<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 2000.
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTERLOGIX, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
12345 SOUTHWEST LEVETON DRIVE
DELAWARE TUALATIN, OREGON 97062 06-1340453
(State of Incorporation) (Address of principal executive offices) (Zip Code) (I.R.S. Employer
Identification No.)
</TABLE>
INTERLOGIX, INC. 2000 STOCK INCENTIVE PLAN
AND
SLC TECHNOLOGIES, INC. STOCK OPTION PLAN
(Full Title of the Plans)
Kenneth L. Boyda
President and Chief Executive Officer
Interlogix, Inc.
12345 Southwest Leveton Drive
Tualatin, Oregon 97062
(name and address of agent for service)
(503) 691-7243
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Amount maximum maximum Amount of
securities to be offering aggregate registration
to be registered registered price per share(1) offering price(1) fee
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,500,000 $21.8125 $32,718,750 $8,638
par value $.01 per shares for the
share Interlogix Plan
758,532 shares $21.8125 $16,545,480 $4,368
for the SLC
Plan
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts are based upon the average of the high and low sale
prices for the Common Stock as reported on the Nasdaq National Market
on May 8, 2000, and are used solely for the purpose of calculating
the registration fee in accordance with paragraphs (c) and (h) of
Rule 457 under the Securities Act of 1933.
<PAGE> 2
PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
The documents containing information specified in Part I of
Form S-8 will be sent or given to employees as specified by Rule 428(b)(1) of
the Securities Act of 1933, as amended (the "Securities Act"). Those documents
and the documents incorporated by reference into this Registration Statement
pursuant to Item 3 of Part II of this Registration Statement, taken together,
constitute a prospectus that meets the requirements of Section 10(a) of the
Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents of Interlogix, Inc. (the "Registrant")
filed or to be filed with the Securities and Exchange Commission (the
"Commission") are incorporated by reference in this Registration Statement as of
their respective dates:
(a) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999, filed March 29, 2000, which contains audited financial
statements for the Registrant's fiscal year ended December 31, 1999.
(b) The Registrant's Quarterly Report on Form 10-Q for the three months
ended March 31, 2000, filed April 24, 2000, and all other reports filed by the
Registrant with the Commission since December 31, 1999 pursuant to Sections 13
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act").
(c) The description of the Registrant's Securities contained in its
Registration Statement on Form S-1 (Registration No. 33-84328), as incorporated
by reference into its Registration Statement on Form 8-A (File No. 0-24900),
filed with the Commission, and including any amendment or report filed for the
purpose of updating such description.
(d) The Registrant's Proxy Statement on Schedule 14A, filed March 28,
2000, including any amendment or report filed for the purpose of update such
proxy statement.
(e) All reports and documents filed by the Registrant with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of this Registration Statement and prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all such securities then remaining to be
sold.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
1
<PAGE> 3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is organized under The General Corporation Law
of the State of Delaware, Title 8 of the Delaware Code. Pursuant to Section 145
of Title 8 of the Delaware Code, the Registrant may provide and has provided in
its Certificate of Incorporation that its current and former officers,
directors, employees and agents be indemnified to the fullest extent permitted
if they act in good faith and in a manner they reasonably believe to be in or
not opposed to the best interests of the Registrant. Such indemnification may
cover liabilities under the Securities Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed herewith and are incorporated
by reference as part of this Registration Statement:
5.1 Opinion of Dechert Price & Rhoads as to the legality
of Common Stock of the Registrant
15.1 Letter re: unaudited interim financial information
from PricewaterhouseCoopers LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Dechert Price & Rhoads (included in its
opinion filed as Exhibit 5.1)
24.1 Powers of Attorney (included as part of signature
page)
99.1 Interlogix, Inc. 2000 Stock Incentive Plan
99.2 SLC Technologies, Inc. Stock Option Plan
ITEM 9. UNDERTAKINGS.
Undertakings required by Item 512(a)
of Regulation S-K
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;
2
<PAGE> 4
(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;
(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 (i) and (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 with or furnished to the Commission by the
Registrant pursuant to Section 13 or 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.
Undertakings required by Item 512(b)
of Regulation S-K
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and 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 initial bona fide offering thereof.
Undertakings required by Item 512(h)
of Regulation S-K
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 Securities Act of 1933 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
3
<PAGE> 5
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> 6
SIGNATURES
The Registrant. 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 Tualatin, State of Oregon, on this
11th day of May, 2000.
INTERLOGIX, INC.
By: /s/ Kenneth L. Boyda
---------------------------------------
Kenneth L. Boyda
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes
and appoints Kenneth L. Boyda and John R. Logan, and each of them, individually,
his attorneys-in-fact, with full power of substitution and resubstitution, for
him 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 the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each such attorney-in-fact, or his agent
substitute, may do or cause to be done by virtue hereof.
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>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth L. Boyda President, Chief Executive Officer and May 11, 2000
- --------------------------- Director (Principal Executive Officer)
Kenneth L. Boyda
/s/ John R. Logan Chief Financial Officer (Principal May 11, 2000
- --------------------------- Financial Officer)
John R. Logan
/s/ Thomas L. Auth Chairman of the Board and Director May 11, 2000
- ---------------------------
Thomas L. Auth
/s/ C.G. Berwind, Jr. Director May 11, 2000
- ---------------------------
C.G. Berwind, Jr.
</TABLE>
5
<PAGE> 7
<TABLE>
<S> <C> <C>
/s/ Jan P. Brantjes Director May 11, 2000
- ---------------------------
Jan P. Brantjes
Director May __, 2000
- ---------------------------
Lawrence C. Karlson
/s/ Edward F. Kosnik Director May 11, 2000
- ---------------------------
Edward F. Kosnik
/s/ Perry J. Lewis Director May 11, 2000
- ---------------------------
Perry J. Lewis
/s/ Donald L. Seeley Director May 11, 2000
- ---------------------------
Donald L. Seeley
</TABLE>
* Signatures representing a majority of the Registrant's Board of Directors
6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
----------- --------
<S> <C>
5.1 Opinion of Dechert Price & Rhoads as to the legality of Common
Stock of the Registrant
15.1 Letter re: unaudited interim financial information from
PricewaterhouseCoopers LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Dechert Price & Rhoads (included in its opinion
filed as Exhibit 5.1)
24.1 Powers of Attorney (included as part of signature page)
99.1 Interlogix, Inc. 2000 Stock Incentive Plan
99.2 SLC Technologies, Inc. Stock Option Plan
</TABLE>
7
<PAGE> 1
[DECHERT PRICE & RHOADS LETTERHEAD]
May 11, 2000
Interlogix, Inc.
12345 Southwest Leveton Drive
Tualatin, Oregon 97062
Re: Registration on Form S-8 of 2,258,532 Shares of Common Stock of
Interlogix, Inc.
---------------------------------------------------------------
Gentlemen and Ladies:
We have acted as counsel for Interlogix, Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of 2,258,532 shares of the Company's
Common Stock, par value $.01 per share (the "Shares"), pursuant to a
Registration Statement on Form S-8 (the "Registration Statement") to be filed
today with the Securities and Exchange Commission under the Securities Act
relating to the Company's 2000 Stock Incentive Plan and the SLC Technologies,
Inc. Stock Option Plan (together the "Plans").
We have participated in the preparation of the Registration Statement
and examined such corporate records and documents and matters of law as we have
considered appropriate to enable us to give this opinion. In making our
examination, we assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as copies.
Based upon the foregoing, it is our opinion that the Shares issuable
pursuant to the Plans, when delivered and paid for in accordance with the terms
of the Plans, will be duly authorized, validly issued, fully paid and
nonassessable.
Our opinion contained herein relates solely to the Delaware General
Corporation Law, and we express no opinion herein concerning the laws of any
other jurisdiction.
<PAGE> 2
Interlogix, Inc.
May 11, 2000
Page 2
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ Dechert Price & Rhoads
<PAGE> 1
Exhibit 15.1
May 11, 2000
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549
Re: Interlogix, Inc. 2000 Stock Incentive Plan and SLC Technologies, Inc.
