<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MANSUR INDUSTRIES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
MANSUR INDUSTRIES INC.
8305 N.W. 27TH STREET
SUITE 107
MIAMI, FLORIDA 33122
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 23, 1999
---------------------
To our Shareholders:
Our 1999 annual meeting of shareholders will be held at the Doral Resort,
4400 N.W. 87th Avenue, Miami, Florida 33178, on Friday, July 23, 1999, beginning
at 10:00 a.m. local time. At the meeting, shareholders will act on the following
matters:
1. Election of five directors, each for a term of one year;
2. Consideration of a proposal to approve and ratify the amendment of
our 1996 Executive Incentive Compensation Plan to increase the number of
shares of common stock reserved for issuance pursuant to grants of awards
under such plan from 375,000 shares to 475,000 shares; and
3. Any other matters that properly come before the meeting.
Shareholders of record at the close of business on June 25, 1999 are
entitled to vote at the meeting or any postponement or adjournment.
By Order of the Board of Directors
Pierre G. Mansur
Chairman of the Board and President
Miami, Florida
June 26, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE> 3
1999 ANNUAL MEETING OF SHAREHOLDERS
OF
MANSUR INDUSTRIES INC.
---------------------
PROXY STATEMENT
---------------------
This proxy statement contains information related to our annual meeting of
shareholders to be held on Friday, July 23, 1999, beginning at 10:00 a.m. local
time, at the Doral Resort, 4400 N.W. 87th Avenue, Miami, Florida 33178, and at
any adjournments or postponements.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, shareholders will act upon the matters outlined in
the accompanying notice of meeting, including the election of directors and
approval and ratification of an amendment to our 1996 Executive Incentive
Compensation Plan. In addition, our management will report on the performance of
the Company during 1998 and respond to questions from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record date,
June 25, 1999, are entitled to receive notice of the annual meeting and to vote
the shares of common stock and Series B convertible preferred stock that they
held on that date at the meeting, or any postponement or adjournment of the
meeting. Each outstanding share of common stock entitles its holder to cast one
vote on each matter to be voted upon. Each outstanding share of Series B
preferred stock entitles its holder to cast 12 votes on each matter to be voted
upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed proxies,
may attend. Please note that if you hold shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of all of the shares of common stock and Series B convertible preferred
stock outstanding on the record date will constitute a quorum, permitting the
meeting to conduct its business. As of the record date, 4,601,309 shares of our
common stock held by approximately 41 shareholders of record and 50,500 shares
of Series B convertible preferred stock held by four shareholders of record were
outstanding. Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of shares considered to be
present at the meeting but will not be counted as votes cast "for" or "against"
any given matter.
If less than a majority of outstanding shares entitled to vote are
represented at the meeting, a majority of the shares present at the meeting may
adjourn the meeting to another date, time or place, and notice need not be given
of the new date, time or place if the new date, time or place is announced at
the meeting before an adjournment is taken.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to us, it will be voted as you direct. If you are a registered shareholder and
you attend the meeting, you may deliver your completed proxy
<PAGE> 4
card in person. "Street name" shareholders who wish to vote at the meeting will
need to obtain a proxy from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with our Secretary either a
notice of revocation or a duly executed proxy bearing a later date. The powers
of the proxy holders will be suspended if you attend the meeting in person and
so request, although attendance at the meeting will not by itself revoke a
previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of our Board of Directors. The recommendation of the Board is set forth with the
description of each item in this proxy statement. In summary, the Board
recommends a vote:
- for the election of the nominated slate of directors (see pages 5 to
6);
- for the proposal to approve and ratify the amendment of our 1996
Executive Incentive Compensation Plan to increase the number of
shares of common stock reserved for issuance pursuant to grants of
awards under such plan from 375,000 shares to 475,000 shares (see
pages 11 to 15).
The Board does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe that the proxy holders
will have to vote for substitute or alternate board nominees. In the event that
any other matter should properly come before the meeting or any nominee is not
available for election, the proxy holders will vote as recommended by the Board
of Directors or, if no recommendation is given, in accordance with their best
judgment.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
Election of Directors. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors
indicated, although it will be counted for purposes of determining whether there
is a quorum. Shareholders do not have the right to cumulate their votes for
directors.
Other Items. For each other item, the affirmative vote of a majority of
the votes represented by shares of common stock and Series B convertible
preferred stock present (either in person or by proxy) and voting will be
required for approval. A properly executed proxy marked "ABSTAIN" with respect
to any such matter will not be voted, although it will be counted for purposes
of determining whether there is a quorum. Accordingly, an abstention will have
the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
WHO PAYS FOR THE PREPARATION OF THE PROXY?
We will pay the cost of preparing, assembling and mailing the proxy
statement, notice of meeting and enclosed proxy card. In addition to the use of
mail, our employees may solicit proxies personally and by telephone. Our
employees will receive no compensation for soliciting proxies other than their
regular salaries. We may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy
2
<PAGE> 5
material to their principals and to request authority for the execution of
proxies and we may reimburse such persons for their expenses incurred in
connection with these activities.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is June 30, 1999. You should review
this information in conjunction with our 1999 Annual Report to Shareholders,
which accompanies this proxy statement. Our principal executive offices are
located at 8305 N.W. 27th Street, Suite 107, Miami, Florida 33122, and our
telephone number is (305) 593-8015. A list of shareholders entitled to vote at
the Annual Meeting will be available at our offices for a period of ten days
prior to the meeting and at the meeting itself for examination by any
shareholder.
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF OUR STOCK?
The following table shows the amount of securities beneficially owned by
(a) each of our directors, (b) each of our executive officers named in the
Summary Compensation Table below, (c) all of our directors and executive
officers as a group and (d) each person known by us to beneficially own more
than 5% of any class of our outstanding securities. Unless otherwise provided,
the address of each holder listed under the heading "Common Stock" is c/o Mansur
Industries Inc., 8305 N.W. 27th Street, Suite 107, Miami, Florida 33122. The
address of each holder listed under the heading "Series B Convertible Preferred
Stock" is c/o Sanders Morris Mundy, 3100 Chase Tower, 600 Travis Street, Suite
3100, Houston, Texas 77002. As of June 25, 1999, each share of Series B
convertible preferred stock is convertible into approximately 12 shares of
common stock or an aggregate of 612,121 shares of common stock representing
approximately 11.7% of the outstanding shares of common stock.
<TABLE>
<CAPTION>
AGGREGATE TOTAL NUMBER
NUMBER OF SHARES OF SHARES OF CLASS PERCENTAGE OF SHARES
BENEFICIALLY ACQUIRABLE WITHIN BENEFICIALLY OWNED OF
NAME OWNED (A) 60 DAYS(1) (B) (COLUMNS (A)+(B)) CLASS OUTSTANDING
- ---- ---------------- ----------------- ------------------ --------------------
<S> <C> <C> <C> <C>
COMMON STOCK
Pierre G. Mansur............... 2,000,000 30,717 2,030,717 43.8%
Paul I. Mansur................. -- 23,369 23,369 *
Richard P. Smith............... 1,000 8,546 9,546 *
Dr. Jan Hedberg................ 35,000 9,167 44,167 *
Joseph E. Jack................. 57,520 6,833 64,353 1.4
Ronald J. Korn................. 1,000 1,167 2,167 *
All directors and executive
officers as a group (6
persons)..................... 2,094,520 78,141 2,172,661 46.4
Oppenheimer Funds, Inc.(2)..... -- 245,000(3) 245,000 5.1
The Commingled Pension Trust
Fund (Multi-Market Special
Investment Fund II) of Morgan
Guaranty Trust Company of New
York......................... -- 247,058(3) 247,058 5.1
SERIES B CONVERTIBLE PREFERRED STOCK
Environmental Opportunities
Fund II (Institutional),
L.P.(4)...................... 23,816 -- 23,816 47.2
Environmental
Opportunities Fund II,
L.P....................... 6,484 -- 6,484 12.8
Environmental
Opportunities Fund, L.P...... 17,968 -- 17,968 35.6
Environmental
Opportunities Fund (Cayman),
L.P.......................... 2,232 -- 2,232 *
</TABLE>
3
<PAGE> 6
- ---------------
* Represents less than 1% of the outstanding stock of the class.
(1) Reflects the number of shares that could be purchased by the holder by
exercise of options granted under our stock option plans or warrants at June
25, 1999 or within 60 days thereafter.
(2) The address of the Oppenheimer Funds, Inc. is Two World Trade Center, 34th
Floor, New York, New York 10048-0203.
(3) Shares issuable upon conversion of 8 1/4% Subordinated Convertible Notes due
2003.
(4) Upon conversion of all of its shares of Series B convertible preferred
stock, Environmental Opportunities Fund II (Institutional), L.P. would hold
approximately 5.9% of the common stock.
To our knowledge, based solely on a review of the copies of filings
furnished to us and written or oral representations that no other reports were
required, we believe that all of our directors and executive officers complied
during 1998 with the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934.
