employee-employer relationship between an Employee and the Company or an
Affiliate for any reason, including, but not by way of limitation, a termination
by resignation, discharge, death, Total Disability or Retirement or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous reemployment by the Company or an Affiliate.
"Total Disability" shall mean permanent and total disability as
determined in accordance with Section 72(m)(7) of the Code.
2. ADMINISTRATION
(d) Appointment of Committee. The Committee shall consist of at least
two Directors, appointed by and holding office at the pleasure of the Board. No
Options, Rights or Awards may be granted to any member of the Committee during
the term of such Director's membership on the Committee. A Director shall be
eligible to serve on the Committee only if such Director has not at any time
within one year prior thereto been selected as a person (i) to whom Options,
Rights or Awards were granted or (ii) to whom stock was allocated or stock
options or awards were granted pursuant to any other plan of the Company or of
any Affiliate entitling the participants therein to acquire stock of the Company
or any Affiliate; provided, however, that a Director may participate in and be
eligible to receive stock, awards and/or options pursuant to any other plan of
<PAGE>
the Company or of any Affiliate if such participation or eligibility would not
disqualify the Director from being a "disinterested person" for purposes of Rule
16b-3 under the Exchange Act. The duties and responsibilities of the Committee
may be assigned by the Board to a standing committee of the Board; provided,
however, that all of the members of such standing committee must satisfy all of
the eligibility requirements set forth above for membership on the Committee.
(e) Duty and Power of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to determine which Employees are
key Employees and to interpret the Plan, the Options, the Rights and the Awards,
and to adopt rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules.
(f) Matters Relating to Termination of Employment. The Committee, in
its absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from Retirement or
Total Disability, and all questions of whether particular leaves of absence
constitute Terminations of Employment.
(g) Transfer Restrictions. The Committee, in its absolute discretion,
may impose such restrictions on the transferability of the Shares issued upon
the exercise of an Option or issued as an Award as it deems appropriate, and any
such restrictions shall be set forth in the respective Option or Award agreement
and may be referred to on the certificates evidencing such Shares.
(h) Committee Actions. The Committee may act either by vote of a
majority of its members at a meeting or by a memorandum or other written
instrument signed by all members of the Committee.
(i) Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee may receive reasonable compensation for their services as
members, and all expenses and liabilities they incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants, or
other persons. The Committee, the Company and officers and directors of the
Company shall be entitled to rely upon the advice, opinions or valuations of any
such persons. All actions taken and all interpretations and determinations made
by the Committee in good faith shall be final and binding upon all Optionees,
Grantees, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, the Options, the
Rights or the Awards, and all members of the Committee shall be fully protected
by the Company in respect to any such action, determination or interpretation.
<PAGE>
3. SHARES SUBJECT TO THE PLAN
(a) Limitations. The total number of Shares that may be subject to
Options, Rights and Awards granted under the Plan shall not exceed 250,000 in
the aggregate. Moreover, no key Employee shall be granted Options, Rights or
Awards with respect to a number of Shares, determined on a cumulative basis,
that exceeds 90% of the aggregate number of Shares that are available to be
issued under the Plan pursuant to this Section 3(a).
(b) Effect of Unexercised or Cancelled Options or Stock Appreciation
Rights, Unvested Restricted Stock or Unit Awards. If an Option, Right or Award
expires or is cancelled for any reason without having been fully exercised or
vested, the number of Shares or units subject to such Option, Right or Award
that were not purchased or did not vest prior to such expiration or cancellation
may again be made subject to an Option, a Right or an Award granted hereunder
(to the same Optionee or Grantee or to a different Optionee or Grantee),
provided that a surrender of all or part of an Option in connection with the
exercise of a Right shall not be considered a termination and the Shares covered
by such Option or the surrendered portion may not be reallocated by the
Committee.
(c) Changes in Company's Shares. In the event that the outstanding
Shares are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company, or of
another corporation by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend, spin-off or
combination of shares, appropriate adjustments shall be made by the Committee in
the aggregate number and kind of shares and units that may be issued on exercise
of Options or Rights or granted as Awards.
4. STOCK OPTIONS AND RIGHTS
(a) Granting of Options and Rights.
(1) Eligibility. Any key Employee of the Company or of any
corporation which is then an Affiliate shall be eligible to be granted Options
and/or Rights.
(2) Granting of Options and/or Rights.
(A) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the eligible key Employees to whom
Options or Rights should be granted and determine the number of
Shares to be subject to such Options or Rights.
(ii) Determine the terms and conditions of such Options or
Rights, consistent with the Plan.
(iii) Determine whether such Options are to be Incentive
Stock Options or not, provided any Incentive Stock Option must meet
all the applicable requirements of Section 422 of the Code.
<PAGE>
(B) Upon the selection of a key Employee to be granted an
Option or Right, the Committee shall authorize the Company to grant
such Option or Right and may impose such conditions on the grant of
such Option or Right, as it deems appropriate.
(b) Terms of Options or Rights.
(1) Option Agreement; Rights Agreement. Each Option and/or Right
shall be evidenced by a written agreement which shall be executed by the
Optionee and the Company and which shall contain the terms and conditions
determined by the Committee. Notwithstanding anything to the contrary in the
Plan, agreements evidencing Incentive Stock Options shall contain such terms and
conditions, among others, as may be necessary in the opinion of the Committee to
qualify them as Incentive Stock Options under Section 422 of the Code.