Stock Option Plan
Commissioners:
We are aware that our reports dated May 10, 1999, August 5, 1999 and November 3,
1999 on our reviews of interim financial information of Interlogix, Inc. (f/k/a
ITI Technologies, Inc.) for the periods ended March 31, 1999 and 1998, June 30,
1999 and 1998 and September 30, 1999 and 1998, respectively, and included in the
Company's quarterly reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999, respectively, are incorporated by
reference in this Registration Statement on Form S-8.
Yours very truly,
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the incorporation by reference in the Registration
Statement of Interlogix, Inc. (f/k/a ITI Technologies, Inc.) on Form S-8 of our
reports dated March 17, 2000 and March 23, 1999 relating to the financial
statements and financial statement schedules, which appear in the Company's
Annual Reports on Form 10-K for the years ended December 31, 1999 and December
31, 1998, respectively.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
May 11, 2000
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the financial
statements of SLC Technologies, Inc. dated February 19, 1999 included in Proxy
Statement of Interlogix, Inc. (formerly, ITI Technologies, Inc.) dated March 27,
2000, and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
May 10, 2000
<PAGE> 1
Exhibit 99.1
INTERLOGIX, INC.
2000 STOCK INCENTIVE PLAN
<PAGE> 2
INTERLOGIX, INC.
2000 STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to promote the long term financial
success of Interlogix, Inc., its Subsidiaries and Affiliates, and to materially
increase shareholder value by: (i) providing performance related incentives that
motivate superior performance on the part of the Employees, Directors and
Consultants; (ii) providing the Employees, Directors and Consultants with the
opportunity to acquire an ownership interest in the Company, and to thereby
acquire a greater stake in the Company and a closer identity with it; and (iii)
enabling the Company to attract and retain the services of Employees, Directors
and Consultants of outstanding ability and upon whose judgment, interest and
special effort the successful conduct of the Company's operations is largely
dependent.
2. DEFINITIONS
2.1. "Act" means the Securities Exchange Act of 1934, as amended.
2.2. "Affiliate" means any entity other than the Subsidiaries in
which the Company has a substantial direct or indirect equity interest, as
determined by the Board.
2.3. "Award" means an award of Options, SARs, Restricted Stock,
Phantom Shares, a Performance Award, Other Stock Grants or any combination
thereof.
2.4. "Award Share" means any share of Common Stock purchased upon
the exercise of an Option or SAR, or issued pursuant to an Award of Restricted
Stock, Phantom Shares, a Performance Award or Other Stock Grants.
2.5. "Board" means the Board of Directors of the Company.
2.6. "Cause" means any of the following actions taken by a
Participant, unless an Award agreement specifies otherwise:
2.6.1. willful engagement in activities which result in
significant injury to the Company, its Subsidiaries or Affiliates, monetarily or
otherwise;
2.6.2. gross negligence in the performance of the
Participant's duties;
2.6.3. commitment of a felony or crime involving moral
turpitude; or
2.6.4. disclosure of trade secrets, customer lists or
confidential information of the Company, its Subsidiaries or Affiliates to a
competitor or unauthorized person.
-2-
<PAGE> 3
2.7. "Change of Control" shall mean, if and when the merger of SLC
Technologies, Inc. into the Company (the "Merger") becomes effective, the
occurrence of any of the following events (prior to the Merger, the Committee
shall determine whether a Change of Control has occurred):
2.7.1. the acquisition in one or more transactions by any
"Person" (as such term is used for purposes of Section 13(d) or Section 14(d) of
the Act) but excluding, for this purpose, the Company or its Subsidiaries and
Affiliates or any employee benefit plan of the Company or its Subsidiaries and
Affiliates, of "Beneficial Ownership" (within the meaning of Rule 13d-3 under
the Act) of thirty percent (30%) or more of the combined voting power of the
Company's then outstanding voting securities (the "Voting Securities"), at a
time when the "Beneficial Ownership" (within the meaning of Rule 13d-3 under the
Act) of Berwind Group Partners or its affiliates is less than thirty percent
(30%) of the combined voting power of the Company's then outstanding Voting
Securities;
2.7.2. the individuals who, as of the effective date of the
Merger, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that if the
election, or nomination for election by the Company's shareholders, of any new
director was approved by a vote of at least a majority of the Incumbent Board,
such new director shall be considered as a member of the Incumbent Board, and
provided further that any reductions in the size of the Board that are
instituted voluntarily by the Incumbent Board shall not constitute a Change of
Control, and after any such reduction the "Incumbent Board" shall mean the Board
as so reduced;
2.7.3. a merger or consolidation involving the Company if the
shareholders of the Company, immediately before such merger or consolidation, do
not own, directly or indirectly, immediately following such merger or
consolidation, more than thirty percent (30%) of the combined voting power of
the outstanding Voting Securities of the corporation resulting from such merger
or consolidation or a complete liquidation or dissolution of the Company or a
sale or other disposition of all or substantially all of the assets of the
Company; or
2.7.4. acceptance by shareholders of the Company of shares in
a share exchange if the shareholders of the Company, immediately before such
share exchange, do not own, directly or indirectly, immediately following such
share exchange, more than thirty percent (30%) of the combined voting power of
the outstanding Voting Securities of the corporation resulting from such share
exchange.
2.8. "Code" means the Internal Revenue Code of 1986, as amended.
2.9. "Committee" means the committee designated by the Board to
administer the Plan under Section 4. The Committee shall have at least two
members. All members shall be "non-employee directors," as defined under Rule
16b-3 issued under the Act, and "outside directors," as defined under Treasury
Regulation Section 1.162-27(e)(3).
-3-
<PAGE> 4
2.10. "Common Stock" means the common stock of the Company, par
value $.01 per share, or such other class or kind of shares or other securities
resulting from the application of Section 13.
2.11. "Company" means the Interlogix, Inc., a Delaware corporation,
or any successor corporation.
2.12. "Consultant" means a key consultant or advisor to the Company
or any of its Subsidiaries or Affiliates who is not an Employee.
2.13. "Director" means a member of the Board who is not an Employee.
2.14. "Disability" means a medically-determinable condition of a
permanent nature which, as determined by the Committee, renders an Optionee
incapable of fulfilling the duties and responsibilities that the Optionee was
performing for the Company, its Subsidiaries and/or Affiliates immediately prior
to the on-set of such condition.
2.15. "Employee" means an officer or other key employee of the
Company, a Subsidiary or an Affiliate, including any member of the Board who is
such an employee.
2.16. "Fair Market Value" means, on any given date:
2.16.1. if the Common Stock is listed on an established stock
exchange or exchanges, the mean between the highest and lowest prices of actual
sales of Common Stock on the principal exchange on which it is traded on such
date, or if no sale was made on such date on such principal exchange, on the
last preceding day on which the Common Stock was traded;
2.16.2. if the Common Stock is not then listed on an exchange,
but is quoted on NASDAQ or a similar quotation system, the mean between the
closing bid and asked prices per share for the Common Stock as quoted on NASDAQ
or similar quotation system on such date;
2.16.3. if the Common Stock is not then listed on an exchange
or quoted on NASDAQ or a similar quotation system, the value, as determined in
good faith by the Committee.
2.17. "Incentive Stock Option" means an Option which meets the
requirements of Section 422 of the Code, and which is designated as an Incentive
Stock Option by the Committee.
2.18. "Non-Qualified Stock Option" means an Option not intended to
be and not designated as an Incentive Stock Option by the Committee.
2.19. "Option" means the right, granted from time to time under the
Plan, to purchase Common Stock for a specified period of time at a stated price.
An Option may be an Incentive Stock Option or a Non-Qualified Stock Option.
-4-
<PAGE> 5
2.20. "Other Stock Grant" shall mean any right granted under Article
11 of the Plan.
2.21. "Participant" means an Employee, Director or Consultant who is
designated by the Committee as eligible to participate in the Plan and who
receives an Award under this Plan.
2.22. "Performance Award" means the conditional grant to a
Participant of the right to receive, at the end of the Performance Period,
either (i) Common Stock, (ii) cash equal to the Fair Market Value of the Common
Stock at the end of the Performance Period, or (iii) a combination of (i) and
(ii) as specified in the Award and provided that the terms, conditions and
objectives specified in the Award are satisfied.