4
<PAGE> 7
PROPOSAL 1 -- ELECTION OF DIRECTORS
Our Articles of Incorporation provide that the number of directors
constituting the Board of Directors shall be at least one, with the exact number
of directors to be fixed from time to time in the manner provided in our Bylaws.
Our Bylaws provide that the number of directors shall be fixed from time to time
by resolution of the Board of Directors. The Board has fixed the number of
directors at five. Each director elected at the annual meeting will serve a
one-year term.
Each of the current members of the Board has been nominated to be reelected
as a director at the annual meeting. The Board has no reason to believe that any
nominee will refuse or be unable to serve if elected. However, if any of them
should become unavailable to serve as director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominees designated by the Board.
The directors standing for election are:
PIERRE MANSUR is our founder and has served as our Chairman of the Board
and President since November 1990. From June 1973 to August 1990, Mr. Mansur
served as President of Mansur Industries Inc., a privately held New York
corporation that operated a professional race engine machine shop. Mr. Mansur
has over twenty years of advanced automotive and machinery operations experience
including developing innovative automotive machine shop applications; designing,
manufacturing, customizing, modifying and retooling high performance engines and
component parts; developing state of the art automotive and powerboat race
engines which have consistently achieved world championship status; and
providing consulting services and publishing articles with respect to automotive
technical research data. Mr. Mansur has conducted extensive research and
development projects for several companies, including testing and evaluating
engine parts and equipment for Direct Connection, a high performance racing
division of the Chrysler Corporation; researching and developing specialized
engine piston rings and codings for Seal Power Corporation; researching
high-tech plastic polymers for internal combustion engines for ICI Americas; and
designing and developing specialized high performance engine oil pan
applications. Pierre Mansur is the brother of Paul I. Mansur, our Chief
Executive Officer and a member of our Board of Directors. Pierre Mansur is a
graduate of the City University of New York.
PAUL MANSUR has served as our Chief Executive Officer and a member of our
Board of Directors since September 1993. From September 1986 to July 1993, Mr.
Mansur served as Chief Executive Officer of Atlantic Entertainment Inc., a
privately held regional retail chain of video superstores. From March 1981 to
September 1986, Mr. Mansur served as the Chief Executive Officer and President
of Ameritrade Corporation, a privately held international distributor of factory
direct duty free products. From June 1972 to March 1981, Mr. Mansur held various
finance and operation positions, including Assistant Vice President Finance and
Operations for Mott's USA, Inc., a division of American Brands. Paul Mansur is
the brother of Pierre G. Mansur, our Chairman of the Board and President. Paul
Mansur is a graduate of the City University of New York.
DR. HEDBERG has served as a member of our Board of Directors since August
1995. From October 1987 to March 1993, Dr. Hedberg served as the Chairman and
Chief Executive Officer of Enprotec International Group, N.V., a company he
co-founded in the business of researching and developing advanced waste oil
recycling technologies. Since March 1993, Dr. Hedberg has been the Chairman of
the Board and Chief Executive Officer of Enprotec (USA) Inc., a wholly owned
subsidiary of Enprotec International Group, N.V., which manufactures, designs
and assembles oil re-refining plants. Dr. Hedberg was the co-recipient of the
1991 International Technology Award for Enterprising Innovation and Creativity
for the development of the Vaxon Re-refining Process, which is a proprietary
process that transforms used oil into usable oil products. Dr. Hedberg has over
15 years of experience in oil related and environmental companies and 12 years
of research and teaching experience, including executive management and advisory
positions, with several multinational organizations. Dr. Hedberg received his
Doctor of Philosophy (Ph.D.) in Geotechnical Engineering from the Massachusetts
Institute of Technology, Cambridge, Massachusetts in 1977.
5
<PAGE> 8
JOSEPH JACK has served as a member of our Board of Directors since August
1995. From May 1989 to June 1991, Mr. Jack served as Vice President of Waste
Management Europe, a waste collection and recycling company that is a publicly
traded company on the London Stock Exchange and a controlled subsidiary of WMX
Technologies, a publicly traded New York Stock Exchange company. From May 1978
to June 1991, Mr. Jack has served in various executive capacities with several
subsidiaries and/or affiliates of Waste Management, Inc. Mr. Jack has been an
active investor in companies since he retired in June 1991.
RONALD KORN has served as a member of our Board of Directors since June
1998. Since July 1991, Mr. Korn has served as President of Ronald Korn
Consulting, a business consulting firm, and as Chairman of the Board of Carole
Korn Interiors, Inc., an interior design firm. From 1961 to 1991, Mr. Korn was a
partner with the certified public accounting firm of KPMG Peat Marwick,
including six years in which Mr. Korn served as Managing Partner of KPMG Peat
Marwick's Miami, Florida office. Since October 1991, Mr. Korn has served as a
director and Chairman of the Compensation and Audit Committee of the Board of
Directors of Engle Homes, Inc., a company whose common stock is traded on the
Nasdaq National Market. From 1996 to August 1998, Mr. Korn served as a director
of Magicworks Entertainment Incorporated, a company whose common stock was
traded on the American Stock Exchange, and from December 1995 to December, 1997,
Mr. Korn served as a director of Vacation Break U.S.A., Inc., a company whose
common stock was traded on the Nasdaq National Market.
HOW ARE DIRECTORS COMPENSATED?
Compensation. No director receives any fee for attendance at meetings of
the Board of Directors or committees thereof, although members of the Board of
Directors do receive reimbursement for actual travel-related expenses incurred
in connection with their attendance at meetings of the Board of Directors.
Directors who are also employed by us do not receive additional compensation for
their services as directors.
Options. Directors are eligible to receive options under our 1996
Executive Incentive Compensation Plan. This plan provides for an automatic grant
of an option to purchase 3,500 shares of our common stock upon a person's
election as a non-employee director, as well as an automatic annual grant of an
option to purchase 3,500 shares of common stock on the day we issue our earnings
release for the prior fiscal year.
HOW OFTEN DID THE BOARD MEET DURING 1998?
Our Board of Directors met four times during 1998. Each director attended
more than 75% of the total number of meetings of the Board and committees on
which he served.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has a standing Audit Committee and Compensation
Committee. We do not have a nominating or similar committee. Our Board of
Directors performs the functions of a nominating or similar committee.
Messrs. Jack, Hedberg and Korn are the current members of our Audit
Committee. The Audit Committee held two meetings during 1998. The duties and
responsibilities of the Audit Committee include (a) recommending to the Board
the appointment of our auditors and any termination of engagement, (b) reviewing
the plan and scope of audits, (c) reviewing our significant accounting policies
and internal controls and (d) having general responsibility for all related
auditing matters.
Messrs. Pierre Mansur, Hedberg and Korn are the current members of our
Compensation Committee, which committee held no meetings during 1998. The
Compensation Committee reviews and approves the compensation of our executive
officers and administers our stock option plan.
6
<PAGE> 9
MANAGEMENT
EXECUTIVE OFFICERS
Our executive officers are elected annually by the Board of Directors and
serve at the discretion of the Board of Directors. Pierre G. Mansur and Paul I.
Mansur serve both on our Board of Directors and as executive officers. "Proposal
1 -- Election of Directors" above, discusses their business experience.
The other executive officer of the Company is as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard P. Smith................................ 41 Vice President of Finance and Chief Financial
Officer
</TABLE>
Richard Smith has served as our Vice President and Chief Financial Officer
since September 1996. From April 1987 to August 1996, Mr. Smith held various
positions, including Vice President, Chief Financial Officer, Treasurer,
Secretary, Director of Business Planning, and Controller of the European
Operations of Telematics International, Inc., a manufacturer and supplier of
intelligent networking technologies and products. From August 1983 to April
1987, Mr. Smith served as Manager of Internal Controls and Cost Analysis for
Motorola, Inc., a worldwide manufacturer of a diverse line of electronic
equipment and components, including communications systems, semiconductors,
electronic controls and computer systems. From January 1980 to March 1981, Mr.
Smith worked as an accountant for Arthur Young and Co. C.P.A. Mr. Smith is a
graduate of Illinois Wesleyan University and holds a Masters of Business
Administration degree from the University of Illinois and a Masters of Finance
degree from Cambridge University.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years ended December 31, 1998, 1997
and 1996, the aggregate compensation awarded to, earned by or paid to Pierre G.
Mansur, our Chairman and President, Paul I. Mansur, our Chief Executive Officer,
and Richard P. Smith, our Chief Financial Officer (collectively known as the
"named executive officers"). None of our other officers earned compensation in
excess of $100,000 during 1998. We did not grant any restricted stock awards or
stock appreciation rights or make any long-term incentive plan payouts during
these three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/SARs
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Pierre G. Mansur....................... 1998 $130,000 -- $ 8,040(1) 9,231
Chairman and President 1997 120,000 -- 6,605(1) 41,460
1996 66,000 $ 58,000 6,605(1) --
Paul I. Mansur......................... 1998 130,000 -- 5,099(1) 9,231
Chief Executive Officer 1997 120,000 -- 5,099(1) 30,438
1996 48,000 250,000 5,099(1) --
Richard P. Smith....................... 1998 115,000 -- 4,800(1) 5,641
Vice President and 1997 110,000 -- 4,800(1) --
Chief Financial Officer 1996 36,667(2) -- 1,600(1) 10,000
</TABLE>
- ---------------
(1) Automobile allowance paid by the Company.