(2) Exercise Price. The Exercise Price of the Shares subject to
each Option or Right shall be set by the Committee; provided, however, that the
price shall not be less than 100% of the Fair Market Value for such Shares on
the date the Option and/or Right is granted as determined by the Committee. The
Exercise Price shall be subject to adjustment only as provided in Section
4(b)(7) of the Plan.
(3) Date of Grant. The date on which an Option or Right shall be
granted shall be the date of the Committee's authorization of such grant or such
later date as may be determined by the Committee at the time such grant is
authorized.
(4) Commencement of Exercisability.
(A) Except as may be otherwise provided in the agreement
evidencing an Option and/or Right or as may be otherwise determined by
the Committee, no Option or Right may be exercised in whole or in part
during the first six months after such Option or Right is granted.
(B) Subject to the provisions of Section 4(b)(4)(A) and (C),
Options or Rights shall become exercisable at such times and in such
installments (which may be cumulative) as the Committee shall provide
in the terms of each individual Option or Right; provided, however,
that in the agreement evidencing an Option or Right or after an Option
or Right is granted, the Committee may, on such terms and conditions as
it may determine to be appropriate and notwithstanding the provisions
of Section 4(b)(4)(A) and (C), accelerate the time at which such Option
or Right or any portion thereof may be exercised.
(C) No portion of an Option or Right which is unexercisable
(except an Incentive Stock Option which is unexercisable solely by
virtue of the sequential exercise restriction contained in Section
4(b)(9)(C)) at the time of the Optionee's Termination of Employment
shall thereafter become exercisable; provided, however, that this does
not limit the discretion of the Committee to provide in the terms of an
Option or Right that there will be an acceleration of exercisability
upon the occurrence of certain types of Terminations of Employment.
<PAGE>
(5) Replacement Options and Rights. The Committee, in its
absolute discretion, may grant to holders of outstanding Options or Right, in
exchange for the surrender and cancellation of such Options or Rights, new
Options or Rights having Exercise Prices lower (or higher) than the Exercise
Price provided in the Options or Rights so surrendered and cancelled and
containing such other terms and conditions as the Committee may deem
appropriate.
(6) Expiration of Options and Rights.
(A) Except as otherwise provided in Section 4(b)(6)(B),
each Option or Right shall terminate on the expiration of ten years
from the date the Option or Right was granted. Notwithstanding the
foregoing or any other provision of the Plan, no Incentive Stock Option
may be exercised after the expiration of ten years from the date the
Option was granted.
(B) Each Option or Right or portion thereof which has
become exercisable may be exercised until the first to occur of the
following events:
(i) The expiration of three months from the date of
the Optionee's Termination of Employment unless such Termination
of Employment results from the Optionee's death, Total
Disability or Retirement, and except as provided in (iv) below;
or
(ii) The expiration of one year from the date of the
Optionee's Termination of Employment by reason of Total
Disability; or
(iii) The expiration of one year from the date of the
Optionee's Retirement; provided no Incentive Stock Option may
be exercised after the expiration of three months from the date
of the Optionee's Retirement, and except as provided in (iv)
below; or
(iv) The expiration of one year from the date of the
Optionee's death, if such death occurs while the Optionee is in
the employ of the Company or an Affiliate or within the
three-month or one-year period referred to in (i), (ii) or (iii)
above, whichever is applicable.
(C) Subject to the provisions of subparagraphs (A) and (B)
of this Section 4(b)(6), the Committee shall provide, in the terms of
each individual Option or Right, when such Option or Right expires and
becomes unexercisable.
(7) Adjustments in Outstanding Options or Rights. In the event
that the outstanding Shares subject to Options or Rights are increased or
decreased or changed into or exchanged for a different number or kind of shares
of the Company, or other securities of the Company, or of another corporation,
by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, spin-off or combination of
shares, the Committee shall make an appropriate and equitable adjustment in the
number and kind of shares as to which all outstanding Options or Rights, or
portions thereof then
<PAGE>
unexercised, shall be exercisable, to the end that after such event the
Optionee's proportionate interest shall be maintained as before the occurrence
of such event. Such adjustment in an outstanding Option or Right shall be made
without change in the total Exercise Price applicable to the Option or Right or
the unexercised portion of the Option or Right (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices) and
with any necessary corresponding adjustment in option price per share and
provided that any such adjustment in respect to an Incentive Stock Option shall
be made in such manner as not to constitute a "modification" as defined in
Section 425 of the Code. Any such adjustment made by the Committee shall be
final and binding upon all Optionees, the Company and all other interested
persons.
(8) Change of Control. In its absolute discretion and on such
terms and conditions as it deems appropriate, and notwithstanding the
provisions of Section 4(b)(4), the Committee may provide that in the event of a
Change of Control, that such Option or Right shall immediately vest and may be
exercised at any time on or following a Change of Control.
(9) Certain Additional Provisions for Incentive Stock Options.
Notwithstanding anything to the contrary in the Plan, each Incentive Stock
Option must meet the following requirements:
(A) The Optionee at the time the Option is granted is an
Employee of the Company or a Subsidiary of the Company.