2.23. "Performance Goal" means a goal that has been established by
the Committee and that must be met by the end of a Performance Period (but that
is substantially uncertain to be met before the grant). The Committee shall have
sole discretion to determine the specific targets within each category of
Performance Goals, and whether such Performance Goals have been achieved. With
respect to any Section 162(m) Participant, such Performance Goals may include,
among other things: (i) the price of Common Stock, (ii) the market share of the
Company, its Subsidiaries or Affiliates (or any business unit thereof), (iii)
sales by the Company, its Subsidiaries or Affiliates (or any business unit
thereof), (iv) earnings per share of Common Stock, (v) return on equity of the
Company, or (vi) costs of the Company, its Subsidiaries or Affiliates (or any
business unit thereof).
2.24. "Performance Period" means the time period during which
Performance Goals must be met.
2.25. "Phantom Share" means a right to receive payment of the Fair
Market Value of a share of Common Stock upon exercise of the right.
2.26. "Plan" means the Interlogix, Inc. 2000 Stock Incentive Plan
herein set forth, as amended from time to time.
2.27. "Reload Option" shall mean any Option granted under Section
6.10 of the Plan.
2.28. "Restriction Period" means the period during which Restricted
Stock awarded under the Plan is subject to forfeiture.
2.29. "Restricted Stock" means Common Stock awarded by the Committee
under Section 8 of the Plan.
2.30. "SAR" means the right to receive, in cash or in Common Stock,
as determined by the Committee, the increase in the Fair Market Value of the
Common Stock underlying the SAR from the date of grant to the date of exercise.
2.31. "Section 162(m) Participant" means any key employee designated
by the Committee as a key employee whose compensation for the fiscal year in
which the key employee
-5-
<PAGE> 6
is so designated or a future fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code.
2.32. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50 percent or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
3. ELIGIBILITY
Any Employee, Director or Consultant who is designated by the Committee
as eligible to participate in the Plan shall be eligible to receive an Award
under the Plan.
4. ADMINISTRATION
4.1. Members of the Committee shall be appointed by and hold office
at the pleasure of the Board. Committee members may resign at any time by
delivering written notice to the Board. The Board may fill vacancies in the
Committee.
4.2. The Plan shall be administered by the Committee, which shall
have full power to interpret and administer the Plan, and full authority to act
in selecting the eligible Employees, Directors and Consultants to whom Awards
may be granted, in determining the times at which such Awards may be granted, in
determining the time and the manner in which Options may be exercised, in
determining the type and amount of Awards that may be granted, in determining
the terms and conditions of Awards that may be granted under the Plan and the
terms of agreements which will be entered into with Participants (which terms
shall not be inconsistent with the terms of the Plan). The Committee also shall
have the power to establish different terms and conditions with respect to (i)
the various types of Awards granted under the Plan, (ii) the granting of the
same type of Award to different Participants (regardless of whether the Awards
are granted at the same time or at different times), and (iii) the establishment
of different Performance Goals for different Participants.
4.3. The Committee shall have the power to accelerate the
exercisability or vesting of any Award. Notwithstanding the foregoing or any
other provision of the Plan, the Committee shall not alter the exercisability or
vesting of an Award granted to a Section 162(m) Participant when such
exercisability or vesting depends on the attainment of one or more Performance
Goals, except in the event of a Change of Control, or the death or Disability of
the Participant.
4.4. The Committee's powers shall include, but not be limited to,
the power to determine whether, to what extent and under what circumstances an
Option may be exchanged for cash, Common Stock or some combination thereof; to
determine whether, to what extent and under what circumstances an Award is made
and operates on a tandem basis with other Awards made hereunder; to determine
whether, to what extent and under what circumstances Common Stock or cash
payable with respect to an Award shall be deferred, and to determine under
-6-
<PAGE> 7
Section 14 the effect, if any, of a Change of Control of the Company upon
outstanding Awards; and to grant Awards that are transferable by a Participant.
4.5. The Committee shall have the power to adopt regulations for
carrying out the Plan and to make changes in such regulations as it shall, from
time to time, deem advisable. The Committee shall have the full and final
authority in its sole discretion to interpret the provisions of the Plan and to
decide all questions of fact arising in the application of the Plan's
provisions, and to make all determinations necessary or advisable for the
administration of the Plan. Any interpretation by the Committee of the terms and
provisions of the Plan and the administration thereof, and all action taken by
the Committee, shall be final, binding, and conclusive for all purposes and upon
all Participants.
4.6. The Committee may condition the grant of any Award or the
lapse of any Restriction Period or Performance Period, or any combination
thereof, upon the Participant's or Company's achievement of a Performance Goal
that is established by the Committee before the grant of the Award and/or upon
the Participant's entering into a non-competition and/or non-solicitation
agreement. The Committee shall certify that any applicable Performance Goals
have been satisfied before making any payment or issuing any Common Stock
pursuant to an Award.
4.7. Members of the Committee shall receive such compensation for
their services as may be determined by the Board. The Company shall pay all
expenses and liabilities which members of the Committee incur in connection with
the administration of the Plan. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants and other service providers.
The Committee, the Board, the Company and the Company's officers shall be
entitled to rely upon the advice and opinions of any such person. No member of
the Committee or the Board shall be personally liable for any action,
determination or interpretation made with respect to the Plan and all members of
the Committee and the Board shall be protected by the Company in respect of any
such action, determination or interpretation in the manner provided in the
Company's bylaws.
4.8. The Committee shall maintain a written record of its
proceedings. A majority of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of the
Committee.
5. SHARES OF STOCK SUBJECT TO THE PLAN
5.1. Subject to adjustment as provided in Section 13, the total
number of shares of Common Stock available for Awards under the Plan shall be
1,500,000 shares; provided, that shares of Common Stock subject to Awards of
SARs or Phantom Shares shall not count toward such limit.
5.2. The maximum number of shares of Common Stock covered by
Options and SARs, with option or base prices greater than or equal to Fair
Market Value on the applicable dates of grant, awarded to any Employee during
any calendar year shall not exceed 500,000 (the
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<PAGE> 8
"Individual Limit"). No Employee may be granted in any calendar year other
Awards contingent on the attainment of one or more Performance Goals which are
valued at more than $3,000,000 on the applicable dates of grant.
5.3. Any shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares or treasury shares. Any shares issued by the
Company through the assumption or substitution of outstanding grants from an
acquired company shall not (i) reduce the number of shares of Common Stock
available for Awards under the Plan, or (ii) be counted against the Individual
Limit. If any shares subject to any Award granted hereunder are forfeited or
such Award otherwise terminates without the issuance of such shares or the
payment of other consideration in lieu of such shares, the shares subject to
such Award, to the extent of any such forfeiture or termination, shall again be
available for Awards under the Plan; however, such shares shall be counted
against the Individual Limit.
6. OPTIONS
The grant of Options shall be subject to the following terms and
conditions:
6.1. Option Grants. Any Option granted under the Plan shall be
evidenced by a written agreement executed by the Company and the Participant,
which agreement shall conform to the requirements of the Plan and may contain
such other provisions not inconsistent with the terms of the Plan as the
Committee shall deem advisable. An agreement shall state that the Option is an
Incentive Stock Option if that is the intent of the Committee. Absent such a
statement, the Option shall be a Non-Qualified Stock Option.
6.2. Number of Shares. Subject to the Individual Limit, the
Committee shall specify the number of shares of Common Stock subject to each
Option.
6.3. Option Price. The price per share at which Common Stock may be
purchased upon exercise of an Option shall be as determined by the Committee.
6.4. Term of Option and Vesting. The Committee shall specify when
an Option may be exercisable and the terms and conditions applicable thereto.
The term of an Option shall in no event be greater than 10 years. Options
granted under the Plan may be subject to a vesting schedule and/or the
attainment of Performance Goals as determined by the Committee and set forth in
the applicable stock option agreement.