(2) Mr. Smith commenced employment with us in September 1996. Accordingly, this
amount represents compensation paid to Mr. Smith for the four months ended
December 31, 1996.
7
<PAGE> 10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
We have entered into a two year employment agreement with Pierre Mansur,
our Chairman of the Board and President, which agreement terminates in September
1999. Mr. Mansur's employment agreement currently provides for an annual base
salary of $150,000 and discretionary bonuses, based on Mr. Mansur's performance,
as determined by our Compensation Committee. Pursuant to this employment
agreement, during the term of Mr. Mansur's employment and for a period of three
years following his termination of employment, Mr. Mansur is prohibited from
disclosing any confidential information, including without limitation,
information regarding our patents, research and development, manufacturing
process or knowledge or information with respect to our confidential trade
secrets. In addition, the employment agreement provides that Mr. Mansur is
prohibited from, directly or indirectly, engaging in any business in substantial
competition with us or any of our affiliates. The employment agreement also
provides that Mr. Mansur is prohibited from becoming an officer, director or
employee of any corporation, partnership or any other business in substantial
competition with us or any of our affiliates during the term of his employment
and for three years thereafter.
We have also entered into a two year employment agreement with Paul Mansur,
the Company's Chief Executive Officer, which agreement terminates in September
1999. Mr. Mansur's employment agreement currently provides for an annual base
salary of $150,000 and discretionary bonuses, based on Mr. Mansur's performance,
as determined by our Compensation Committee. Pursuant to the employment
agreement, during the term of Mr. Mansur's employment and for a period of three
years following his termination of employment, Mr. Mansur is prohibited from
disclosing any confidential information, including without limitation,
information regarding our patents, research and development, manufacturing
process or knowledge or information with respect to our confidential trade
secrets. The employment agreement also provides that Mr. Mansur is prohibited
from, directly or indirectly, engaging in any business in substantial
competition with us or any of our affiliates. The employment agreement also
provides that Mr. Mansur is prohibited from becoming an officer, director or
employee of any corporation, partnership or any other business in substantial
competition with us or any of our affiliates during the term of his employment
and for three years thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Pierre G. Mansur, our Chairman of the Board and President, participated in
deliberations of the Compensation Committee of our Board of Directors concerning
executive compensation during 1998. Mr. Mansur was compensated in accordance
with his employment agreement, which agreement was approved by our Board of
Directors.
INCENTIVE PLAN
We adopted the 1996 Executive Incentive Compensation Plan in September 1996
in connection with our initial public offering of common stock. The purpose of
this plan is to advance our interests by providing additional incentive in
attracting, motivating and retaining the participants in the plan, qualified
executives and other employees, officers, directors and independent contractors,
by enabling these participants to acquire or increase a proprietary interest in
us in order to strengthen the mutuality of interests between participants and
our shareholders, and providing participants with annual and long term
performance incentives to expend their maximum efforts in the creation of
shareholder value. The plan provides for grants of stock options, stock
appreciation rights, restricted stock, deferred stock, other stock-related
awards and performance or annual incentive awards that may be settled in cash,
stock or other property. The plan was approved by our shareholders in June 1997
as part of our 1997 Annual Meeting of Shareholders. An aggregate of 375,000
shares of our common stock have been reserved for issuance to participants under
the Plan. As of June 25, 1999, options to purchase an aggregate of 374,997
shares of common stock were issued under the Incentive Plan. For a detailed
discussion of the plan refer to Proposal 2 of this proxy statement.
8
<PAGE> 11
OPTION/SAR GRANT TABLE
The table below sets forth the following information with respect to
options granted to the named executive officers during 1998 and the potential
realizable value of such option grants:
- the number of shares of common stock underlying options granted during
the year;
- the percentage that such options represent of all options granted to
employees during the year;
- the exercise price; and
- the expiration date.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO
OPTIONS/SARs EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE ($/SH) DATE
---- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Pierre G. Mansur............................... 9,231 10.9% $19.50 4/7/08
Chairman of the Board and President
Paul I. Mansur................................. 9,231 10.9 19.50 4/7/08
Chief Executive Officer
Richard P. Smith............................... 5,641 6.6 19.50 4/7/08
Vice President and Chief Financial Officer
</TABLE>
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning unexercised
stock options held by our named executive officers as of December 31, 1998. No
stock options were exercised by the named executive officers during 1998. No
stock appreciation rights have been granted or are outstanding.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN THE
UNEXERCISED OPTIONS MONEY OPTIONS
SHARES AT FY-END (#) AT FY-END(1)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pierre G. Mansur............ 0 $0 13,820 36,871 (2) (2)
Paul I. Mansur.............. 0 0 10,146 20,292 (2) (2)
Richard P. Smith............ 0 0 6,666 8,975 $19,998(3) $10,002(3)
</TABLE>
- ---------------
(1) The closing price of the Common Stock as reported on the Nasdaq SmallCap
Market on December 31, 1998 was $10.50.
(2) The option exercise price exceeds $10.50 and accordingly, such options are
"underwater."
(3) Value is calculated by multiplying (i) the difference between $10.50 and the
option exercise price of $7.50 by (ii) the number of shares of common stock
underlying the option.
CERTAIN TRANSACTIONS
COMMON STOCK OWNERSHIP
In connection with the organization of our company in November 1990, we
issued 2,000,000 shares of common stock to Mr. Pierre Mansur in exchange for the
assignment to us of (i) certain ongoing research and development and rights to
any related patents and patents pending, and (ii) real estate and equipment
valued at $52,000.
9
<PAGE> 12
CONSULTING AGREEMENT AND SERVICES
In November 1994, we entered into a two-year consulting agreement with
Environmental Technologies BVI Limited. Pursuant to the consulting agreement,
Environmental Technologies agreed to advise us, consult with us, introduce us to
third parties and generally assist our efforts to explore new manufacturing and
marketing arrangements. In exchange for these services, we agreed to pay to
Environmental Technologies certain fees in connection with the sale of certain
equipment, services, license rights, royalty rights, manufacturing rights,
marketing rights or our entrance into a partnership or joint venture arrangement
or consummation of a merger. Environmental Technologies did not receive any
commissions pursuant to the consulting agreement. In December 1995, we issued
Environmental Technologies 10,000 shares of common stock in exchange for its
services and to secure its agreement to terminate the consulting agreement and
any and all of its associated rights. Dr. Jan Hedberg, one of our directors,
owns 50% and serves as the managing director of Environmental Technologies.
Dr. Jan Hedberg and Joseph E. Jack have, from time to time, rendered
consulting services to us in connection with financing, marketing and technical
matters. In April 1996, Messrs. Hedberg and Jack were each issued 10,000 shares
of our common stock, valued at $3.50 per share, in exchange for previous
consulting services.
NOTE PAYABLE TO CHIEF EXECUTIVE OFFICER
Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul Mansur
made a series of advances ranging from $5,000 to $30,000, totaling an aggregate
of $150,000, to us between June 1, 1990 and May 31, 1996. Under the terms of the
line of credit, interest accrued at a rate of 6% in 1994, 1995 and the five
month period ended May 31, 1996. On December 31, 1994, we paid Mr. Paul Mansur
$34,814 and on December 31, 1995, we paid him an additional $12,000, in
satisfaction of interest owed with respect to this debt. The note evidencing the
debt had a maturity date of December 31, 1995, which maturity date was extended
to December 31, 1996. On May 31, 1996, we paid Mr. Paul Mansur $150,000 in
satisfaction of the outstanding principal balance of and $5,000 in satisfaction
of the interest owed with respect to this debt.
CONVERTIBLE NOTES
In connection with its issuance of an aggregate of $1,012,500 in principal
amount of convertible notes in June 1996, we issued promissory notes in the
principal amount of $101,250 to each of (1) Environmental Technologies BVI
Limited, a consulting firm of which Dr. Jan Hedberg, one of our directors, is
Managing Director, and (2) Joseph E. Jack, one of our directors. Upon
consummation of our initial public offering in September 1996, each of these
convertible notes was converted into 15,000 shares of our common stock.
Environmental Technologies BVI Limited and Mr. Jack acquired the convertible
notes on the same terms as other unaffiliated investors.
10
<PAGE> 13
PROPOSAL 2 -- APPROVAL AND RATIFICATION OF AMENDMENT
TO THE 1996 EXECUTIVE INCENTIVE COMPENSATION PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE PURSUANT TO GRANTS
OF AWARDS UNDER SUCH PLAN FROM 375,000 SHARES TO 475,000 SHARES
WHAT IS THE PURPOSE OF THE INCENTIVE PLAN?