(B) The Optionee (together with persons whose stock
ownership is attributed to the Optionee pursuant to Section 425(d) of
the Code) at the time the Option is granted does not own stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any of its Subsidiaries, unless
at the time of grant the exercise price of the Option is at least 110%
of the Fair Market Value of the Common Stock subject to the Option and
the Option may not be exercisable after the expiration of five years
from the date the Option was granted.
(C) No Option may be granted to an Employee which, when
aggregated with all other Incentive Stock Options granted to such
Employee by the Company and its Subsidiaries, would result in stock
having an aggregate Fair Market Value (determined for each share of
stock as of the time the Option covering such share is granted) in
excess of $100,000 becoming first available for purchase upon exercise
of the Option during any calendar year.
(D) The Option may not be exercised after the expiration
of three months after the Optionee ceases to be employed by the Company
or a Subsidiary.
(10) Substitute Options or Rights. Options or Rights may be
granted under the Plan from time to time in substitution for options or rights
held by employees of other corporations who are about to become Employees of the
Company as the result of a merger or consolidation of the employing corporation
with the Company or the acquisition by the Company or any Affiliate of the
assets of the employing corporation or the acquisition by the Company or any
Affiliate of stock of the employing corporation as a result of which it
<PAGE>
becomes an Affiliate of the Company. The terms and conditions of substitute
Options or Rights so granted may vary from the terms and conditions set forth in
the Plan to such extent as the Committee at the time of grant may deem
appropriate in order to conform, in whole or in part, to the provisions of the
options or rights in substitution for which Options or Rights are being granted,
but no such variation shall be such as to affect the qualified status of any
such Option which has been granted in substitution for an incentive stock option
under Section 422 of the Code.
(c) Exercise of Options and Rights.
(1) Person Eligible to Exercise. During the lifetime of the
Optionee, only the Optionee may exercise an Option or Right granted to the
Optionee or any portion thereof. After the death of the Optionee, any
exercisable portion of an Option or Right may be exercised by the Optionee's
personal representative or by any person empowered to do so under the deceased
Optionee's will or under the then applicable laws of descent and distribution.
The Company may require appropriate proof from any such other person of such
person's right or power to exercise the Option or Right or any portion thereof.
(2) Fractional Shares; Partial Exercise. The Company shall not
be required to issue fractional Shares on exercise of an Option and the
Committee may, by the terms of the Option, require any partial exercise thereof
to be with respect to a specified minimum number of Shares.
(3) Manner of Exercise. An exercisable Option or Right, or any
exercisable portion thereof, may be exercised solely by delivery to the
Secretary or the Secretary's office of all of the following:
(A) Notice in writing signed by the Optionee or other
person then entitled to exercise such Option or Right or portion
thereof, stating that such Option or Right or portion is exercised,
such notice complying with all applicable rules established by the
Committee;
(B) In the case of an Option, full cash payment of the
Exercise Price for the Shares with respect to which such Option or
portion is thereby exercised and which are to be delivered to the
Optionee pursuant to such exercise; provided, at the discretion of the
Committee, payment may be made in whole or in part in Shares which
Shares will be valued at its then Fair Market Value as determined by
the Committee or in whole or in part pursuant to such other
arrangement, including any deferred payment arrangement or simultaneous
exercise and sale arrangement, as the Committee, in its absolute
discretion, determines; and
(C) Such representations and documents as the Committee,
in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of
1933, as amended, and any other federal or state securities laws or
regulations. The Committee may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such
<PAGE>
compliance including, without limitation, placing legends on Share
certificates and issuing stop-transfer orders to transfer agents and
registrars.
(4) Right to Elect to Pay Profit or to Credit Profit in Lieu of
Delivering Option Shares. The Committee, in its absolute discretion, may elect
(in lieu of delivering all or a portion of the shares of Common Stock as to
which an Option has been exercised) if the Fair Market Value of the Common Stock
exceeds the Exercise Price of the Option (i) to pay the Optionee in cash or in
Shares, or a combination of cash and Shares, an amount equal to the excess of
the Fair Market Value of the Shares on the exercise date over the Exercise Price
or, in the case of an Option which is not an Incentive Stock Option, (ii) to
defer payment and to credit the amount of such excess on the Company's books for
the account of the Optionee and either (a) to treat the amount in such account
as if it had been invested in the manner from time to time determined by the
Committee, with dividends or other income thereon being deemed to have been so
reinvested or (b) for the Company's convenience, to contribute the amount in
such account to a trust, which may be revocable by the Company, for investment
in the manner from time to time determined by the Committee and set forth in
the instrument creating such trust. The election pursuant to this Section
4(c)(4) shall be made by giving written notice to the Optionee (or other person
exercising the Option). Shares paid pursuant to this subparagraph will be valued
at the Fair Market Value on the exercise date. For purposes of any cash payment
to an Optionee who is subject to Section 16(b) of the Exchange Act and who
exercises an Option during a "window period," for purposes of this Section
4(c)(4) the Fair Market Value of the Common Stock on the exercise date shall be
deemed to be that value determined by the Committee in its discretion which is
not less than the lowest Fair Market Value, nor more than the highest Fair
Market Value, of a Share on any day during such "window period." "Window period"
shall mean the ten-day period defined in Rule 16b-3(e)(3) under the Exchange
Act. For purposes of the limitations in Section 3(a), the number of Shares which
are paid or credited pursuant to this Section 4(c)(4) shall not be counted, but
the full number of Shares as to which the Option was exercised shall be counted
even though the Committee has made an election under this Section 4(c)(4) in
respect to some or all of the Shares.