6.5. Incentive Stock Options. Each provision of the Plan and each
agreement relating to an Incentive Stock Option shall be construed and
interpreted in a manner consistent with the requirements of Section 422 of the
Code, and in no event shall a Participant be granted an Incentive Stock Option
that does not comply with the requirements of Section 422 of the Code.
6.6. Exercise of Option and Payment of Option Price. An Option may
be exercised only for a whole number of shares of Common Stock. The Committee
shall establish the time and the manner in which an Option may be exercised. The
option price of the shares of
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Common Stock received upon the exercise of an Option shall be paid in full in
cash at the time of the exercise or, with the consent of the Committee:
6.6.1. in whole or in part in Common Stock held by the
Participant for at least six months prior to the date of exercise and which is
valued at Fair Market Value on the date of exercise;
6.6.2. by the delivery of a properly executed exercise notice,
together with irrevocable instructions to a Company-designated broker to
promptly deliver to the Company the amount of sale or loan proceeds required to
pay the exercise price; or
6.6.3. any other method deemed acceptable by the Committee.
6.7. Termination Due to Death or Disability. If a Participant's
employment or service with the Company, a Subsidiary or Affiliate terminates due
to death or Disability, any unexercised Option granted to the Participant may
thereafter be exercised (to the extent such Option was exercisable at the time
of the Participant's termination or to a greater extent permitted by the
Committee) by the Participant (or where appropriate, the Participant's
transferee, personal representative, heir or legatee), for one year, or such
other period determined by the Committee which may extend to the expiration of
the stated term of the Option.
6.8. Termination for Cause. If a Participant's employment or
service with the Company, a Subsidiary or Affiliate terminates for Cause, any
Options granted to the Participant and which are unexercised shall terminate on
the date of such termination or notice of such termination, if earlier, unless
otherwise determined by the Committee.
6.9. Termination Due to Retirement or Other Reasons. If a
Participant's employment or service with the Company, a Subsidiary or Affiliate
terminates due to retirement after the Participant has attained age 65
("Retirement"), any unexercised Option granted to the Participant may thereafter
be exercised (to the extent such Option was exercisable at the time of the
Participant's termination or to a greater extent permitted by the Committee) by
the Participant (or where appropriate, the Participant's transferee, personal
representative, heir or legatee), for such period determined by the Committee
which may extend to the expiration of the stated term of the Option. If a
Participant's employment or service with the Company, a Subsidiary or Affiliate
terminates for any reason other than death, Disability, Retirement or for Cause,
any unexercised Option granted to the Participant may thereafter be exercised
(to the extent such Option was exercisable at the time of the Participant's
termination or to a greater extent permitted by the Committee) by the
Participant (or where appropriate, the Participant's transferee, personal
representative, heir or legatee), for 90 days, or such other period determined
by the Committee which may extend to the expiration of the stated term of the
Option.
6.10. Reload Options. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which, subject to the
terms and conditions established by the Committee, the Participant would be
granted a new Option when the payment of the exercise price of a previously
granted Option is made by the delivery of Common Stock owned
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by the Participant pursuant to Section 6.6 of the Plan or the relevant
provisions of another plan of the Company, and/or when the Common Stock is
tendered or withheld as payment of the amount to be withheld under applicable
income tax laws in connection with the exercise of an Option. Such a Reload
Option would be an Option to purchase a number of shares of Common Stock not
exceeding the sum of (A) the number of shares so provided as consideration upon
the exercise of the previously granted option to which the Reload Option
relates, and (B) the number of shares, if any, tendered or withheld as payment
of the amount to be withheld under applicable tax laws in connection with the
exercise of the option to which such Reload Option relates. Such Reload Options
shall have a per share exercise price equal to the Fair Market Value of one
share of Common Stock as of the date of grant of the new Option. Any Reload
Option shall be subject to availability of sufficient shares of Common Stock for
grant under the Plan.
7. STOCK APPRECIATION RIGHTS
The grant of SARs shall be subject to the following terms and
conditions:
7.1. Grant of SARs. Any SAR granted under the Plan shall be
evidenced by a written agreement executed by the Company and the Participant,
which agreement shall specify the number of shares of Common Stock subject to
the Award, conform to the requirements of the Plan and may contain such other
provisions not inconsistent with the terms of the Plan as the Committee shall
deem advisable. The base price of an SAR shall be the Fair Market Value of the
Common Stock on the date of grant.
7.2. Tandem SARs. An SAR granted under the Plan may be granted in
tandem with all or a portion of a related Option. An SAR granted in tandem with
an Option may be granted either at the time of the grant of the Option or at a
time thereafter during the term of the Option and shall be exercisable only to
the extent that the related Option is exercisable. The base price of an SAR
granted in tandem with an Option shall be the option price under the related
Option.
7.3. Exercise of an SAR. An SAR shall entitle the Participant to
surrender unexercised the SAR (or any portion of such SAR) and to receive a
payment equal to the excess of the Fair Market Value of the shares of Common
Stock covered by the SAR on the date of exercise over the base price of the SAR.
Such payment may be in cash, in shares of Common Stock, in shares of Restricted
Stock, or any combination thereof, as the Committee shall determine. Upon
exercise of an SAR issued in tandem with an Option or lapse thereof, the related
Option shall be canceled automatically to the extent of the number of shares of
Common Stock covered by such exercise, and such shares shall no longer be
available for purchase under the Option. Conversely, if the related Option is
exercised, or lapses, as to some or all of the shares of Common Stock covered by
the grant, the related SAR, if any, shall be canceled automatically to the
extent of the number of shares of Common Stock covered by the Option exercise.
7.4. Other Applicable Provisions. SARs shall be subject to the same
terms and conditions applicable to Options as stated in sections 6.4, 6.7, 6.8
and 6.9.
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8. RESTRICTED STOCK
An Award of Restricted Stock is a grant by the Company of a specified
number of shares of Common Stock to the Participant, which shares are subject to
forfeiture upon the happening of specified events or upon the Participant's
and/or Company's failure to achieve Performance Goals established by the
Committee. A grant of Restricted Stock shall be subject to the following terms
and conditions.
8.1. Grant of Restricted Stock Award. Any Restricted Stock granted
under the Plan shall be evidenced by a written agreement executed by the Company
and the Participant, which agreement shall conform to the requirements of the
Plan, and shall specify (i) the number of shares of Common Stock subject to the
Award, (ii) the Restriction Period applicable to each Award, (iii) the events
that will give rise to a forfeiture of the Award, (iv) the Performance Goals, if
any, that must be achieved in order for the restriction to be removed from the
Award, (v) the extent to which the Participant's right to receive Common Stock
under the Award will lapse if the Performance Goals, if any, are not met, and
(vi) whether the Restricted Stock is subject to a vesting schedule. The
agreement may contain such other provisions not inconsistent with the terms of
the Plan as the Committee shall deem advisable.
8.2. Delivery of Restricted Stock. Upon determination of the number
of shares of Restricted Stock to be granted to the Participant, the Committee
shall direct that a certificate or certificates representing the number of
shares of Common Stock be issued to the Participant with the Participant
designated as the registered owner. The certificate(s) representing such shares
shall be legended as to restrictions on the sale, transfer, assignment, or
pledge of the Restricted Stock during the Restriction Period and deposited by
the Participant, together with a stock power endorsed in blank, with the
Company.
8.3. Dividend and Voting Rights. During the Restriction Period,
unless otherwise determined by the Committee, the Participant will not have the
right to vote the shares of Restricted Stock or to receive dividends and other
distributions related to such shares.
8.4. Receipt of Common Stock. At the end of the Restriction Period,
the Committee shall determine, in light of the terms and conditions set forth in
the Restricted Stock agreement, the number of shares of Restricted Stock with
respect to which the restrictions imposed hereunder shall lapse. The Restricted
Stock with respect to which the restrictions shall lapse shall be converted to
unrestricted Common Stock by the removal of the restrictive legends from the
Restricted Stock. Thereafter, Common Stock equal to the number of shares of the
Restricted Stock with respect to which the restrictions hereunder shall lapse
shall be delivered to the Participant (or, where appropriate, the Participant's
legal representative). The Committee may, in its sole discretion, modify or
accelerate the vesting and delivery of shares of Restricted Stock.
