As filed with the Securities and Exchange Commission on October 24, 1996
File No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
STOCKER & YALE, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2114473
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
32 Hampshire Road
Salem, New Hampshire 03079
(Address of Principal Executive Offices)
THE STOCKER & YALE, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
(Full title of the plan)
-------------------------
MARK W. BLODGETT
Chief Executive Officer
Stocker & Yale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
(Name and address of agent for service)
(603) 893-8778
(Telephone number, including area code,
of agent for service)
-------------------------
copy to:
STUART M. CABLE, ESQ.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
(617) 570-1000
-------------------------
<TABLE>
<CAPTION>
===========================================================================================
CALCULATION OF REGISTRATION FEE
===========================================================================================
Title of securities Amount to be Proposed maximum Proposed maximum Amount of to
be registered registered (1) offering price aggregate offering registration fee
per share price
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 53,000 $5.88(2) $311,640.00 $94.44
$0.001 par value 8,000 $5.88(2) $47,040.00 $14.25
89,000 $6.25(3) $556,250.00 $168.56
- --------------------------------------------------------------------------------------------
Total 150,000 --- $914,930.00 $278.00
=============================================================================================
</TABLE>
(1) Plus such additional number of shares as may be required pursuant to the
option plan in the event of a stock dividend, reverse stock split,
split-up, recapitalization or other similar event.
(2) This estimate is made pursuant to Rule 457(h)(1) under the Securities Act
of 1993, as amended (the "Securities Act"), solely for the purpose of
determining the amount of the registration fee and is based upon the price
at which outstanding stock options may be exercised.
(3) This estimate is made pursuant to Rule 457(c) and (h) under the Securities
Act solely for the purpose of determining the amount of the registration
fee and is based upon the market value of outstanding shares of the
Company's common stock on October 24, 1996, utilizing the average of the
high and low sale prices reported on The Nasdaq SmallCap Market on that
date.
===============================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
Stocker & Yale, Inc. (the "Company") hereby incorporates by reference the
documents listed in (a) through (c) below, which have previously been filed with
the Securities and Exchange Commission.
(a) The Company's 1995 Annual Report, which has previously been filed
with the Securities and Exchange Commission;
(b) All reports filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since December
31, 1995; and
(c) The description of the Company's common stock, $.001 par value,
contained in the Company's registration statement on Form 10-SB/A
dated December 29, 1995, filed with the Securities and Exchange
Commission pursuant to Section 12 of the Exchange Act and any
amendments or reports filed for the purpose of updating such
description.
In addition, all documents subsequently filed with the Securities and
Exchange Commission by the Company pursuant to Sections 13(a) and 13(c), Section
14 and Section 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereunder
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this registration statement and to
be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares to be offered hereby will be passed upon for the
Company by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 67 of Chapter 156B of the Massachusetts General Laws provides a
statutory framework covering indemnification of directors, officers and
employees against liabilities and expenses arising out of legal proceedings
brought against them by reason of their status or service as directors or
officers. In addition, Article V of the Company's Amended and Restated By-Laws
provides for indemnification of directors, officers and employees of the
Company. Section 67 and the Company's Amended and Restated By-Laws generally
provide that a director, officer or employee of the Company shall be indemnified
by the Company for all expenses and liabilities of legal proceedings brought
against him/her by reason of his/her status or service as a director, officer or
employee unless the director, officer or employee is adjudged not to have acted
in good faith in the reasonable belief that his/her action was in the best
interest of the Company or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such plan. The Company's Amended and Restated
Articles of Organization also incorporate certain provisions permitted under the
Massachusetts General Laws relating to the liability of directors. The
provisions eliminate a director's liability for monetary damages for a breach of
fiduciary duty, including gross negligence, except in circumstances involving
certain wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or authorization of distributions in violation of the
Company's Amended and Restated Articles of Organization or of loans to officers
or directors of the Company or any transaction from which the director derived
improper personal benefit. These provisions do not eliminate a director's duty
of care. Moreover, the provisions do not apply to claims against a director for
violations of certain laws, including federal securities laws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
(a) The following is a complete list of exhibits filed or incorporated by
reference as part of this registration statement.
Exhibit
*4.1 Amended and Restated Articles of Incorporation.
+4.2 Amended and Restated By-laws.
5 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being registered.