(5) Conditions to Issuance of Stock Certificates. The Shares
deliverable upon exercise of an Option, or any part thereof, may be either
previously authorized but unissued Shares or issued Shares which have then been
reacquired by the Company. The Company shall not be required to issue or deliver
any certificate or certificates for Shares purchased upon the exercise of any
Option or portion thereof prior to fulfillment of all of the following
conditions:
(A) The admission of such Shares to listing on all stock
exchanges or automated quotation system operated by a national
securities association on which such class of stock is then listed or
traded;
(B) The completion of any registration or other
qualification of such Shares under any state or federal law or under
the rulings or regulations of the Securities and Exchange Commission or
any other governmental regulatory body, which the Company shall, in its
absolute discretion, deem necessary or advisable;
<PAGE>
(C) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Company shall, in
its absolute discretion, determine to be necessary or advisable;
(D) The provision for any income tax withholding which the
Company shall, in its absolute discretion, determine to be necessary or
advisable; and
(E) The lapse of such reasonable period of time following
the exercise of the Option as the Company may determine, in its
absolute discretion, from time to time to be necessary or advisable for
reasons of administrative convenience.
(6) Rights as Shareholders. An Optionee shall not be, nor have
any of the rights or provisions of, a shareholder of the Company in respect to
any Shares which may be purchased upon the exercise of any Option, or that are
subject to any Right, or portion thereof unless and until certificates
representing such Shares have been issued by the Company to such Optionee.
5. AWARDS
(a) Eligibility. Any key Employee of the Company or of any corporation
which is then an Affiliate shall be eligible to be granted Awards.
(b) Award Procedure. The Committee shall from time to time in its
absolute discretion:
(1) Select from among the eligible key Employees the Employees
to whom Awards shall be granted, determine whether such Awards are to be
Restricted Stock Awards or Restricted Unit Awards (or both) and determine the
number of Shares or units to be covered by such Awards; and
(2) Determine the terms and conditions of such Awards,
consistent with the Plan.
(c) Award Agreements. Each Award shall be evidenced by a written
agreement, executed by the Grantee and the Company, which shall contain such
restrictions, terms and conditions as the Committee may require and (without
limiting the generality of the foregoing) such agreements reflecting Restricted
Stock Awards may impose an escrow condition and/or require that an appropriate
legend be placed on Share certificates.
(d) Restricted Stock Awards.
(1) Shares Subject to Award. The Shares awarded as a Restricted
Stock Award may be either previously authorized but unissued Shares or issued
Shares which have then been reacquired by the Company. Such awarded Shares shall
be issued in the name of the Grantee and delivered to the Grantee (or the escrow
holder, if any) as soon as reasonably practicable after the Award is made (and
after the Grantee has executed the Award agreement and any other documents which
the Committee, in its absolute discretion, may
<PAGE>
require) without the payment of any cash consideration by such Grantee. Unless
and until the Shares so awarded to the Grantee shall have vested in the manner
set forth in Section 5(f), below, such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated. Upon
the Termination of Employment of the Grantee, all of such Shares which are not
then vested shall thereupon be forfeited and automatically transferred to and
reacquired by the Company at no cost to the Company. The Committee may also
impose such other restrictions and conditions on the Shares as it deems
appropriate.
(2) Rights as Shareholder.
(A) Upon delivery of the Shares awarded to the Grantee (or
the escrow holder, if any) as a Restricted Stock Award, the Grantee
shall have all the rights of a shareholder with respect to such Shares,
including the right to vote the Shares and receive all dividends, or
other distributions paid or made with respect to the Shares.
(B) In the event that as a result of a stock dividend,
stock-split, reclassification, recapitalization, combination of Shares
or the adjustment in the capital stock of the Company or otherwise, or
as a result of a merger, consolidation, spin-off or other
reorganization, the Company's Common Stock shall be increased, reduced
or otherwise changed, and by virtue of any such change a Grantee shall
in the Grantee's capacity as owner of unvested Shares of stock which
have been awarded to the Grantee as a Restricted Stock Award (the
"prior Shares") be entitled to new or additional or different shares of
stock or securities (other than rights or warrants to purchase
securities), such new or additional or different shares or securities
shall thereupon be considered to be unvested Restricted Stock Awards
and shall be subject to all of the conditions and restrictions which
were applicable to the prior Shares pursuant to the Plan.
(C) If a Grantee receives rights or warrants with respect
to any Shares which were awarded to the Grantee as Restricted Stock
Awards, such rights or warrants or any Shares or other securities
acquired by the exercise of such rights or warrants may be held,
exercised, sold or otherwise disposed of by the Grantee free and clear
of the restrictions and obligations provided in the Plan.
(3) Conditions. Each Restricted Stock Award shall contain either
performance-based criteria to be met prior to vesting or require a minimum time
period of six months over which the Shares comprising such Restricted Stock
Award shall vest in increments as the Committee, in each case, shall determine.
(e) Restricted Unit Awards.