8.5. Termination. Unless otherwise determined by the Committee, if
a Participant's employment or service with the Company, a Subsidiary or
Affiliate terminates, any Restricted Stock with respect to which the Restriction
Period has not expired shall be forfeited.
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9. PERFORMANCE AWARDS
9.1. Grant of Performance Award. Any Performance Award granted
under the Plan shall be evidenced by a written agreement executed by the Company
and the Participant, which agreement shall conform to the requirements of the
Plan and shall specify (i) the number of shares of Common Stock subject to the
Award, (ii) the Performance Period applicable to each Award, (iii) the
Performance Goals that must be achieved in order for the Participant to be
entitled to the Award, (iv) the extent to which the Participant's right to
receive the Award will lapse if the Performance Goals are not met, and (v)
whether the Performance Award is subject to a vesting schedule. The agreement
may contain such other provisions not inconsistent with the terms of the Plan as
the Committee shall deem advisable.
9.2. Dividend and Voting Rights. During the Performance Period, the
Participant shall have no right to receive dividends from or to vote the shares
covered by the Performance Award.
9.3. Receipt of Common Stock. As soon as practicable after the
Performance Period, the Committee shall determine the extent to which the
Performance Award has been earned on the basis of the Company's and/or
Participant's performance in relation to the Performance Goals set forth in the
Performance Award agreement. Once the Performance Award to which the Participant
is entitled has been determined, the Performance Award shall be paid to the
Participant (or, where appropriate, the Participant's legal representative). If
the Participant and/or the Company fails to achieve the Performance Goals
specified in the Performance Award agreement, all or a portion of the
Performance Award shall be forfeited.
9.4. Termination. Unless otherwise determined by the Committee, if
a Participant's employment or service with the Company, a Subsidiary or
Affiliate terminates, any Performance Award with respect to which the
Performance Period has not expired shall be forfeited.
10. PHANTOM SHARES
10.1. Grant of Phantom Shares. Any Phantom Shares granted under the
Plan shall be evidenced by a written agreement executed by the Company and the
Participant, which agreement shall specify the number of shares of Common Stock
subject to the Award, conform to the requirements of the Plan and may contain
such other provisions not inconsistent with the terms of the Plan as the
Committee shall deem advisable.
10.2. Exercise of Phantom Shares. A Participant may exercise Phantom
Shares awarded to him (or any portion of such Phantom Shares) at the times
provided for in the applicable Phantom Share agreement or as otherwise permitted
by the Committee. Upon exercise, the Participant shall receive a payment equal
to the Fair Market Value of a share of Common Stock on the date of exercise
multiplied by the number of Phantom Shares exercised. Such payment may be in
cash, in shares of Common Stock, in shares of Restricted Stock or any
combination thereof, as the Committee shall determine.
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10.3. Other Applicable Provisions. Phantom Shares shall be subject
to the same terms and conditions applicable to Options as stated in Sections
6.4, 6.7, 6.8 and 6.9.
11. OTHER STOCK GRANTS
The Committee, subject to the terms of the Plan and any
applicable Award agreement, may grant to Participants Common Stock without
restrictions thereon as determined by the Committee to be consistent with the
purpose of the Plan.
12. DEFERRAL ELECTION
Notwithstanding any provision of the Plan to the contrary, any
Participant may elect, with the concurrence of the Committee and consistent with
any rules and regulations established by the Committee, to defer to a specified
date the receipt of unrestricted Common Stock that the Participant would
otherwise be entitled to receive pursuant to an Award. Notwithstanding such an
election, the Committee may distribute the unrestricted Common Stock deferred by
all Participants pursuant to this Section 12 if the Committee determines, in its
discretion, that the continued deferral of Common Stock hereunder is no longer
in the best interest of the Company.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of a reorganization, recapitalization, stock split,
spin-off, split-off, split-up, stock dividend, issuance of stock rights,
combination of shares, merger, consolidation or any other change in the
corporate structure of the Company affecting Common Stock, or any distribution
to shareholders other than a cash dividend, the Committee shall make appropriate
adjustment in the number and kind of shares authorized for use under the Plan
and any adjustments to outstanding Awards as it determines appropriate. The
adjustments to outstanding Awards shall include, but not be limited to, the
respective prices, limitations, and/or performance criteria applicable to the
outstanding Awards. No fractional shares of Common Stock shall be issued
pursuant to such an adjustment. The Fair Market Value of any fractional shares
resulting from adjustments pursuant to this Section shall, where appropriate, be
paid in cash to the Participant. The determinations and adjustments made by the
Committee pursuant to this Section 13 shall be conclusive.
14. CHANGE OF CONTROL OF THE COMPANY
Upon a Change of Control, the Committee may in its discretion
implement the following steps with respect to outstanding Awards:
(a) Provide that all Options that are unexercised and
outstanding (i) become immediately and fully vested and exercisable, or (ii) be
canceled in exchange for a cash payment in an amount equal to the excess, if
any, of the Fair Market Value of the Common Stock underlying the Option as of
the date of the Change of Control over the exercise price of such Option. In
addition, provide that all Restricted Stock and Performance Awards that are
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outstanding on the date of the Change of Control become nonforfeitable and/or
immediately payable in cash;
(b) Provide that the Awards that are outstanding as of the
date of a Change of Control, shall be assumed by the successor corporation, and
shall be substituted with awards involving the common stock of the successor
corporation. Provided, however, that the substitution of Awards described under
this subsection (b) shall occur only if (i) the common stock of the successor
corporation is traded on an established stock exchange or exchanges, or will be
so traded within 60 days of the Change of Control and (ii) the terms and
conditions of the substituted awards are no less favorable than the Awards
granted by the Company; or
(c) Make no changes to outstanding Awards or take such other
actions as the Committee deems appropriate.
15. EFFECTIVE DATE, TERMINATION AND AMENDMENT
The Plan shall become effective on the date it is approved by
the Company's shareholders. The Plan shall remain in full force and effect until
the earlier of 10 years from its effective date or the date it is terminated by
the Board. The Board shall have the power to amend, suspend or terminate the
Plan at any time, provided that no such amendment shall be made without
shareholder approval to the extent such approval is required under Code Section
422, Code Section 162(m), the rules of a stock exchange or NASDAQ, or any other
applicable law. Termination of the Plan pursuant to this Section 15 shall not
affect Awards outstanding under the Plan at the time of termination.
16. TRANSFERABILITY
Except as provided below, Awards may not be pledged, assigned or
transferred for any reason during the Participant's lifetime, and any attempt to
do so shall be void and the relevant Award shall be forfeited. The Committee may
grant Awards other than Incentive Stock Options that are transferable by the
Participant during his lifetime, but such Awards shall be transferable only to
the extent specifically provided in the agreement entered into with the
Participant. The transferee of the Participant shall, in all cases, be subject
to the provisions of the agreement between the Company and the Participant,
including any requirements as to the Participant's continued service or
employment. The rights of the transferee shall be no greater than the rights
that would be acquired by the Participant's estate if the Participant were to
die prior to the transfer of the Award.
17. GENERAL PROVISIONS
17.1. No Employment Rights. Nothing contained in the Plan, or any
Award granted pursuant to the Plan, shall confer upon any Employee any right
with respect to continuance of employment by the Company, a Subsidiary or
Affiliate, or upon any Director or Consultant any right with respect to
continued service for the Company, a Subsidiary or Affiliate nor interfere in
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<PAGE> 15
any way with the right of the Company, a Subsidiary or Affiliate to terminate
the employment or service of any Employee, Director or Consultant at any time.
17.2. Transfer of Employment. For purposes of this Plan, transfer of
employment between the Company and its Subsidiaries and Affiliates shall not be
deemed termination of employment.
17.3. Payment of Taxes. The Company shall have the power to
withhold, or require a Participant to remit to the Company, all taxes required
to be paid in connection with any Award, the exercise thereof and the transfer
of shares of Common Stock pursuant to this Plan. The Company's power to withhold
a portion of the cash or Common Stock received pursuant to an Award, or require
that the Participant remit the applicable taxes shall extend to all applicable
Federal, state, local or foreign withholding taxes. The Company shall have the
right to retain the shares of Common Stock to be issued or cash to be paid
pursuant to an Award until the Company determines that the applicable
withholding taxes have been satisfied. Agreements evidencing such Awards shall
contain appropriate provisions to effect withholding in this manner.