23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5 hereto).
23.2 Consent of Arthur Andersen LLP, Independent Certified Public Accountants.
24 Powers of Attorney (included in Part II of this registration statement).
99 The Stocker & Yale, Inc. 1996 Stock Option and Incentive Plan.
- --------------------
* Incorporated by reference to the Company's registration statement on Form
SB-2, as amended, under the Securities Act of 1933, as amended.
+ Incorporated by reference to the Company's registration statement on Form
10-SB, as amended, under the Exchange Act .
2
<PAGE>
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
undersigned registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
undersigned registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause
3
<PAGE>
to be delivered, to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salem, State of New Hampshire, on October 24, 1996.
STOCKER & YALE, INC.
By: /s/ Mark W. Blodgett
---------------------------------
Mark W. Blodgett,
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Mark W. Blodgett and Alex W. Blodgett,
and each of them singly, as his or her true and lawful attorney-in-fact and
agent, with full power of substitution, for him or her and in his or her name,
place and stead, in any and all capacities to sign any or all amendments or
post-effective amendments to this registration statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or his or her
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title
/s/ Mark W. Blodgett Chairman of the Board of October 24, 1996
- -------------------------- Directors and Chief Executive
Mark W. Blodgett Officer (Principal Executive
Officer)
/s/ James Bickman President and Director October 24, 1996
- ---------------------------
James Bickman
/s/ Alex W. Blodgett President of Stilson Division October 24, 1996
- --------------------------- and Director
Alex W. Blodgett
/s/ Clifford L. Abbey Director October 24, 1996
- ---------------------------
Clifford L. Abbey
5
<PAGE>
/s/ Robert G. Atkinson Director October 24, 1996
- ---------------------------
Robert G. Atkinson
/s/ Hubert R. Marleau Director October 24, 1996
- ----------------------------
Hubert R. Marleau
/s/ John M. Nelson Director October 24, 1996
- ----------------------------
John M. Nelson
/s/ Susan Sundell Senior Vice President of October 24, 1996
- ---------------------------- Finance and Treasurer
Susan Hojer Sundell (Principal Financial and
Accounting Director)
6
283586.c1
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
* 4.1 Amended and Restated Articles of Incorporation -
+ 4.2 Amended and Restated By-laws -
5 Opinion of Goodwin, Procter & Hoar LLP as to
the legality of the securities being registered
23.1 Consent of Goodwin, Procter & Hoar LLP -
(included in Exhibit 5 hereto)
23.2 Consent of Arthur Andersen LLP, Independent Certified
Public Accountants
24 Powers of Attorney (included in Part II of this -
registration statement)
99 The Stocker & Yale, Inc. 1996 Stock Option and
Incentive Plan
- ---------------------
* Incorporated by reference to the Company's registration statement on Form
SB-2, as amended, under the Securities Act of 1933, as amended.
+ Incorporated by reference to the Company's registration statement on Form
10-SB, as amended, under the Securities Exchange Act of 1934, as amended.
7
283586.c1
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
October 24, 1996
Stocker & Yale, Inc.
32 Hampshire Road
Salem, New Hampshire 03079
Re: Stocker & Yale, Inc. 1996 Stock Option and Incentive Plan
Ladies and Gentlemen:
This opinion is furnished in connection with the registration pursuant to
the Securities Act of 1933, as amended (the "Act"), of 150,000 shares (the
"Shares") of common stock, par value $.001 per share (the "Common Stock"), of
Stocker & Yale, Inc. (the "Company") which may be issued pursuant to awards
granted under the Company's 1996 Stock Option and Incentive Plan (the "Plan").
We have acted as counsel to the Company in connection with the registration
of the Shares under the Act. We have examined the Amended and Restated Articles
of Incorporation and the Amended and Restated By-laws of the Company; such
records of the corporate proceedings of the Company as we deemed necessary; a
registration statement on Form S-8 under the Act relating to the Shares (the
"Registration Statement"); and such other certificates, receipts, records and
documents as we considered necessary for the purposes of this opinion.
We are attorneys admitted to practice in the Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America and the Commonwealth of Massachusetts.
Based upon the foregoing, we are of the opinion that upon the issuance and
delivery of, and payment for, the Shares in accordance with the terms of the
Registration Statement, the Plan and the option agreements entered into pursuant
to the Plan, the Shares will be legally issued, fully paid and non-assessable
shares of the Company's Common Stock.