(1) Restricted Unit Account. In the case of Restricted Unit
Awards, no Shares shall be issued to the Grantee at the time the Award is made,
and no fund shall be set aside by the Company for the payment of any such Award;
but rather the Company shall establish and maintain a separate written account
for each Grantee and shall record in such account the number of Restricted Units
awarded to such Grantee. Whenever the Company
<PAGE>
pays a cash dividend upon its Common Stock, there shall be credited to each such
Grantee's account an amount equal to the cash dividend paid upon one Share for
each Restricted Unit then in such Grantee's account (hereinafter referred to as
"Dividend Equivalents").
(2) Payment of Restricted Units. Each Restricted Unit Award
agreement shall specify a date or dates on which payment of the value of vested
Restricted Units (and Dividend Equivalents with respect to such vested
Restricted Units) in the Grantee's account is to be made. As soon as reasonably
practicable after the payment date, the Company shall deliver to the Grantee one
Share for each vested Restricted Unit credited to the Grantee's account and cash
equal to the vested Dividend Equivalents credited to the Grantee's account;
provided, however that the Committee may, in its absolute discretion, elect to
pay the Grantee cash or part cash and part Shares in lieu of delivering only
Shares for the vested Restricted Units. If a cash payment is made in lieu of
delivering Shares the amount of such cash payment shall (in respect to each
vested Restricted Unit for which a cash payment is to be made) be equal to the
Fair Market Value of the Shares on the payment date. The Shares delivered in
payment, in whole or in part, of a Restricted Unit may be either previously
authorized but unissued Shares or issued Shares which have then been reacquired
by the Company. Payments to be made hereunder shall, if the Grantee is then
deceased, be made to the Grantee's estate or others as may be designated in
writing by the Grantee, with the approval of the Committee.
(3) Deferral of Payment. The Restricted Unit Award agreement may
permit a Grantee to request the payment of vested Restricted Units (and Dividend
Equivalents with respect to such Restricted Units) be deferred beyond the
payment date specified in the agreement. It shall be at the Committee's sole
discretion whether or not to permit such deferment and to specify the terms and
conditions which are not inconsistent with the Plan, to be contained in the
agreement. In the event of such deferment, the Committee may determine that
interest shall be credited annually on the Dividend Equivalents at a rate to be
determined by the Committee. The Committee may also determine to compound such
interest.
(4) Adjustments in Capitalization. The Committee shall make an
appropriate adjustment in the number of kind of Restricted Units then credited
to the account or accounts of any Grantee due to changes in the Company's
outstanding Common Stock by reason of a merger, consolidation, spin-off or other
reorganization, recapitalization, reclassification, stock split-up, stock
dividend, or combination of Shares and any such adjustment made by the Committee
shall be final and binding upon all Grantees, the Company and all other
interested persons.
(5) No Trust Fund. Grantees of Restricted Unit Awards shall not
have any interest in any fund or specific asset of the Company by reason of such
Award. No trust fund shall be created in connection with the Plan or any
Restricted Unit Award thereunder, and there shall be no required funding of
amounts which may become payable under any such Award.
(f) Vesting of Awards. Shares awarded as Restricted Stock Awards and
units awarded as Restricted Unit Awards (including Dividend Equivalents with
<PAGE>
respect to such Restricted Unit Awards) shall vest at such time or times and on
such terms, conditions and performance criteria, as the Committee may determine;
provided, however, that (i) no such Shares or units shall vest until six months
from the date of Award and (ii) the vesting of such Shares or units shall occur
only if the Grantee on the date of the vesting is then and has continuously been
an Employee from the date of the Award. In the event of Termination of
Employment as a result of the death or Total Disability of a Grantee, the
Committee, in its absolute discretion, may determine that the unvested portion
of some or all Shares awarded to the Grantee as Restricted Stock Awards and some
or all units awarded to the Grantee as Restricted Unit Awards (including
unvested Dividend Equivalents) shall thereupon immediately vest. The Committee
may also decide at any time in its absolute discretion and on such terms and
conditions as it deems appropriate, to accelerate the vesting of Shares awarded
as Restricted Stock Awards and units awarded as Restricted Unit Awards
(including unvested Dividend Equivalents).
6. STOCK APPRECIATION RIGHTS
(a) Eligibility. Any key Employee of the Company or of any corporation
which is then an Affiliate shall be eligible to be granted Stock Appreciation
Rights.
(b) Grant of Stock Appreciation Rights. A Stock Appreciation Right
whether Related to an Option or independent of an Option shall, upon its
exercise, entitle the Optionee to whom such Stock Appreciation Right was granted
to receive the number of Shares or cash or combination thereof, as the Committee
in its discretion shall determine at the date of grant and as provided for in
the applicable agreement pursuant to which the Stock Appreciation Right is
granted. The aggregate value of the Stock Appreciation Right (i.e., the sum of
the amount of cash and/or Fair Market Value of such Shares on the date of
exercise) shall equal the amount by which the Fair Market Value per Share on the
date of such exercise shall exceed the Exercise Price of such Stock Appreciation
Right (see Section 6(c) below for instructions on how to calculate the Exercise
Price of a Related Stock Appreciation Right), multiplied by the number of
Shares with respect of which such Stock Appreciation Right shall have been
exercised. A Stock Appreciation Right may be related to an Option or may be
granted independently of any Option, as the Committee shall from time to time in
each case determine at the date of grant and as provided in the applicable agree
ment.