An integral part of our compensation philosophy is to provide incentives to
our employees to remain with us and to improve individual, as well as our
company performance. The incentive plan was adopted in order to allow us to
provide such incentives to our employees. The incentive plan provides for grants
of stock options, stock appreciation rights (known as SARs), restricted stock,
deferred stock, other stock-related awards and performance or annual incentive
awards, collectively referred to as Awards, that may be settled in cash, stock
or other property. The incentive plan was intended to supplement our
pre-existing stock option plans.
HOW MANY SHARES OF COMMON STOCK ARE CURRENTLY RESERVED FOR ISSUANCE UNDER THE
INCENTIVE PLAN?
A total of 375,000 shares of common stock are currently reserved for
issuance upon the exercise of Awards granted under the incentive plan. As of
June 25, 1999, Awards to purchase an aggregate of 374,997 shares of common stock
have been granted and are outstanding under the incentive plan.
WHO IS ENTITLED TO RECEIVE GRANTS OF AWARDS UNDER THE INCENTIVE PLAN?
Our officers, directors, employees and independent contractors and the
officers, directors and employees and independent contractors of our
subsidiaries are eligible to receive grants of Awards under the incentive plan.
WHO ADMINISTERS THE INCENTIVE PLAN?
The incentive plan is administered by the Compensation Committee of our
Board of Directors, or in the absence thereof, the Board of Directors. The
Compensation Committee is authorized to select eligible persons to receive
Awards, determine the type and number of Awards to be granted and the number of
shares of common stock to which Awards will relate, specify times at which
Awards will be exercisable or settleable (including performance conditions that
may be required as a condition thereof), set other terms and conditions of
Awards, prescribe forms of Award agreements, interpret and specify rules and
regulations relating to the incentive plan, and make all other determinations
that may be necessary or advisable for the administration of the incentive plan.
Each member of the Compensation Committee is a "non-employee director" as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended,
and an "outsider director" for purposes of Section 162(m) of the Code.
WHAT TYPES OF AWARDS MAY BE GRANTED UNDER THE INCENTIVE PLAN?
The Compensation Committee is authorized to grant the following types of
Awards under the incentive plan:
- Stock Options and SARs. Stock options, including both incentive stock
options, known as ISOs and which can result in potentially favorable tax
treatment to the participant, and non-qualified stock options, and SARs
entitling the participant to receive the amount by which the fair market
value of a share of common stock on the date of exercise exceeds the
grant price of the SAR, may be granted by the Compensation Committee
under the incentive plan. The exercise price per share of common stock
subject to an option and the grant price of an SAR are determined by the
Compensation Committee, but in the case of an ISO may not be less than
the fair market value of our common stock on the date of grant. Unless
otherwise determined by the Compensation Committee, the fair market value
of common stock as of any given date shall be the closing sales price per
share of common stock as reported on the Nasdaq SmallCap Market on the
date as of which such value is being determined or, if there is no sale
on that date, then on the last previous day on which a sale was reported.
The maximum term of each option or SAR, the times at which each option or
SAR will be exercisable, and provisions requiring forfeiture of
unexercised options or SARs at or following termination of employment
generally are fixed by the Compensation Committee, except that no option
or SAR may have a term
11
<PAGE> 14
exceeding ten years. Options may be exercised by payment of the exercise
price in cash, shares that have been held for at least 6 months,
outstanding Awards or other property having a fair market value equal to
the exercise price, as the Compensation Committee may determine from time
to time. Methods of exercise and settlement and other terms of the SARs
are determined by the Compensation Committee.
- Restricted and Deferred Stock. Restricted stock is a grant of shares of
common stock which may not be sold or disposed of, and which may be
forfeited in the event of certain terminations of employment, prior to
the end of a restricted period specified by the Compensation Committee. A
participant granted restricted stock generally has all of the rights of a
shareholder, unless otherwise determined by the Compensation Committee.
An Award of deferred stock confers upon a participant the right to
receive shares of common stock at the end of a specified deferral period,
subject to possible forfeiture of the Award in the event of certain
terminations of employment prior to the end of a specified restricted
period. Prior to settlement, an Award of deferred stock carries no voting
or dividend rights or other rights associated with share ownership,
although dividend equivalents may be granted, as discussed below. As of
the date hereof, no Awards of restricted stock or deferred stock have
been granted under the incentive plan.
- Dividend Equivalents. The Compensation Committee is authorized to grant
dividend equivalents conferring on participants the right to receive,
currently or on a deferred basis, cash, shares of common stock, other
Awards or other property equal in value to dividends paid on a specific
number of shares of common stock or other periodic payments. Dividend
equivalents may be granted alone or in connection with another Award, may
be paid currently or on a deferred basis and, if deferred, may be deemed
to have been reinvested in additional shares of common stock, Awards or
otherwise as specified by the Compensation Committee. As of the date
hereof, no Awards of dividend equivalents have been granted under the
incentive plan.
- Bonus Stock and Awards in Lieu of Cash Obligations. The Compensation
Committee is authorized to grant shares of common stock as a bonus free
of restrictions, or to grant shares of common stock or other Awards in
lieu of our obligations to pay cash under the incentive plan or other
plans or compensatory arrangements, subject to such terms as the
Compensation Committee may determine. As of the date hereof, no such
Awards have been granted under the incentive plan.
- Other Stock-Based Awards. The Compensation Committee is authorized to
grant Awards that are denominated or payable in, valued by reference to,
or otherwise based on or related to shares of common stock. Such Awards
might include convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of common stock, purchase rights
for shares of common stock, Awards with value and payment contingent upon
our performance or any other factors designated by the Compensation
Committee, and Awards valued by reference to the book value of shares of
common stock or the value of securities of or the performance of
specified subsidiaries or business units. The Compensation Committee
determines the terms and conditions of such Awards. As of the date
hereof, no such Awards have been granted under the incentive plan.
HOW ARE AWARDS EXERCISED?
Awards may be settled in the form of cash, shares of common stock, other
Awards or other property, in the discretion of the Compensation Committee. The
Compensation Committee may require or permit participants to defer the
settlement of all or part of an Award in accordance with the terms and
conditions the Compensation Committee may establish, including payment or
crediting of interest or dividend equivalents on deferred amounts, and the
crediting of earnings, gains and losses based on deemed investment of deferred
amounts in specified investment vehicles. Additionally, the Compensation
Committee may condition any payment relating to an Award on the withholding of
taxes and may provide that a portion of any shares of
12
<PAGE> 15
common stock or other property to be distributed will be withheld (or previously
acquired shares of common stock or other property be surrendered by the
participant) to satisfy withholding and other tax obligations.
Awards granted under the incentive plan generally may not be pledged or
otherwise encumbered and are not transferable except by will or by the laws of
descent and distribution, or to a designated beneficiary upon the participant's
death, except that the Compensation Committee may, in its discretion, permit
transfers for estate planning or other purposes subject to any applicable
restrictions under Rule 16b-3.
UNDER WHAT CIRCUMSTANCES MAY AWARDS BE GRANTED OR EXERCISED?
The right of a participant to exercise or receive a grant or settlement of
an Award, and the timing thereof, may be subject to performance conditions
(including subjective individual goals) specified by the Compensation Committee.
In addition, the Incentive Plan authorizes specific annual incentive Awards,
which represent a conditional right to receive cash, shares of common stock or
other Awards upon achievement of certain preestablished performance goals and
subjective individual goals during a specified fiscal year. The Compensation
Committee will determine performance Award and annual incentive Award terms,
including the required levels of performance with respect to specified business
criteria, the corresponding amounts payable upon achievement of such levels of
performance, termination and forfeiture provisions and the form of settlement.
The Compensation Committee may, in its discretion, accelerate the
exercisability, the lapsing of restrictions or the expiration of deferral or
vesting periods of any Award, and such accelerated exercisability, lapse,
expiration and if so provided in the Award agreement, vesting shall occur
automatically in the case of a "change in control" of the Company, as defined in
the incentive plan. In addition, the Compensation Committee may provide in an
Award agreement that the performance goals relating to any performance based
Award will be deemed to have been met upon the occurrence of any "change in
control." Upon the occurrence of a change in control, if provided in the
applicable Award agreement, stock options and limited SARs may be cashed out
based on a defined "change in control price," which will be the higher of (i)
the cash and fair market value of property that is the highest price per share
paid (including extraordinary dividends) in any reorganization, merger,
consolidation, liquidation, dissolution or sale of substantially all assets of
our company, or (ii) the highest fair market value per share (generally based on
market prices) at any time during the 60 days before and 60 days after a change
in control. For purposes of the incentive plan, the term "change in control"
generally means (a) approval by shareholders of any reorganization, merger or
consolidation or other transaction or series of transactions if persons who were
shareholders immediately prior to such reorganization, merger or consolidation
or other transaction do not, immediately thereafter, own more than 50% of the
combined voting power of the reorganized, merged or consolidated company's then
outstanding, voting securities, or a liquidation or dissolution of our company
or the sale of all or substantially all of our assets (unless the
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned), or (b) a change in
the composition of the Board such that the persons constituting the current
Board, and subsequent directors approved by the current Board (or approved by
such subsequent directors), cease to constitute at least a majority of the
Board.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES TO US AND TO PLAN PARTICIPANTS OF
GRANTS OF STOCK OPTIONS?