The foregoing opinion assumes that all requisite steps will be taken to
comply with the requirements of the Act and applicable requirements of state
laws regulating the offer and sale of securities. The foregoing opinion further
assumes that the purchase price paid for the Shares is in excess of the par
value thereof.
<PAGE>
GOODWIN, PROCTER & HOAR LLP
Stocker & Yale
October 24, 1996
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
289938.c1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Form S-8.
/s/ Arthur Andersen LLP
Boston, Massachusetts
October 17, 1996
STOCKER & YALE, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Stocker & Yale, Inc. 1996 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Directors and other key persons of Stocker & Yale, Inc.
(the "Company") and its Subsidiaries upon whose judgment, initiative and efforts
the Company largely depends for the successful conduct of its business to
acquire a proprietary interest in the Company. It is anticipated that providing
such persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Cause" as such term relates to the termination of any person means the
occurrence of one or more of the following: (i) such person is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, (ii) such person engages in a fraudulent act to
the material damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any Subsidiary, all as determined by the Board in good faith in its
sole discretion, (iii) any material act or omission by such person involving
malfeasance or negligence in the performance of such person's duties to the
Company or any Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
which has not been corrected by such person within 30 days after written notice
from the Company of any such act or omission, (iv) failure by such person to
comply in any material respect with the terms of his employment agreement, if
any, or any written policies or directives of the Board as
<PAGE>
determined by the Board in good faith in its sole discretion, which has not been
corrected by such person within 30 days after written notice from the Company of
such failure, or (v) material breach by such person of his noncompetition
agreement with the Company, if any, as determined by the Board in good faith in
its sole discretion.
"Change of Control" is defined in Section 14.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Committee of the Board referred to in Section 2.
"Disability" means an individual's inability to perform his normal required
services for the Company and its Subsidiaries for a period of six consecutive
months by reason of the individual's mental or physical disability, as
determined by the Committee in good faith in its sole discretion.
"Disinterested Person" means an Independent Director who qualifies as such
under Rule 16b-3(c)(2)(i) promulgated under the Act, or any successor definition
under said Rule.
"Dividend Equivalent Right" means Awards granted pursuant to Section 9.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.
"Fair Market Value" on any given date means the value determined by the
Committee in accordance with Section 3(e).
"Incentive Stock Option" means any Stock Option designated and qualified as
an Aincentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 8.
2
<PAGE>
"Restricted Stock Award" means Awards granted pursuant to Section 6.
"Retirement" means the employee's termination of employment with the
Company and its Subsidiaries after attainment of age 65 or attainment of age 58
and completion of 10 years of service.
"Stock" means the Common Stock, par value $.001 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 7.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
AND DETERMINE AWARDS AND FAIR MARKET VALUE
(a) Committee. The Plan shall be administered by all of the Independent
Director members of the Compensation Committee of the Board, or any other
committee of not less than two Independent Directors performing similar
functions as appointed by the Board from time to time. Each member of the
Committee shall be a Disinterested Person.
(b) Powers of Committee. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, employees and key persons of the Company
and its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards,
Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent
Rights, or any combination of the foregoing, granted to any one or more
participants;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
3
<PAGE>
(v) to accelerate at any time the exercisability or vesting of all or
any portion of any Award;
(vi) to determine the Fair Market Value of Stock for all purposes of
the Plan in accordance with Section 3(e);
(vii) subject to the provisions of Section 5(a)(iii), to extend at any
time the period in which Stock Options may be exercised;
(viii) to determine at any time whether, to what extent, and under
what circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and
(ix) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Options. The Committee may, in its
sole discretion, delegate to the Chairman of the Board of the Company power and
authority, under Section 2(b) (including paragraphs (i) through (iv) thereof)
and Section 5, to grant Options to employees of the Company effective on the
first day of the employee's employment with the Company; provided, however, that
no such grant shall be made to an employee who is subject to the reporting
requirements of Section 16 of the Act; and provided further that the power and
authority delegated hereunder shall not include any power and authority
conferred by paragraphs (v) through (viii) of Section 2(b) or by Section 13 or
any power and authority under Section 5 to alter the rights of the employee or
otherwise exercise discretion with respect to the Option after the grant date.