(c) Related Stock Appreciation Right. A Related Stock Appreciation
Right may be granted at the time of grant of an Option or, in the case of a
nonqualified stock option, at any time thereafter during the term of the
nonqualified stock option. The Exercise Price of a Related Stock Appreciation
Right shall be the same as the Exercise Price of the Related Option. The
following provisions shall apply to a Related Stock Appreciation Right:
(1) Grant of Related Stock Appreciation Right. Related Stock
Appreciation Rights may be granted by the Committee under the Plan in connection
with an Option, either at the time of grant or by amendment to the Related Stock
Option Agreement. Each Related Stock Appreciation Right shall be subject to the
same terms and conditions as the Related Option and to such additional
conditions as the Committee shall determine, shall be exercisable only to the
extent the Related Option is exercisable and shall become
<PAGE>
nonexercisable and be forfeited if and to the extent the Related Option is
exercised or becomes unexercisable.
(2) Exercise of Stock Appreciation Rights. A Related Stock
Appreciation Right shall entitle the Optionee to surrender to the Committee
unexercised the Related Option, or any portion thereof, and to receive from the
Company in exchange therefor a cash payment and/or Shares having an aggregate
Fair Market Value equal to the excess of the Fair Market Value of one Share over
the Exercise Price per Share provided for in the related Option, multiplied by
the number of Shares called for by the Option, or portion thereof, which is
surrendered. The Committee shall have the sole discretion to determine the form
in which payment is to be made upon the exercise of a Related Stock Appreciation
Right (i.e., whether in cash, in Shares or partly in cash and partly in Shares).
In no event will fractional Shares be issued but cash will be paid in lieu
thereof.
(3) Window Period Exercises for Cash. Notwithstanding the
provisions of Section 6(c)(2), above, the Committee shall have the ability, in
its discretion, to fix the Fair Market Value of a Share for purposes of
determining the amount of cash and the number of Shares, if any, to be received
upon the exercise of a Related Stock Appreciation Right during any "window
period" (which consists of a period beginning on the third business day
following the date of release of quarterly or annual sales and earnings
information by the Company and ending on the twelfth business day following such
release date) for payment wholly or partly in cash at an amount not greater than
the highest Fair Market Value, nor less than the lowest Fair Market Value, of a
Share during such window period.
(4) Relation to Related Options. Related Stock Appreciation
Rights shall be exercisable at such time as may be determined by the Committee,
provided that a Related Stock Appreciation Right shall not be exercisable prior
to the time the Related Option could be exercised and, except in the event of
death or Total Disability, shall not be exercisable for a period of six months
from the date of grant of such Right. A Related Stock Appreciation Right may be
exercised in whole or in part only upon surrender of a proportionate part of the
Related Option by the Optionee.
(5) Expiration or Termination. Each Related Stock Appreciation
Right and all Rights and obligations thereunder shall terminate and may no
longer be exercised upon the termination or exercise of the Related Option.
(6) Shares May Be Used Only Once. Shares subject to a Related
Option to which a Related Stock Appreciation Right is related shall be used not
more than once to calculate the cash or Shares to be received by the Optionee
pursuant to an exercise of such Related Stock Appreciation Right.
(7) Effect of Death or Other Termination of Employment. In the
event of the Termination of Employment of a recipient of a Related Stock
Appreciation Right, the recipient's Related Stock Appreciation Right shall be
exercisable only to the extent and upon the conditions that the Related Option
is exercisable under the applicable provisions of Section 4(b)(6) hereof.
<PAGE>
(8) Adjustment in Outstanding Options. In the event that the
Options to which any Related Stock Appreciation Rights are related are adjusted
pursuant to the provisions of Section 4(b)(7), then the Committee shall make an
appropriate and equitable adjustment in the number of such Stock Appreciation
Rights, to the end that after such event the Optionee shall be in the same
position with respect to the Options as the Optionee was prior to the occurrence
of such event.
7. LIMITED STOCK APPRECIATION RIGHTS; ACCELERATION OF AWARDS
(a) Grant of LSAR. At the time of grant of an Option or Stock
Appreciation Right to any Optionee (or, in the case of a nonqualified stock
option or a Stock Appreciation Right not related to an Incentive Stock Option,
at any time thereafter during the term of the Option or Stock Appreciation
Right), the Committee shall have full and complete authority and discretion also
to grant to the Optionee an LSAR which is Related to such Option or Stock
Appreciation Right.
(b) Exercise of LSAR. An LSAR shall entitle the holder thereof, upon
exercise of the LSAR within the exercise period prescribed below and
satisfaction of any conditions imposed by the Committee in the grant of the
LSAR, to surrender the Related Option and/or Related Stock Appreciation Right or
any portion thereof, and to receive without payment to the Company an amount of
cash determined pursuant to Section 7(d) hereof. An LSAR shall be exercisable
only during one or more of the periods prescribed below in Section 7(c);
provided, however, that no LSAR may be exercised within six months of the date
the LSAR was granted and an LSAR shall be exercisable only at such time or times
and to the extent that the Related Stock Appreciation Right or Option is
exercisable and only when the Fair Market Value per Share exceeds the Exercise
Price per Share. To the extent that an LSAR is exercised, the Related Option
and/or Stock Appreciation Right shall automatically be cancelled to the extent
of the number of Shares covered by such exercise, and such Shares shall no
longer be available for future Grants or Awards. To the extent that a Related
Option or Stock Appreciation Right is exercised, the Related LSAR shall
automatically be cancelled to the extent of the number of Shares covered by such
exercise.