In general, the grant of an option will create no tax consequences for the
participant or us. A participant will not have taxable income upon exercising an
ISO (except that the alternative minimum tax may apply). Upon exercising an
option other than an ISO, the participant must generally recognize ordinary
income equal to the difference between the exercise price and the fair market
value of the freely transferable and non-forfeitable shares of common stock
acquired on the date of exercise.
Upon a disposition of shares of common stock acquired upon exercise of an
ISO before the end of the applicable ISO holding periods, the participant must
generally recognize ordinary income equal to the lesser of (i) the fair market
value of the shares of common stock at the date of exercise of the ISO minus the
exercise price, or (ii) the amount realized upon the disposition of the ISO
shares of common stock minus the exercise price. Otherwise, a participant's
disposition of shares of common stock acquired upon the exercise of an option
(including an ISO for which the ISO holding periods are met) generally will
result in short-term or long-term
13
<PAGE> 16
capital gain or loss measured by the difference between the sale price and the
participant's tax basis in such shares of common stock (the tax basis generally
being the exercise price plus any amount previously recognized as ordinary
income in connection with the exercise of the option).
In general, we will be entitled to a tax deduction equal to the amount
recognized as ordinary income by the participant in connection with an option.
We are not entitled to a tax deduction relating to amounts that represent a
capital gain to a participant. Accordingly, we will not be entitled to any tax
deduction with respect to an ISO if the participant holds the shares of common
stock for the ISO holding periods prior to disposition of the shares.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Code, which generally disallows a public company's tax deduction for
compensation to covered employees in excess of $1 million in any tax year
beginning on or after January 1, 1994. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million deductibility
cap, and therefore remains fully deductible by the company that pays it. As
discussed above, we intend that options and certain other Awards granted to
employees whom the Compensation Committee expects to be covered employees at the
time a deduction arises in connection with such Awards, qualify as such
"performance-based compensation," so that such Awards will not be subject to the
Section 162(m) deductibility cap of $1 million. Future changes in Section 162(m)
or the regulations thereunder may adversely affect our ability to ensure that
options or other Awards under the incentive plan will qualify as
"performance-based compensation" that is fully deductible by us under Section
162(m).
The foregoing discussion, which is general in nature and is not intended to
be a complete description of the federal income tax consequences of the
incentive plan, is intended for the information of shareholders and not as tax
guidance to participants in the incentive plan. This discussion does not address
the effects of other federal taxes or taxes imposed under state, local or
foreign tax laws. Participants in the incentive plan should consult a tax
advisor as to the tax consequences of participation.
A copy of the entire text of the incentive plan, containing the proposed
amendment, is provided herewith as Annex A to this proxy statement.
PRIOR GRANTS OF OPTIONS
As of the June 25, 1999, options to purchase an aggregate of 374,997 shares
of common stock had been granted under the incentive plan. The following table
indicates certain information as of June 25, 1999 regarding options which have
been granted under the incentive plan to the following persons and groups:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE
NAME AND POSITION SUBJECT TO OPTIONS PER SHARE VALUE OF OPTIONS(1)
- ----------------- ------------------ -------------- -------------------
<S> <C> <C> <C>
Pierre G. Mansur.............................. 72,806 $8.8125-$19.50 $ 40,083.44
Chairman of the Board and President
Paul I. Mansur................................ 61,784 8.8125-19.50 40,083.44
Chief Executive Officer
Richard P. Smith.............................. 29,209 7.50-19.50 55,842.00
Vice President and Chief Financial Officer
All current executive officers as a group (3
persons).................................... 163,799 7.50-19.50 136,008.88
All current directors who are not executive
officers as a group (3 persons)............. 51,500 8.8125-19.50 19,031.25
All employees as a group, other than executive
officers (288 persons)...................... 160,198 8.8125-19.50 247,364.56
</TABLE>
- ---------------
(1) The closing sale price of the common stock on June 25, 1999 was $10.625 per
share. Value is calculated by multiplying (i) the difference between $10.625
and the option exercise price by (ii) the number of shares of common stock
underlying the option. Options with an exercise price exceeding $10.625 were
"underwater" as of June 25, 1999.
14
<PAGE> 17
WHAT IS THE RECOMMENDATION OF THE BOARD?
The Board of Directors believes that it is in our best interests to
increase the number of shares of common stock subject to grants of Awards under
the incentive plan. Accordingly, the Board recommends that you vote to approve
the amendment of the incentive plan as described above. Your proxy will be voted
"for" approval of the amendment of the incentive plan unless you specify
otherwise.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as our independent public
accountants during 1998. Our Board of Directors has selected KPMG Peat Marwick
LLP as our independent public accountants for 1999. One or more representatives
of KPMG Peat Marwick LLP are expected to be present at the Annual Meeting and
will be afforded the opportunity to make a statement if they so desire and to
respond to appropriate shareholder questions.
OTHER BUSINESS
We know of no other business to be brought before the Annual Meeting. If,
however, any other business should properly come before the Annual Meeting, the
persons named in the accompanying proxy will vote proxies as in their discretion
they may deem appropriate, unless they are directed by a proxy to do otherwise.
SHAREHOLDER PROPOSALS
Shareholders interested in presenting a proposal for consideration at our
2000 annual meeting of shareholders may do so by following the procedures
prescribed in Rule 14a-8 under the Securities Exchange Act of 1934 and our
Bylaws. To be eligible for inclusion in our proxy statement and form of proxy
relating to the meeting, shareholder proposals must be received by our Corporate
Secretary no later than January 5, 2000. Any shareholder proposal submitted
other than for inclusion in our proxy materials for that meeting must be
delivered to us no later than March 16, 2000, or such proposal will be
considered untimely. If a shareholder proposal is received after March 16, 2000,
we may vote in our discretion as to the proposal all of the shares for which we
have received proxies for the 2000 annual meeting of shareholders.
By Order of the Board of Directors,
Pierre G. Mansur
Chairman of the Board and President
Miami, Florida
June 26, 1999
15
<PAGE> 18
MANSUR INDUSTRIES INC.
1996 EXECUTIVE INCENTIVE COMPENSATION PLAN, AS AMENDED
1. Purpose. The purpose of this 1996 Executive Incentive Compensation Plan
(the "Plan") is to assist Mansur Industries Inc. (the "Company") and its
subsidiaries in attracting, motivating, retaining and rewarding high-quality
executives and other employees, officers, directors and independent contractors
enabling such persons to acquire or increase a proprietary interest in the
Company in order to strengthen the mutuality of interests between such persons
and the Company's stockholders, and providing such persons with annual and long
term performance incentives to expend their maximum efforts in the creation of
shareholder value. The Plan is also intended to qualify certain compensation
awarded under the Plan for tax deductibility under Section 162(m) of the Code
(as hereafter defined) to the extent deemed appropriate by the Committee (or any
successor committee) of the Board of Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted Stock
Deferred Stock, Stock granted as a bonus or in lieu of another award, Dividend
Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive
Award, together with any other right or interest granted to a Participant under
the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means person, persons, trust
or trusts entitled by will or the laws of descent and distribution to receive
such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial Ownership"
shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange
Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.
(i) "Committee" means a committee designated by the Board to administer the
Plan; provided, however, that the Committee shall consist solely of at least two
directors, each of whom shall be (i) a "disinterested person" within the meaning
of Rule 16b-3 under the Exchange Act, unless administration of the Plan by
"disinterested persons" is not then required in order for exemptions under Rule
16b-3 to apply to transactions under the Plan, and (ii) an "outside director" as
defined under Section 162(m) of the Code, unless administration of the Plan by
"outside directors" is not then required in order to qualify for tax
deductibility under Section 162(m) of the Code.
(j) "Corporate Transaction" means a transaction as defined in Section 9(b)
of the Plan.
(k) "Covered Employee" means an Eligible Person who is a Covered Employee
as specified in Section 8(e) of the Plan.
A-1
<PAGE> 19
(l) "Deferred Stock" means a right, granted to a Participant under Section
6(e) hereof, to receive Stock, cash or a combination thereof at the end of a
specified deferral period.
(m) "Director" means a member of the Board.
(n) "Disability" means a permanent and total disability (within the meaning
of Section 22(e) of the Code), as determined by a medical doctor satisfactory to
the Committee.