The power and authority delegated hereunder shall be subject to such additional
limitations as the Committee may specify.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 150,000 shares. For purposes of
this limitation, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan.
4
<PAGE>
Subject to such overall limitation, shares of Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided, however, that
Stock Options with respect to no more than 40,000 shares of Stock may be granted
to any one individual participant during any calendar year period. The shares
available for issuance under the Plan may be authorized but unissued shares of
Stock or shares of Stock reacquired by the Company.
(b) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options that can be granted to any one individual participant, (iii)
the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, and (iv) the price for each share subject to
any then outstanding Stock Options under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options) as to which such Stock Options remain exercisable. The adjustment
by the Committee shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the Plan resulting from any such adjustment, but the
Committee in its discretion may make a cash payment in lieu of fractional
shares.
(c) Mergers. Upon consummation of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options: (i) provide that such Stock Options
shall be assumed or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof), (ii) upon written notice to
the optionees, provide that all unexercised Stock Options will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of a business combination under the terms of which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the business combination, make or provide for a
cash payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of all such outstanding Stock Options in exchange for the
termination of such Stock Options.
5
<PAGE>
(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
(e) Fair Market Value. Fair market value shall be based on the last
reported sale price at which Stock is traded on such date or, if no Stock is
traded on such date, the next preceding date on which the Stock was traded. The
price at which Stock is traded shall be determined based on the NASDAQ SmallCap
system (or the NASDAQ National Market System, if applicable), or in the event
that the Stock is not traded on either the NASDAQ SmallCap System or the NASDAQ
National Market system, the price at which Stock is traded shall be determined
on the Vancouver Stock Exchange (provided that the price shall be expressed in
the currency of the United States).
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, and other
employees and key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the Committee,
in its sole discretion, or by the Chairman of the Board of the Company pursuant
to authority delegated under Section 2(c). Independent Directors are also
eligible to participate in the Plan but only to the extent provided in Section
5(c) and Section 7 below.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after March 18,
2006.
(a) Stock Options Granted to Employees and Key Persons. The Committee in
its discretion may grant Stock Options to eligible employees and key persons of
the Company or any Subsidiary. Stock Options granted to employees pursuant to
this Section 5(a) shall be
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subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock covered
by a Stock Option granted pursuant to this Section 5(a) shall be determined
by the Committee at the time of grant but shall not be less than 100% of
the Fair Market Value on the date of grant in the case of Incentive Stock
Options, or 85% of the Fair Market Value on the date of grant, in the case
of Non-Qualified Stock Options. Notwithstanding the foregoing, with respect
to Non-Qualified Stock Options which are granted in lieu of cash bonus, the
exercise price per share shall not be less than 50% of the Fair Market
Value on the date of grant. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option shall be not less than 110% of the Fair Market Value on the
grant date.
(ii) Grant of Discount Options in Lieu of Cash Bonus. Upon the request
of an eligible employee and with the consent of the Committee, such
employee may elect each calendar year to receive a Non-Qualified Stock
Option in lieu of any cash bonus to which he may become entitled during the
following calendar year pursuant to any other plan of the Company, but only
if such employee makes an irrevocable election to waive receipt of all or a
portion of such cash bonus. Such election shall be made on or before the
date set by the Committee which date shall be no later than 15 days (or
such shorter period permitted by the Committee) preceding January 1 of the
calendar year for which the cash bonus would otherwise be paid. A
Non-Qualified Stock Option shall be granted to each employee who made such
an irrevocable election on the date the waived cash bonus would otherwise
be paid; provided, however, that with respect to an employee who is subject
to Section 16 of the Act, if such grant date is not at least six months and
one day from the date of the election, the grant shall be delayed until the
date which is six months and one day from the date of the election (or the
next following business day, if such date is not a business day). The
exercise price per share shall be determined by the Committee but shall not
be less than 50% of the Fair Market Value of the Stock on the date the
Stock Option is granted. The number of shares of Stock subject to the Stock
Option shall be determined by dividing the amount of the waived cash bonus
by the difference between the Fair Market Value of the Stock on the date
the Stock Option is granted and the exercise price per Stock Option. The
Stock Option shall be granted for whole number of shares so determined; the
value of any fractional share shall be paid in cash. An employee may revoke
his election under this Section 5(a)(ii) on a prospective basis at any
time; provided, however, that with respect to an employee who is subject to
Section 16 of the Act, such revocation shall only be effective six months
and one day following the date of such revocation.