17.4. Participation of Foreign Nationals. Without amending the Plan,
Awards may be granted to Employees who are foreign nationals or employed outside
the United States or both, on such terms and conditions different from those
specified in the Plan as may, in the judgment of the Committee, be necessary or
desirable to further the purpose of the Plan.
17.5. Restrictions on Shares. The Award Shares shall be subject to
restrictions on transfer pursuant to applicable securities laws and such other
agreements as the Committee shall deem appropriate and shall bear a legend
subjecting the Award Shares to those restrictions on transfer in accordance with
the applicable Award. The certificates shall also bear a legend referring to any
restrictions on transfer arising hereunder or under any other applicable law,
regulation or agreement.
17.6. Requirements of Law. The Plan and each Award under the Plan
shall be subject to the requirement that if at any time the Committee shall
determine that (a) the listing, registration or qualification of the Award
Shares upon any securities exchange or under any state or federal law, (b) the
consent or approval of any government regulatory body or (c) an agreement by the
recipient of an Award with respect to the disposition of the Award Shares is
necessary or desirable as a condition of, or in connection with, the Plan or the
granting of such Award or the issue or purchase of the Award Shares thereunder,
the Award may not be consummated in whole or in part until such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
17.7. Amending of Awards. The Committee may amend any outstanding
Awards to the extent it deems appropriate. Such amendment may be made by the
Committee without the consent of the Participant, except in the case of
amendments adverse to the Participant, in which case the Participant's consent
is required to any such amendment.
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17.8. No Shareholder Rights. The Participant shall have no rights as
a shareholder with respect to shares of Common Stock subject to an Award unless
and until certificates for the Award Shares are issued.
17.9. Headings. Section headings are included only for ease of
reference. Headings are not intended to constitute substantive provisions of the
Plan and shall not be used to interpret the scope of this Plan or the rights or
obligations of the Company in any way.
17.10. Changes to Existing Laws, Regulations or Rules. Any law,
regulation or rule referenced in the Plan shall be construed to include any
successor thereto or amendment thereof.
17.11. Governing Law. To the extent that Federal laws do not
otherwise control, the Plan and all determinations made and actions taken
pursuant hereto shall be governed by the law of the State of Delaware and
construed accordingly.
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<PAGE> 1
Exhibit 99.2
SLC TECHNOLOGIES, INC.
STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
1.1. SLC TECHNOLOGIES, INC. (the "Company") desires to afford certain of its
directors and key employees, and certain directors and key employees of
the subsidiary, affiliate or parent entities of the Company, who are
responsible for the continued growth of the Company an opportunity to
acquire a proprietary interest in the Company, and thus to create in
such key employees an increased interest in and a greater concern for
the welfare of the Company.
1.2. The Company, by means of this 1997 Stock Option Plan (the "Plan"),
seeks to retain the services of persons now holding key positions and
to secure the services of persons capable of filling such positions
1.3. The options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended (the "Code"), or
options that do not meet the requirements for Incentive Options
("Non-Qualified Options"), but the Company makes no warranty as to the
qualification of any option as an Incentive Option.
II. AMOUNT OF STOCK SUBJECT TO THE PLAN
2.1. The total number of shares of common stock of the Company which may be
purchased pursuant to the exercise of options granted under the Plan
shall not exceed, in the
<PAGE> 2
aggregate, 50,000 shares of authorized common stock, $ .005 par value
per share, of the Company (the "Shares").
2.2. Shares which may be acquired under the Plan may be either authorized
but unissued shares, shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the
extent that options granted under the Plan expire or terminate without
having been exercised, new options may be granted with respect to the
Shares covered by such expired or terminated options, provided that the
grant and the terms of such new options shall in all respects comply
with the provisions of the Plan.
III. EFFECTIVE DATE AND TERM OF THE PLAN
3.1. The Plan shall become effective on December 17, 1997 (the "Effective
Date") or such later date on which it is adopted by the board of
directors of the Company (the "Board of Directors"); provided, however,
that if the Plan is not approved by a vote of the shareholders of the
Company within twelve (12) months before or after the Effective Date,
the Plan and any options granted thereunder shall terminate.
3.2. The Company may, from time to time during the period beginning on the
Effective Date and ending on December 17, 2007 (the "Termination
Date"), grant options to persons eligible to participate in the Plan,
under the terms of the Plan. Options granted prior to the Termination
Date may extend beyond that date, in accordance with the terms thereof.
3.3. As used in the Plan, the term "subsidiary corporation" and "parent
corporation" shall have the meanings ascribed to such terms,
respectively, in Sections 425(f) and 425(e) of the Code.
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<PAGE> 3
3.4. An employee or director to whom options are granted hereunder may be
referred to herein as a "Participant."
IV. ADMINISTRATION
4.1. The Board of Directors shall designate a Stock Option Plan Committee
(the "Committee") to administer the Plan. The Committee shall consist
of no fewer than three directors, provided that the members of the
Committee may not be officers of the Company or option holders under
the Plan. A majority of the members of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee shall
be the act of the Committee. Any member of the Committee may be removed
at any time either with or without cause by resolution adopted by the
Board of Directors, and any vacancy on the Committee may at any time be
filled by resolution adopted by the Board of Directors.
4.2. Any or all powers and functions of the Committee may at any time and
from time to time be exercised by the Board of Directors. Any reference
in the Plan to the Committee shall be deemed to refer to the Board of
Directors to the extent that the Board of Directors is exercising any
of the powers and functions of the Committee.
4.3. Subject to the express provisions of the Plan, the Committee shall have
the authority, in its discretion:
4.3.1. to determine the directors and employees (other than
members of the Committee) to whom options shall be
granted, the time when such options shall be granted,
the number of Shares which shall be subject to each
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<PAGE> 4
option, the purchase price or exercise price of each
Share which shall be subject to each option, the
period(s) during which such options shall be
exercisable (whether in whole or in part), and the
other terms and provisions of the respective options
(which need not be identical);
4.3.2. to construe the Plan and the options granted
thereunder;
4.3.3. to prescribe, amend and rescind rules and regulations
relating to the Plan; and
4.3.4. to make all other determinations necessary or
advisable for administering the Plan.
4.4. Without limiting the foregoing, the Committee also shall have the
authority to require, in its discretion, as a condition of the granting
of any option, that the Participant agree (i) not to sell or otherwise
dispose of Shares acquired pursuant to the option for a period of six
(6) months following the date of acquisition of such Shares and (ii)
that in the event of termination of the directorship or employment of
such Participant, other than as a result of dismissal without cause,
such Participant will not, for a period of one year following such
termination, enter into any employment or participate directly or
indirectly in any business or enterprise which is competitive with the
business of the Company or any subsidiary corporation, affiliate or
parent entity of the Company, or enter into any employment in which
such employee will be called upon to utilize special knowledge obtained
through the employee's directorship or employment with the Company or
any subsidiary corporation, affiliate or parent entity thereof.
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<PAGE> 5
4.5. The determination of the Committee on matters referred to in this
Article IV shall be conclusive.
4.6. The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company. No member or former member of
the Committee or of the Board of Directors shall be liable for any
action or determination made in good faith with respect to the Plan or
any option.
V. ELIGIBILITY
5.1. Non-Qualified Options may be granted only to directors, officers and
other salaried key employees of the Company, or of any subsidiary
corporation, affiliate or parent entity of the Company now existing or
hereafter formed or acquired, except as hereinafter provided. Any
person who shall have ceased being actively employed by the Company or
any subsidiary corporation, affiliate or parent entity of the Company,
whether by retirement, resignation, termination or otherwise, although
such person shall have entered into a consulting contract with the
Company or any subsidiary corporation, affiliate or parent entity of
the Company, shall not be eligible to receive an option.