(o) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan, which shall be
the date the Company consummates a registered initial public offering of its
Stock.
(q) "Eligible Person" means each executive officer of the Company (as
defined under the Exchange Act) and other officers, Directors and employees of
the Company or of any subsidiary, and independent contractors with the Company
or any subsidiary. The foregoing notwithstanding, no Non-Employee Director shall
be an Eligible Person for purposes of receiving any Awards under this Plan other
than Formula Grants of Options granted under Section 6(b)(iv) of the Plan and
Formula Grants of Restricted Stock granted under Section 6(d)(v) of the Plan,
and no independent contractor shall be an Eligible Person for purposes of
receiving any Awards other than Options under Section 6(b) of the Plan. An
employee on leave of absence may be considered as still in the employ of the
Company or a subsidiary for purposes of eligibility for participation in the
Plan.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and rules
thereto.
(s) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(t) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or under procedures established by
the Committee. Unless otherwise determined by the Committee, the Fair Market
Value of Stock on any business day shall be (i) if the Stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of the Stock on such exchange or
reporting system, as reported in any newspaper of general circulation, (ii) if
the Stock is quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Stock on such system, or (iii)
if neither clause (i) or (ii) is applicable, the mean between the high bid and
low quotations for the Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and asked
questions for the Stock on at least 5 of the 10 preceding days.
(u) "Formula Grants" means the Formula Grant Options and Formula Grant
Restricted Stock granted to Non-Employee Directors pursuant to Sections 6(b)(iv)
and 6(d)(v) of the Plan.
(v) "Incentive Stock Option" or "ISO" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
(w) "Incumbent Board" means the Board as defined in Section 9(b) of the
Plan.
(x) "Limited SAR" means a right granted to a Participant under Section 6(c)
hereof.
(y) "Non-Employee Director" shall mean a member of the Board who is not an
employee of the Company or any subsidiary.
(z) "Option" means a right granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.
(aa) "Other Stock-Based Awards" means Awards granted to a Participant under
Section 6(h) hereof.
A-2
<PAGE> 20
(bb) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an Eligible
Person.
(cc) "Performance Award" means a right, granted to a Eligible Person under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.
(dd) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a "group" as defined in Section 13(d) thereof.
(ee) (intentionally omitted)
(ff) "Restricted Stock" means Stock granted to a Participant under Section
6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(gg) "Retire" or "Retirement" means termination of service as a Director
after having attained at least age 62 and having served as a Director for at
least 5 years, other than by reason of death, Disability or the Director's
willful misconduct or negligence.
(hh) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-l(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(ii) "Stock" means the Company's Common Stock, and such other securities as
may be substituted (or resubstituted) for Stock pursuant to Section 10(c)
hereof.
(jj) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type, number and
other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant)
and rules and regulations for the administration of the Plan, construe and
interpret the Plan and Award agreements and correct defects, supply omissions or
reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan.
(b) Manner of Exercise of Committee Authority. The Committee shall
exercise sole and exclusive discretion on any matter relating to a Participant
then subject to Section 16 of the Exchange Act with respect to the Company to
the extent necessary in order that transactions by such Participant shall be
exempt under Rule 16b-3 under the Exchange Act. Any action of the Committee
shall be final, conclusive and binding on all persons, including the Company,
its subsidiaries, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant, and
stockholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee shall determine, (i) to perform
administrative functions, (ii) with respect to Participants not subject to
Section 16 of the Exchange Act, to perform such other functions as the Committee
may determine, and (iii) with respect to Participants subject to Section 16, to
perform such other functions of the Committee as the Committee may determine to
the extent performance of such functions will not result in the loss of an
exemption under Rule 16b-3 otherwise available for transactions by such persons,
in each case to the extent permitted under applicable law and subject to the
requirements set forth in Section 8(d). The Committee may appoint agents to
assist it in administering the Plan.
(c) Limitation of Liability. The Committee and each member thereof shall
be entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any executive officer, other
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officer or employee of the Company or a subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and any officer or employee of the Company or a
subsidiary acting at the direction or on behalf of the Committee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares Subject to Awards. Subject to adjustment as
provided in Section 10(c) hereof, the total number of shares of Stock that may
be subject to the granting of Awards under the Plan at any point in time during
the term of the Plan shall be 475,000.
(b) Application of Limitations. The limitation contained in Section 4(a)
shall apply not only to Awards that are settleable by the delivery of shares of
stock but also to Awards relating to shares of Stock but settleable only in cash
(such as cash-only SARs). The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number of
shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under
the Plan only to Eligible Persons. In each fiscal year during any part of which
the Plan is in effect, an Eligible Person may not be granted Awards relating to
more than 250,000 shares of Stock, subject to adjustment as provided in Section
10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h), 8(b) and
8(c). In addition, the maximum amount that may be earned as a final Annual
Incentive Award or other cash Award in any fiscal year by any one Participant
shall be $1,000,000, and the maximum amount that may be earned as a final
Performance Award or other cash Award in respect of a performance period by any
one Participant shall be $5,000,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 10(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of employment by the Participant and terms
permitting a Participant to make Sections relating to his or her Award. The
Committee shall retain full power and discretion to accelerate, waive or modify,
at any time, any term or condition of an Award that is not mandatory under the
Plan. Except in cases in which the Committee is authorized to require other
forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Florida law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee, provided that such
exercise price shall not be less than the Fair Market Value of a share of
Stock on the date of grant of such Option except as provided under Section
7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at
which Options shall cease to be or become exercisable following termination
of employment or upon other conditions, the methods by which such exercise
price may be paid or deemed to be paid, the form of such payment,
including, without limitation, cash, Stock, other Awards or awards granted
under other plans of the Company or any subsidiary, or other property
(including notes or other contractual obligations of
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Participants to make payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Section 422 of the Code. Anything in
the Plan to the contrary notwithstanding, no term of the Plan relating to
ISOs (including any SAR in tandem therewith) shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify either the Plan or any ISO under Section 422
of the Code, unless the Participant has first requested the change that
will result in such disqualification.
(iv) Formula Grants of Options to Non-Employee Directors. Subject to
adjustment as provided in the first sentence of Section 10(c) hereof, each
Non-Employee Director shall receive (A) on the date of his or her
appointment as a Director of the Company, an Option to purchase 3,500
shares of Stock, and (B) each year, on the day the Company issues its
earnings release for the prior fiscal year, an Option to purchase 3,500
shares of Stock. Options granted to Non-Employee Directors pursuant to this
Section shall be for a term of 7 years and shall become exercisable at the
rate of 33 1/3% per year commencing on the first anniversary of the date on
which the Option is granted; provided, however, that the Options shall be
fully exercisable in the event that, while serving as a Director, the
Non-Employee Director dies, suffers a Disability, or Retires. The per share
exercise price of all Options granted to Non-Employee Directors pursuant to
this paragraph (iv) shall be equal to the Fair Market Value of a share of
Stock on the date such Option is granted. Unless otherwise extended in the
sole discretion of the Committee, the unexercised portion of any Option
granted pursuant to this paragraph (iv) shall become null and void (V)
three months after the date on which such Non-Employee Director ceases to
be a Director of the Company for any reason other than the Non-Employee
Director's willful misconduct or negligence, Disability, death or
Retirement, (W) immediately in the event of the Non-Employee Director's
willful misconduct or negligence, (X) one year after the Non-Employee
Director ceases to be a Director by reason of his Disability, (Y) at the
expiration of its original term, if the Non-Employee Director ceases to be
a Director by reason of his Retirement, and (Z) twelve months after the
date of the Non-Employee Director's death in the event that such death
occurs prior to the time the Option otherwise would become null and void
pursuant to this sentence.
(c) Stock Appreciation Rights. The Committee is authorized to grant
SAR's to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess
of (A) the Fair Market Value of one share of stock on the date of
exercise (or, in the case of a "Limited SAR", the Fair Market Value
determined by reference to the Change in Control Price, as defined under
Section 9(c) hereof), over (B) the grant price of the SAR as determined
by the Committee. The grant price of an SAR shall not be less than the
Fair Market Value of a share of Stock on the date of grant except as
provided under Section 7(a) hereof.
(ii) Other Terms. The Committee shall determine at the date of
grant or thereafter, the time or times at which and the circumstances
under which a SAR may be exercised in whole or in part (including based
on achievement of performance goals and/or future service requirements),
the time or times at which SARs shall cease to be or become exercisable
following termination of employment or upon other conditions, the method
of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or
deemed to be delivered to Participants, whether or not a SAR shall be in
tandem or in combination with any other Award, and any other terms and
conditions of any SAR. Limited SARs that may only be exercised in
connection with a Change in Control or other event as specified by the
Committee may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee may determine. SARs and Limited SARs may
be either freestanding or in tandem with other Awards.