(c) Trigger Event. An LSAR shall be exercisable, subject to the
provisions in Section 7(b), during any one or more of the following periods:
(1) For a period of 60 days beginning on the date on which
Shares are first purchased pursuant to a tender offer or exchange offer (other
than such an offer by the Company, any Subsidiary, any employee benefit plan of
the Company or of any Subsidiary or any entity holding Shares or other
securities of the Company for or pursuant to the terms of such plan), whether or
not such offer is approved or opposed by the Company and regardless of the
number of Shares purchased pursuant to such offer;
(2) For a period of 60 days beginning on the date the Company
acquired knowledge that any person or group deemed a person as used in Section
13(d) of the Exchange Act (other than the Company, any Subsidiary, any employee
benefit plan of the Company or of any Subsidiary or any entity holding shares or
other securities of the Company for or pursuant to the terms of any such plan,
or any person or group who, as of
<PAGE>
the date of adoption of this Plan by the Board of Directors of the Company, is
known by the Company to be the beneficial owner, directly or indirectly, of
securities representing 10% or more of the combined voting power of the
Company's outstanding securities), in a transaction or series of transactions,
has become the beneficial owner, directly or indirectly (with beneficial
ownership determined as provided in Rule 13d-3, or any successor rule, under the
Exchange Act), of securities of the Company entitling the person or group to 30%
or more of all votes (without consideration of the rights of any class of stock
to elect directors by a separate class vote) to which all shareholders of the
Company would be entitled to vote in the election of the Board of Directors were
an election held on such date;
(3) For a period of 60 days beginning on the date, during any
period of two consecutive years, when individuals who at the beginning of such
period constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the shareholders of the Company, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period; and
(4) For a period of 60 days beginning on the date of approval by
the shareholders of the Company of an agreement (a "reorganization agreement")
providing for:
(A) The merger or consolidation of the Company with
another corporation where the shareholders of the Company, immediately
prior to the merger or consolidation, do not beneficially own,
immediately after the merger or consolidation, shares of the
corporation issuing cash or securities in the merger or consolidation
entitling such shareholders to 51% or more of all votes (without
consideration of the rights of any class of stock to elect directors by
a separate class vote) to which all shareholders of such corporation
would be entitled in the election of directors or where the members of
the Board of Directors of the Company, immediately prior to the merger
or consolidation, do not, immediately after the merger or
consolidation, constitute a majority of the Board of Directors of the
corporation issuing cash or securities in the merger or consolidation;
or
(B) The sale or other disposition of all or substantially all
the assets of the Company.
Each of the events specified in (1),(2),(3) and (4) is a "Trigger
Event" for the purposes of the Plan.
(d) Payment Upon Exercise. Upon exercise of an LSAR, the Participant
shall be entitled to receive an amount of cash in respect of each Share subject
to the Related Option or Stock Appreciation Right equal to the excess of the
fair market value of such Share over the Exercise Price of such Related Option
or Stock Appreciation Right. In the case of LSARs related to Incentive Stock
Options, "fair market value" shall mean the Fair Market Value of Shares on the
date the LSAR is exercised. In the case of all other LSARs, "fair market value"
shall mean the highest last sale price of the Shares quoted by Nasdaq during the
period beginning on the 90th day prior to the date on which the LSAR is
exercised and ending on such date, except that:
<PAGE>
(1) In the event of a tender offer or exchange offer for Shares,
fair market value shall mean the greater of such last sale price or the highest
price paid for Shares pursuant to any tender offer or exchange offer in effect
at any time beginning on the 90th day prior to the date on which the LSAR is
exercised and ending on such date;
(2) In the event of the acquisition by any person or group of
beneficial ownership of securities of the Company entitling the person or group
to 30% or more of the combined voting power of the Company's outstanding
securities as described in Section 7(c)(2), fair market value shall mean the
greater of such last price or the highest price per Share paid shown on Schedule
13D, or any amendment thereto, filed by the person or group becoming a 30%
beneficial owner or disclosing an intention or possible intention to acquire
control of the Company; and
(3) In the event of approval by shareholders of the Company of a
reorganization agreement, fair market value shall mean the greater of such last
sale price or the fixed or formula price specified in the reorganization
agreement if such price is determinable as of the date of exercise of the LSAR.
Any securities or property which are part or all of the consideration
paid for Shares in a tender offer or exchange offer or under an approved
reorganization agreement shall be valued at the higher of (1) the valuation
placed on such securities or property by the person making the tender offer or
exchange offer or by the corporation other than the Company issuing securities
or property in the merger or consolidation or to whom the Company is selling or
otherwise disposing of all or substantially all the assets of the Company and
(2) the valuation placed on such securities or property by the Committee.
(e) Acceleration of Options and Stock Appreciation Rights. All Options
and Stock Appreciation Rights shall become fully exercisable upon the occurrence
of any Trigger Event, whether or not such Options or Stock Appreciation Rights
are then exercisable under the provisions of the applicable agreements relating
thereto, except that:
(1) In no event will Stock Appreciation Rights or Options
related to Stock Appreciation Rights be exercisable within six months after the
date on which granted; and
(2) Stock Appreciation Rights related to LSARs may not be
exercised for cash during any of the 60-day periods after a Trigger Event.