5.2. An Incentive Option may be granted only to salaried key employees of
the Company or any subsidiary corporation, affiliate or parent entity
of the Company now existing or hereafter formed or acquired, and not to
any director or officer who is not also an employee.
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VI. LIMITATION ON EXERCISE OF INCENTIVE OPTIONS
Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of Shares with respect to which Incentive
Options are exercisable for the first time by an employee during any
calendar year (under all stock option plans of the Company and any
parent corporation or subsidiary corporation of the Company) exceeds
$10,000, such options shall be treated as Non-Qualified Options. For
purposes of this limitation, (i) the fair market value of Shares is
determined as of the time the option is granted, (ii) the limitation
will be applied by taking into account options in the order in which
they were granted.
VII. PRICE AND PAYMENT
7.1. The purchase price for each Share purchasable under any Non-Qualified
Option granted hereunder shall be such amount as the Committee shall
deem appropriate.
7.2. The purchase price for each Share purchasable under any Incentive
Option granted hereunder shall be such amount as the Committee shall,
in its best judgment, determine to be not less than one hundred (100%)
of the fair market value per Share on the date the option is granted;
provided, however, that in the case of an Incentive Option granted to a
Participant who, at the time such Incentive Option is granted, owns
stock (or other ownership interest) of the Company or any subsidiary
corporation, affiliate or parent entity of the Company possessing more
than ten (10%) of the total combined voting power of all classes of
stock (or other ownership interest) of the Company or of any subsidiary
corporation, affiliate or parent entity of the Company, the purchase
price for each share shall be such amount as the Committee shall, in
its best judgment, determine
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to be not less than one hundred ten percent (110%) of the fair market
value per Share at the date the option is granted.
7.3. If the Shares are listed on a national securities exchange in the
United States on the date on which the fair market value per Share is
to be determined, the fair market value per Share shall be deemed to be
the closing price at which such Shares were sold on such national
securities exchange on such date. If the Shares are listed on more than
one national securities exchange in the United States on the date any
such option is granted, the Committee shall determine which national
securities exchange shall be used for the purpose of determining the
fair market value per share.
7.4. If a public market exists for the Shares on any date on which the fair
market value per Share is to be determined but the Shares are not
listed on a national securities exchange in the United States, the fair
market value per Share shall be deemed to be the mean between the
closing bid and asked quotations in the over-the-counter market for the
Shares on such date. If there are no bid and asked quotations for the
Shares on such date, the fair market value per Share shall be deemed to
be the mean between the closing bid and asked quotations in the
over-the-counter market for the Shares on the closest date preceding
such date for which such quotations are available.
7.5. If no public market exists of the Shares on any date on which the fair
market value per Share is to be determined, the Committee shall, in its
sole discretion and best judgment, determine the fair market value of a
Share.
7.6. For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.
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7.7. Upon the exercise of an option, the Company shall cause the purchased
Shares to be issued only when it shall have received the full purchase
price for the Shares in cash or by certified check.
VIII. USE OF PROCEEDS
The cash proceeds of the sale of Shares subject to options are to be
added to the general funds of the Company and used for its general
corporate purposes as the Board of Directors shall determine.
IX. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
9.1. Any option shall be exercisable at such times, in such amounts and
during such period or periods as the Committee shall determine at the
date of the grant of such option; provided, however, that an Incentive
Option shall not be exercisable after the expiration of ten (10) years
from the date such option is granted; and provided further that, in the
case of an Incentive Option granted to a Participant who, at the time
such option is granted owns stock (or other ownership interest) of the
Company or of any subsidiary corporation, affiliate or parent entity of
the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock (or other ownership
interest) of the Company or of any subsidiary corporation, affiliate or
parent entity of the Company, such option shall not be exercisable
after the expiration of five (5) years from the date such option is
granted.
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9.2. Subject to the provisions of Article XIX, the Committee shall have the
right to accelerate or extend, in whole or in part, from time to time,
conditionally or unconditionally, rights to exercise any option.
9.3. To the extent that an option is not exercised within the period of
exercisability specified therein, it shall expire as to the then
unexercised part.
9.4. In no event shall an option granted hereunder be exercisable for a
fraction of a Share.
X. EXERCISE OF OPTIONS
Any option shall be exercised by the Participant holding such option as
to all or part of the Shares covered by such option by giving written
notice of such exercise to the Corporate Secretary of the Company at
the principal business office of the Company, specifying the number of
Shares to be purchased and specifying a business day not more than
fifteen (15) days from the date such notice is given, for the payment
of the purchase price against delivery of the Shares being purchased.
Subject to the terms of Articles XV, XVII and XVIII, the Company shall
cause certificates for the Shares so purchased to be delivered to the
Participant at the principal business office of the Company, against
payment of the full purchase price, on the date specified in the notice
of exercise.
XI. NONTRANSFERABILITY OF OPTIONS
No option shall be transferable, whether by operation or law or
otherwise, other than by will or the laws of the descent and
distribution, and any option shall be exercisable, during the lifetime
of the Participant, only by such Participant.
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XII. TERMINATION OF DIRECTORSHIP OR EMPLOYMENT
12.1. Upon termination of the directorship or employment of any Participant
with the Company and all subsidiary corporations, affiliates and parent
entities of the Company, any option previously granted to the
Participants unless otherwise specified by the Committee in the option,
shall, to the extent not theretofore exercised, terminate and become
null and void, provided that:
12.1.1. if the Participant shall die while serving as a
director or while in the employ of such entity or
during either the three (3) month or one (1) year
period, whichever is applicable, specified in
paragraph 12.1.2 below and at a time when such
Participant was entitled to exercise an option as
herein provided, the legal representative of such
Participant, or such person who acquired such option
by bequest or inheritance or by reason of the death
of the Participant, may, not later than one (1) year
from the date of death, exercise such option, to the
extent not theretofore exercised, in respect of any
or all of such number of Shares as specified by the
Committee in such option, and
12.1.2. if the directorship or employment of any Participant
to whom such option shall have been granted shall
terminate by reason of the Participant's retirement
(at such age or upon such conditions as shall be
specified by the Committee), disability (as defined
in Section 22(e)(3) of the Code) or dismissal by the
employer other than for cause (as defined in Section
12.4 below), and while such Participant is entitled
to exercise such option as
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herein provided, such Participant shall have the
right to exercise such option, to the extent not
theretofore exercised, in respect of any or all of
such number of Shares as specified by the Committee
in such option, at any time up to and including (i)
three (3) months after the date of such termination
of directorship or employment in the case of
termination by reason of retirement or dismissal
other than for cause and (ii) one (1) year after the
date of termination of directorship or employment in
the case of termination by reason of disability.
In no event, however, shall any person be entitled to exercise any
option after the expiration of the period of exercisability of such
option as specified therein.
12.2. If a Participant voluntarily terminates his or her directorship or
employment, or is discharged for cause, any option granted hereunder
shall, unless otherwise specified by the Committee in the option,
forthwith terminate with respect to any unvested or vested but
unexercised portion thereof.
12.3. If any option shall be exercised by the legal representative of a
deceased Participant, or by a person who acquired an option by bequest
or inheritance or by reason of the death of any Participant, written
notice of such exercise shall be accompanied by a certified copy of
letter testamentary or equivalent proof of the right of such legal
representative or other person to exercise such option.
12.4. For the purposes of the Plan, the term "for cause" shall mean (i) with
respect to an employee who is a party to a written agreement with or,
alternatively, participates in a compensation or benefit plan of, the
Company or a subsidiary corporation, affiliate or
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<PAGE> 12
parent entity of the Company, which agreement or plan contains a
definition of "for cause" or "cause" (or words of like import) for
purposes of termination of employment thereunder by the Company or such
subsidiary corporation, affiliate or parent entity of the Company, "for
cause" or "cause" as defined in the most recent of such agreements or
plans, or (ii) in all other cases, as determined by the Board of
Directors, in its sole discretion, (a) the willful commission by an
employee of an act that causes or probably will cause substantial
economic damage to the Company or a subsidiary corporation, affiliate
or parent entity of the Company or substantial injury to the business
reputation of the Company or a subsidiary corporation, affiliate or
parent entity of the Company; (b) the commission by an employee of an
act of fraud in the performance of such employee's duties on behalf of
the Company or a subsidiary corporation, affiliate or parent entity of
the Company; (c) the continuing willful failure of an employee to
perform the duties of such employee to the Company or a subsidiary
corporation, affiliate or parent entity of the Company (other than such
failure resulting from the employee's incapacity due to physical or
mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) and a reasonable opportunity
to be heard and cure such failure are given to the employee by the
Board of Directors; or (d) the order of a court of competent
jurisdiction requiring the termination of the employee's employment.