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(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which restrictions
may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise,
as the Committee may determine at the date of grant or thereafter. In no
event shall the restricted period be less than three years unless the
Restricted Stock is subject to performance conditions in accordance with
Section 8 of this Plan, in which case the restricted period shall not be
less than one year. Except to the extent restricted under the terms of
the Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the
right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the
restricted period applicable to the Restricted Stock, subject to Section
10(b) below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee
at the time of the Award, upon termination of a Participant's employment
during the applicable restriction period, the Participant's Restricted
Stock that is at that time subject to restrictions shall be forfeited
and reacquired by the Company; provided that the Committee may provide,
by rule or regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Stock are registered in the name
of the Participant, the Committee may require that such certificates
bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the Company
retain physical possession of the certificates, and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to the
Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award
of Restricted Stock, the Committee may require that any cash dividends
paid on a share of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock or applied to the purchase of
additional Awards under the Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be subject
to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has
been distributed.
(v) Formula Grants of Restricted Stock to Non-Employee
Directors. (intentionally omitted)
(e) Deferred Stock. The Committee is authorized to grant Deferred
Stock to Participants, which are rights to receive Stock, cash, or a
combination thereof at the end of a specified deferral period, subject to
the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred
Stock shall occur upon expiration of the deferral period specified for
such Deferred Stock by the Committee (or, if permitted by the Committee,
as elected by the Participant). In addition, Deferred Stock shall be
subject to such restrictions (which may include a risk of forfeiture) as
the Committee may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times
(including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. In no event shall an Award of
Deferred Stock payable in Stock have a deferral period of less than
three years unless the Award is subject to performance conditions in
accordance with Section 8 of the Plan, in which case the deferral period
shall be for not less than one year. Deferred Stock may be satisfied by
delivery of Stock, cash equal to the Fair Market Value of the specified
number of shares
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of Stock covered by the Deferred Stock, or a combination thereof, as
determined by the Committee at the date of grant or thereafter. Prior to
satisfaction of an Award of Deferred Stock, an Award of Deferred Stock
carries no voting or dividend or other rights associated with share
ownership.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of a Participant's employment during the applicable
deferral period thereof to which forfeiture conditions apply (as
provided in the Award agreement evidencing the Deferred Stock), the
Participant's Deferred Stock that is at that time subject to deferral
(other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to Deferred
Stock shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases
waive in whole or in part the forfeiture of Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the specified number
of shares of Stock covered by an Award of Deferred Stock shall be either
(A) paid with respect to such Deferred Stock at the dividend payment
date in cash or in shares of unrestricted Stock having a Fair Market
Value equal to the amount of such dividends, or (B) deferred with
respect to such Deferred Stock and the amount or value thereof
automatically deemed reinvested in additional Deferred Stock, other
Awards or other investment vehicles, as the Committee shall determine or
permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company obligations to pay cash or deliver other property under the Plan or
under other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified subsidiaries
or business units. The Committee shall determine the terms and conditions of
such Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(h) shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any subsidiary, or
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any business entity to be acquired by the Company or a subsidiary, or any other
right of a Participant to receive payment from the Company or any subsidiary.
Such additional, tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for another Award or
award, the Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be granted
in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any subsidiary, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered (for example, Options granted with an
exercise price "discounted" by the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided that in no event shall the term of any
Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Section 422 of the Code).
(c) Form and Timing of Pavement Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events (in addition to
a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan) or permitted at the election of
the Participant on terms and conditions established by the Committee. Payments
may include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 or Rule 16a-l(c)(3) to the extent necessary to ensure that neither the
grant of any Awards to nor other transaction by a Participant who is subject to
Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-l(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-l(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable under any Award subject to
performance conditions, except as limited under Sections 8(b) and 8(c) hereof in
the case of a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered Employees. If and to
the extent that the Committee determines that a Performance Award to be granted
to an Eligible Person who is designated by the Committee as likely to be a
Covered Employee should qualify as "performance-based compensation" for purposes
of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be
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contingent upon achievement of preestablished performance goals and other terms
set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder including
the requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to the
total stockholder return and earnings per share criteria), shall be used
exclusively by the Committee in establishing performance goals for such
Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable basis) of a
publicly available index such as, but not limited to, the Standard & Poor's
500 Stock Index or the S&P Specialty Retailer Index; (3) net income; (4)
pretax earnings; (5) earnings before interest expense, taxes, depreciation
and amortization; (6) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special items; (7)
operating margin; (8) earnings per share; (9) growth in earnings per share;
(10) return on equity; (11) return on capital; (12) return on investment;
(13) operating earnings; (14) working capital or inventory; and (15) ratio
of debt to stockholders' equity. One or more of the foregoing business
criteria shall also be exclusively used in establishing performance goals
for Annual Incentive Awards granted to a Covered Employee under Section
8(c) hereof.
(iii) Performance Period; Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of up to ten years, as
specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable
to such Performance Awards, or at such other date as may be required or
permitted for "performance-based compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business
criteria set forth in Section 8(b)(ii) hereof during the given performance
period, as specified by the Committee in accordance with Section 8(b)(iii)
hereof. The Committee may specify the amount of the Performance Award pool
as a percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Stock, other Awards or other property,
in the discretion of the Committee. The Committee may, in its discretion,
reduce the amount of a settlement otherwise to be made in connection with
such Performance Awards. The Committee shall specify the circumstances in
which such Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a
performance period or settlement of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees. If
and to the extent that the Committee determines that an Annual Incentive Award
to be granted to an Eligible Person who is designated by the Committee as likely
to be a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Annual Incentive Award
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shall be contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Annual Incentive
Awards. The amount of such Annual Incentive Award pool shall be based upon
the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any such business criteria,
a percentage thereof in excess of a threshold amount, or as another amount
which need not bear a strictly mathematical relationship to such business
criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the
90th day of each fiscal year, or at such other date as may be required or
permitted in the case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and
the amounts potentially payable thereunder, for that fiscal year, either
out of an Annual Incentive Award pool established by such date under
Section 8(c)(i) hereof or as individual Annual Incentive Awards. In the
case of individual Annual Incentive Awards intended to qualify under Code
Section 162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof in the given
performance year, as specified by the Committee; in other cases, such
amount shall be based on such criteria as shall be established by the
Committee. In all cases, the maximum Annual Incentive Award of any
Participant shall be subject to the limitation set forth in Section 5
hereof.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal
year, the Committee shall determine the amount, if any, of (A) the Annual
Incentive Award pool, and the maximum amount of potential Annual Incentive
Award payable to each Participant in the Annual Incentive Award pool, or
(B) the amount of potential Annual Incentive Award otherwise payable to
each Participant. The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Annual Incentive Award shall
be reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever. The Committee
shall specify the circumstances in which an Annual Incentive Award shall be
paid or forfeited in the event of termination of employment by the
Participant prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the achievement of performance
goals relating to Performance Awards under Section 8(b), and the amount of any
Annual Incentive Award pool or potential individual Annual Incentive Awards and
the amount of final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section
162(m). It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c), (d) and (e), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee, at the time of grant of Performance
Awards or an Annual Incentive Award, as
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likely to be a Covered Employee with respect to that fiscal year. If any
provision of the Plan or any agreement relating to such Performance Awards or
Annual Incentive Awards does not comply or is inconsistent with the requirements
of Code Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.
9. Change in Control
(a) Effect of "Change in Control." In the event of a "Change in Control,"
as defined in Section 9(b), the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of the
time of the Change in Control and shall remain exercisable and vested for
the balance of the stated term of such Award without regard to any
termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 10(a) hereof;
(ii) Any optionee who holds an Option shall be entitled to elect,
during the 60-day period immediately following a Change in Control, in lieu
of acquiring the shares of Stock covered by such Option, to receive, and
the Company shall be obligated to pay, in cash the excess of the Change in
Control Price over the exercise price of such Option, multiplied by the
number of shares of Stock covered by such Option; provided, however, that
no optionee who is subject to Section 16 with respect to the Company at the
time of the Change in Control shall be entitled to make such an election if
the acquisition of the right to make such election would represent a
non-exempt purchase under Section 16(b) by such optionee;
(iii) Limited SARs (and other SARs if so provided by their terms)
shall become exercisable for amounts, in cash, determined by reference to
the Change in Control Price.
(iv) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse
and such Awards shall be deemed fully vested as of the time of the Change
in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 10(a) hereof; and
(v) With respect to any such outstanding Award subject to achievement
of performance goals and conditions under the Plan, such performance goals
and other conditions will be deemed to be met if and to the extent so
provided by the Committee in the Award agreement relating to such Award.