8. MISCELLANEOUS PROVISIONS
(a) Options, Rights and Awards Not Transferable. No Option or interest
or right therein or part thereof and no Right, Restricted Stock Award or
Restricted Unit Award shall be liable for the debts, contracts, or engagements
of the Optionee, Grantee or such person's successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means, whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition
<PAGE>
thereof shall be null and void and of no effect; provided, however, that nothing
in this Section 8(a) shall prevent transfers by will or by the applicable laws
of descent and distribution.
(b) Employment. Nothing in the Plan or in any Option, Right or Award
shall confer upon any Employee the right to continue in the employ of the
Company or any Affiliate or shall interfere with or restrict in any way the
rights of the Company and Affiliates to discharge any Employee at any time for
any reason whatsoever, with or without good cause.
(c) Effect of a Change of Control. The Committee may, in its absolute
discretion, provide that in the event of a Change of Control, some or all Shares
and units awarded under the Plan as Restricted Stock Awards or Restricted Unit
Awards including unvested Dividend Equivalents shall immediately vest.
(d) Amendment, Suspension or Termination of the Plan. The Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board or the Committee. However, without
approval of the Company's shareholders given within 12 months before or after
the action by the Board or the Committee, no action of the Committee or Board
may, except as provided in Section 3(c), (i) increase the limits imposed in
Section 3(a) on the maximum number of Shares which may be the subject of
Options, Rights and Awards granted under the Plan, (ii) amend Section 4(b)(6)(A)
or (B) to permit the exercise of an Option or Right after expiration of ten
years from the date the Option or Right was granted, or extend the limit imposed
in this subsection on the period during which Incentive Stock Options may be
granted, (iii) materially modify the requirements as to eligibility for
participation in the Plan or (iv) otherwise materially increase the benefits
accruing to participants under the Plan. Neither the amendment, suspension, nor
termination of the Plan shall, without the consent of the Optionee or the
Grantee, alter or impair any rights or obligations under any Option, Right or
Award theretofore granted. No Option, Right or Award may be granted during any
period of suspension nor after termination of the Plan, and in no event may any
Option intended to be an Incentive Stock Option be granted under the Plan more
than ten years after the date the adoption of the Plan was approved by the
Board.
(e) Effect upon Other Compensation Plans. The adoption of the Plan
shall not affect any other stock option, compensation or incentive plans in
effect for the Company or any Affiliate and the Plan shall not preclude the
Board from establishing any other forms of incentive or compensation for
Employees of the Company or any Affiliate.
(f) Compliance with Rule 16b-3. To the extent that Rule 16b-3 under the
Exchange Act applies to Options, Rights or Awards granted under the Plan, it is
the intent of the Company that the Plan comply in all respects with the
requirements of Rule 16b-3, that any ambiguities or inconsistencies in
construction of the Plan be interpreted to give effect to such intention and
that if the Plan shall not so comply, whether on the date of adoption or by
reason of any later amendment to or interpretation of Rule 16b-3, the provisions
of the Plan shall be deemed to be automatically amended so as to bring them into
full compliance with such rule.
<PAGE>
(g) Shareholder Approval. Notwithstanding anything to the contrary set
forth herein, no Option or Right may be exercised and no Award may be granted
until the Plan shall have been approved by the affirmative vote of the holders
of a majority of the outstanding Shares present or represented by proxy and
entitled to vote at a duly convened meeting of shareholders of the Company.
(h) Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.
<PAGE>
EXHIBIT (5)
March 10, 1997
The Board of Directors of
Mountbatten, Inc.
Thirty Three Rock Hill Road
Bala Cynwyd, PA 19004
Gentlemen:
We have acted as counsel to Mountbatten, Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a registration
statement on Form S-8 (the "Registration Statement") relating to the offer and
sale by the Company of up to 250,000 shares (the "Shares") of Common Stock,
$.001 par value, of the Company, pursuant to the Company's 1995 Equity Incentive
Plan for Key Employees (the "Plan").
As counsel to the Company, we have supervised all corporate proceedings
in connection with the preparation and filing of the Registration Statement. We
have also examined the Company's Articles of Incorporation and By-laws, as
amended to date, the corporate minutes and other proceedings and the records
relating to the authorization, sale and issuance of the Shares, and such other
documents and matters of law as we have deemed necessary or appropriate in order
to render this opinion.
Based upon the foregoing, it is our opinion that each of the Shares,
when issued in accordance with the terms and conditions of the Plan, will be
duly authorized, legally and validly issued and outstanding, fully paid and
nonassessable.
We hereby consent to the use of this opinion in the Registration
Statement.
Sincerely,
DUANE, MORRIS & HECKSCHER
By:/s/ Frederick W. Dreher
-----------------------
A Partner
<PAGE>
Exhibit (23)(B)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registra tion Statement for the Mountbatten Inc. 1996
Equity Incentive Plan For Key Employees on Form S-8 of our report dated March
19, 1996 appearing on page 16 of Mountbatten Inc.'s Annual Report on Form 10-KSB
for the year ended December 31, 1995. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 3, 1997