For purposes of the Plan, no act, or failure to act, on the employee's
part shall be considered "willful" unless done or omitted to be done by
the employee not In good faith and without reasonable belief that the
employee's action or omission was in the best interest of the Company
or a subsidiary corporation, affiliate or parent entity of the Company.
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12.5. For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and an entity if, at the time of
the determination, the individual was an "employee" of such entity for
purposes of Section 422A(a) of the Code. If an individual is on
maternity, military, or sick leave or other bona fide leave of absence,
such individual shall be considered an "employee" for purposes of the
exercise of an option and shall be entitled to exercise such option
during such leave if the period of such leave does not exceed ninety
(90) days, or, if longer, so long as the individual's right to
reemployment with his employer is guaranteed either by statute or by
contract. If the period of leave exceeds ninety (90) days, the
employment relationship shall be deemed to have terminated on the
ninety-first (91st) day of such leave, unless the individual's right to
reemployment is guaranteed by statute or contract.
12.6. A termination of employment shall not be deemed to occur by reason of
(i) the transfer of a Participant from employment by the Company to
employment by a subsidiary corporation, affiliate or a parent entity of
the Company or (ii) the transfer of a Participant from employment by a
subsidiary corporation, affiliate or a parent entity of the Company to
employment by the Company or by another subsidiary corporation,
affiliate or parent entity of the Company.
XIII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
13.1. In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, split-up, split-off, spin-off, combination or exchange of
shares, or other like change in capital structure of the Company, an
adjustment shall be made to each outstanding option such that each such
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<PAGE> 14
option shall thereafter be exercisable for such securities, cash and/or
other property as would have been received in respect of the Shares
subject to such option had such option been exercised in full
immediately prior to such change, and such an adjustment shall be made
successively each time any such change shall occur. The term "Shares"
after any such change shall refer to the securities, cash and/or
property then receivable upon exercise of an option. In addition, in
the event of any such changes the Committee shall make any further
adjustment as may be appropriate to the maximum number of Shares
subject to the Plan, and the number of Shares and price per Share
subject to outstanding options as shall be equitable to prevent
dilution or enlargement of rights under such options, and the
determination of the Committee as to these matters shall be conclusive.
Notwithstanding the foregoing (i) each such adjustment with respect to
an Incentive Option shall comply with the rules of Section 425(a) of
the Code, and (ii) in no event shall any adjustment be made which would
render any Incentive Option granted hereunder other than an "incentive
stock option" for purposes of Section 422A of the Code.
13.2. The Committee may determine, in its discretion, that all then
outstanding options shall immediately become exercisable upon a change
of control of the Company.
XIV. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation, affiliate or parent entity thereof to continue
the employment of any Participant; and it shall not impose any
obligation on the part of any Participant to remain
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in the employ of the Company or of any subsidiary corporation,
affiliate or parent entity thereof.
XV. PURCHASE FOR INVESTMENT
Except as hereafter provided, a Participant shall, upon any exercise of
an option, execute and deliver to the Company a written statement, in
form satisfactory to the Company, in which such Participant represents
and warrants that such Participant is purchasing or acquiring the
Shares acquired thereunder for such Participant's own account, for
investment only and not with a view to the resale or distribution
thereof, and agrees that any subsequent offer for sale or sale or
distribution of any such Shares shall be made only pursuant to either
(a) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard
to the Shares being offered or sold, or (b) a specific exemption from
the registration requirements of the Securities Act, but in claiming
such exemption the holder shall, if so requested by the Company, prior
to any offer for sale or sale of such Shares, obtain a prior favorable
written opinion, in form and substance satisfactory to the Company,
from counsel for or approved by the Company, as to the applicability of
such exemption thereto. The foregoing restrictions shall not apply to
(i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof
is current or (ii) reofferings of Shares by affiliates of the Company
(as defined in Rule 405 or any successor rule or regulation promulgated
under the Securities Act) if the Shares being reoffered are registered
under the Securities Act and a prospectus in respect thereof is
current.
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XVI. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
16.1. Upon any exercise of an option and payment of the purchase price, a
certificate or certificates for the Shares as to which the option has
been exercised shall be issued by the Company in the name of the person
exercising the option and shall be delivered to or upon the order of
such person or persons.
16.2. The Company may endorse such legend or legends upon the certificates
for Shares issued upon exercise of an option granted hereunder and may
issue such "stop transfer" instructions to its transfer agent in
respect of such Shares as, in its discretion, it determines to be
necessary or appropriate to (i) prevent a violation of, or to perfect
an exemption from, the registration requirements of the Securities Act
(ii) implement the provisions of the Plan and any agreement between the
Company and the Participant with respect to such Shares, or (iii)
permit the Company to determine the occurrence of a disqualifying
disposition, within the meaning of Section 421(b) of the Code, of
Shares transferred upon exercise of an Incentive Option granted under
the Plan.
16.3. The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses
incurred by the Company in connection with such issuance or transfer.
16.4. All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
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XVII. WITHHOLDING TAXES
The Company may require an employee exercising a Non-Qualified Option
granted hereunder, or disposing of Shares acquired pursuant to the
exercise of an Incentive Option in a disqualifying disposition (within
the meaning of Section 421(b) of the Code), to reimburse the entity
that employs such employee for any taxes required by any government to
be withheld or otherwise deducted and paid by such entity in respect of
the issuance or disposition of such Shares. In lieu thereof, the
employer corporation shall have the right to withhold the amount of
such taxes from any other sums due or to become due from such entity to
the employee upon such terms and conditions as the Committee shall
prescribe. The employer entity may, in its discretion, hold the stock
certificate to which such employee is entitled upon the exercise of an
option as security for the payment of such withholding tax liability,
until cash sufficient to pay that liability has been accumulated.
XVIII. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors shall determine in its discretion
that the listing, registration or qualification of the Shares covered
by the Plan upon any national securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection
with, the sale or purchase of Shares under the Plan, no Shares shall be
issued unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise
provided for, free of any conditions not acceptable to the Board of
Directors.
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XIX. AMENDMENT OF THE PLAN
The Board of Directors or the Committee may, from time to time, amend
the Plan, provided that, notwithstanding anything to the contrary
herein, no amendment shall be made, without the approval of the
shareholders of the Company, that will (i) increase the total number of
Shares reserved for options under the Plan (other than an increase
resulting from an adjustment provided for in Article XIII), (ii) reduce
the exercise price of any Incentive Option granted hereunder below the
price required by Article VI, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits
accruing to Participants under the Plan. The Board of Directors or the
Committee shall be authorized to amend the Plan and the options granted
thereunder to permit the Incentive Options granted thereunder to
qualify as "incentive stock options" within the meaning of Section 422A
of the Code. The rights and obligations under any option granted before
amendment of the Plan or any unexercised portion of such option shall
not be adversely affected by amendment of the Plan or the option
without the consent of the holder of the option.
XX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors or the Committee may at any time and for any or
no reason suspend or terminate the Plan. The Plan, unless sooner
terminated under Article III or by action of the Board of Directors,
shall terminate at the close of business on the Termination Date. An
option may not be granted while the Plan is suspended or after it is
terminated. Options granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except
upon the consent of the person to whom the
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option was granted. The power of the Committee under Article IV to
construe and administer any options granted prior to the termination or
suspension of the Plan shall continue after such termination or during
such suspension.
XXI. GOVERNING LAW
The Plan, such options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Oregon from time to time obtaining.
XXII. PARTIAL INVALIDITY
The invalidity or illegality of any provision herein shall not be
deemed to affect the validity of any other provision.
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