(b) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred upon:
(i) An acquisition by any Person of Beneficial Ownership of the shares
of Common Stock of the Company then outstanding (the "Company Common Stock
Outstanding") or the voting securities of the Company then outstanding
entitled to vote generally in the election of directors (the "Company
Voting Securities Outstanding") if such acquisition of Beneficial Ownership
results in the Person's Beneficially Owning 25% or more of the Company
Common Stock outstanding or 25% or more of the combined voting power of the
Company Voting Securities Outstanding; or
(ii) The approval by the stockholders of the Company of a
reorganization, merger, consolidation, complete liquidation or dissolution
of the Company, sale or disposition of all or substantially all of the
assets of the Company, or similar corporate transaction (in each case
referred to in this Section 9(b) as a "Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly);
provided, however, that any merger, consolidation, sale, disposition or
other similar transaction to or with one or more Participants or entities
controlled by one or more Participants shall not constitute a Corporate
Transaction in respect of such Participant(s); or
(iii) A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however,
for purposes of this Section 9(b), that any individual who becomes a member
of the Board subsequent to the Effective Date
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whose election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; and, provided,
further, that any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest subject to
Rule 14a-11 of Regulation 14A under the Exchange Act, including any
successor to such Rule, or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board shall
in no event be considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii) of
this Section 9(b), the following shall not constitute a Change in Control for
purposes of the Plan: (1) any acquisition by or consummation of a Corporate
Transaction with any entity that was a subsidiary of the Company immediately
prior to the transaction or an employee benefit plan (or related trust)
sponsored or maintained by the Company or an entity that was a subsidiary of the
Company immediately prior to the transaction if, immediately after such
transaction (including consummation of all related transactions, the surviving
entity is controlled by no Person other than such subsidiary, employee benefit
plan (or related trust) and/or other Persons who controlled the Company
immediately prior to such transaction; or (2) any acquisition or consummation of
a Corporate Transaction following which more than 50% of, respectively, the
shares then outstanding of common stock of the corporation resulting from such
acquisition or Corporate Transaction and the combined voting power of the voting
securities then outstanding of such corporation entitled to vote generally in
the election of directors is then Beneficially Owned, directly or indirectly, by
all or substantially all of the individuals and entities who were Beneficial
Owners, respectively, of the Company Common Stock Outstanding and Company Voting
Securities Outstanding immediately prior to such acquisition or Corporate
Transaction in substantially the same proportions as their ownership,
immediately prior to such acquisition or Corporate Transaction, of the Company
Common Stock Outstanding and Company Voting Securities Outstanding, as the case
may be.
(c) Definition of "Change in Control Price." The "Change in Control Price"
means an amount in cash equal to the higher of (i) the amount of cash and fair
market value of property that is the highest price per share paid (including
extraordinary dividends) in any Corporate Transaction triggering the Change in
Control under Section 9(b)(ii) hereof or any liquidation of shares following a
sale of substantially all assets of the Company, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding and 60-day period
following the Change in Control.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the
extent deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Stock or payment of other benefits under any Award until completion
of such registration or qualification of such Stock or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to any stock exchange or automated quotation system upon
which the Stock or other Company securities are listed or quoted, or compliance
with any other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such representations,
furnish such information and comply with or be subject to such other conditions
as it may consider appropriate in connection with the issuance or delivery of
Stock or payment of other benefits in compliance with applicable laws, rules,
and regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take
or cause to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any postponement of
the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to the
extent that such postponement or other condition would represent a greater
burden on a Participant than existed on the 90th day preceding the Change in
Control.
(b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan, including any Award or right which
constitutes a derivative security as generally defined in Rule 16a-l(c) under
the Exchange Act, shall be pledged, hypothecated or otherwise encumbered or
subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a subsidiary), or
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<PAGE> 30
assigned or transferred by such Participant otherwise than by will or the laws
of descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or her guardian or
legal representative, except that Awards and other rights (other than ISOs and
SARs in tandem therewith) may be transferred to one or more Beneficiaries or
other transferees during the lifetime of the Participant, and may be exercised
by such transferees in accordance with the terms of such Award, but only if and
to the extent such transfers and exercises are permitted by the Committee
pursuant to the express terms of an Award agreement (subject to any terms and
conditions which the Committee may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance goals, and
Annual Incentive Awards and any Annual Incentive Award pool or performance goals
relating thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the Company,
any subsidiary or any business unit, or the financial statements of the Company
or any subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Stock, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority to withhold or
receive Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant's tax obligations, either on a mandatory or
elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company's stockholders not later than the annual meeting next following such
Board action if such
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<PAGE> 31
amendment represents a material change to the Plan or such stockholder approval
is required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award. Notwithstanding anything
in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
shall be available, including the substitution of Stock having a Fair Market
Value equal to the cash otherwise payable hereunder for the right which caused
the transaction to be ineligible for pooling of interest accounting.
Notwithstanding anything hereto to the contrary, the provisions of Section
6(b)(iv) and Section 6(d)(v) of this Plan which govern formula grants of Options
and Restricted Stock to Non-Employee Directors, shall not be amended more than
once every six months other than to comport with changes to the Code or the
rules promulgated thereunder or the Employee Retirement Income Security Act of
1974, as amended, or the rules promulgated thereunder, or with rules promulgated
by the Securities and Exchange Commission, unless such limit on amendments is
not required under Rule 16b-3 or other applicable law.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ of the Company or a subsidiary; (ii) interfering in any way with the
right of the Company or a subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company's obligations under the Plan. Such
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify and in accordance with
applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
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<PAGE> 32
(j) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Florida without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Awards Under Preexisting Plans. Upon approval of the Plan by
stockholders of the Company, as required under Section 10(1) hereof, no further
Awards shall be granted under any Preexisting Plan.
(l) Plan Effective Date and Stockholder Approval; Termination of Plan. The
Plan shall become effective on the Effective Date, subject to subsequent
approval by stockholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Section 162(m)
and 422, Rule 16b-3 under the Exchange Act, applicable NASDAQ requirements, and
other laws, regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to stockholder approval, but may not be exercised
or otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.
(m) Agreement with Underwriter. The Company will agree with the
Underwriter of the Company's initial public offering that for a 13-month period
immediately following the effective date of this Plan, the Company will not,
without the consent of the Underwriter, adopt or propose to adopt any plan or
arrangement permitting the grant, issue or sale of any shares of its Common
Stock or issue, sell or offer for sale any of its Common Stock, or grant any
option for its Common Stock which shall: (x) have an exercise price per share of
Common Stock less than (a) the initial public offering price of the Common Stock
offered in this Prospectus or (b) the fair market value of the Common Stock on
the date of grant; or (y) be granted to any direct or indirect beneficial holder
of more than 10% of the issued and outstanding Common Stock of the Company. No
option or other right to acquire Common Stock granted, issued or sold during the
13-month period immediately following the effective date of this Plan shall
permit (a) the payment with any form of consideration other than cash, (b)
payment of less than the full purchase or exercise price for such shares of
Common Stock or other securities of the Company on or before the date of
issuance, or (c) the existence of stock appreciation rights, phantom options or
similar arrangements.
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<PAGE> 33
MANSUR INDUSTRIES INC.
8305 N.W. 27TH STREET, SUITE 107
MIAMI, FLORIDA 33122
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned holder of capital stock of Mansur Industries Inc., a Florida
corporation (the "Company"), hereby appoints Paul I. Mansur and Richard P.
Smith, and each of them, as proxies for the undersigned, each with full power of
substitution, for and in the name of the undersigned to act for the undersigned
and to vote, as designated below, all of the shares of common stock, par value
$.001 per share (the "Common Stock"), and Series B Convertible Preferred Stock,
$1.00 par value, of the Company that the undersigned is entitled to vote at the
1999 Annual Meeting of Shareholders of the Company, to be held on Friday, July
23, 1999, at 10:00 a.m., local time, at the Doral Resort, 4400 N.W. 87th Avenue,
Miami, Florida 33178, and at any adjournment(s) or postponement(s) thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN PROPOSAL (1) BELOW AND "FOR" PROPOSAL (2) BELOW.
PROPOSAL 1. ELECTION OF PIERRE G. MANSUR, PAUL L. MANSUR, JOSEPH E. JACK, DR.
JAN HEDBERG AND RONALD J. KORN AS DIRECTORS OF THE COMPANY.
[ ] VOTE FOR all nominees listed above, except vote withheld from the
following nominee(s) (if any).
-----------------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
PROPOSAL 2. APPROVAL AND RATIFICATION OF THE AMENDMENT OF THE COMPANY'S 1996
EXECUTIVE INCENTIVE COMPENSATION PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK RESERVED FOR ISSUANCE PURSUANT TO GRANTS OF
AWARDS UNDER SUCH PLAN FROM 375,000 SHARES TO 475,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the 1999 Annual Meeting
of Shareholders, and any adjournments or postponements thereof.
Continued and to be signed on other side
Continued from other side
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS.
The undersigned hereby acknowledges receipt of (i) the Notice of 1999 Annual
Meeting of Shareholders and (ii) the Proxy Statement.
Dated:
-----------------------------------, 1999
-----------------------------------
(Signature)
-----------------------------------
(Signature if held jointly)
IMPORTANT: Please sign exactly as
your name appears hereon and mail
it promptly even though you may
plan to attend the meeting. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