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(iii) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the term of such option shall be no
more than five years from the date of grant.
(iv) Exercisability; Rights of a Stockholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the grant
date; provided, however, that Stock Options granted in lieu of cash bonus
shall be exercisable in full as of the grant date. The Committee may at any
time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(v) Method of Exercise. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made
by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the
optionee for at least six months, if permitted by the Committee in its
discretion. Such surrendered shares shall be valued at Fair Market
Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of laws.
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(vi) Termination by Reason of Death. Any Stock Option held by an optionee
whose employment by (or other business relationship with) the Company and its
Subsidiaries is terminated by reason of death shall become fully exercisable and
may thereafter be exercised by the legal representative or legatee of the
optionee, for a period of 12 months (or such longer period as the Committee
shall specify at any time) from the date of death, or until the expiration of
the stated term of the Option, if earlier.
(vii) Termination by Reason of Disability.
(A) Any Stock Option held by an optionee whose employment by (or other
business relationship with) the Company and its Subsidiaries is terminated
by reason of Disability shall become fully exercisable and may thereafter
be exercised, for a period of 12 months (or such longer period as the
Committee shall specify at any time) from the date of such termination of
employment (or business relationship), or until the expiration of the
stated term of the Option, if earlier.
(B) The Committee shall have sole authority and discretion to
determine whether a participant's employment (or business relationship) has
been terminated by reason of Disability.
(C) Except as otherwise provided by the Committee at any time, the
death of an optionee during the period provided in this Section 5(a)(vii)
for the exercise of a Stock Option shall extend such period for 12 months
from the date of death, subject to termination on the expiration of the
stated term of the Option, if earlier.
(viii) Termination by Reason of Retirement.
(A) Any Stock Option held by an optionee whose employment by (or
business relationship with) the Company and its Subsidiaries is terminated
by reason of Retirement may thereafter be exercised, to the extent it was
exercisable at the time of such termination, for a period of 12 months (or
such other period as the Committee shall specify at any time) from the date
of such termination of employment (or business relationship), or until the
expiration of the stated term of the Option, if earlier.
(B) Except as otherwise provided by the Committee at any time, the
death of an optionee during a period provided in this Section 5(a)(viii)
for the exercise of a Stock Option shall extend such period for 12 months
from the date of death, subject to termination on the expiration of the
stated term of the Option, if earlier.
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(ix) Termination for Cause. If any optionee's employment by (or
business relationship with) the Company and its Subsidiaries is terminated
for Cause, any Stock Option held by such optionee, including any Stock
Option that is immediately exercisable at the time of such termination,
shall immediately terminate and be of no further force and effect;
provided, however, that the Committee may, in its sole discretion, provide
that such Stock Option can be exercised for a period of up to 30 days from
the date of termination of employment (or business relationship) or until
the expiration of the stated term of the Option, if earlier.
(x) Other Termination. Unless otherwise determined by the Committee,
if an optionee's employment by (or business relationship with) the Company
and its Subsidiaries terminates for any reason other than death,
Disability, Retirement, or for Cause, any Stock Option held by such
optionee may thereafter be exercised, to the extent it was exercisable on
the date of termination of employment (or business relationship), for three
months (or such longer period as the Committee shall specify at any time)
from the date of termination of employment (or business relationship) or
until the expiration of the stated term of the Option, if earlier.
(xi) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.
(b) Reload Options. At the discretion of the Committee, Options granted
under Section 5(a) may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(v)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.
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(c) Stock Options Granted to Independent Directors.
(i) Automatic Grant of Options.
(A) Each Independent Director who is first elected to serve as a
Director on or after the effective date of the Plan shall be granted,
on the fifth business day after his election, a Non-Qualified Stock
Option to acquire 4,000 shares of Stock.
(B) Each Independent Director who is serving as Director of the
Company on the fifth business day after each annual meeting of
shareholders, beginning with the later of (i) the 1996 annual meeting
or (ii) the annual meeting following the grant of a Stock Option to
the Independent Director pursuant to (A) above, shall automatically be
granted on such day a Non-Qualified Stock Option to acquire 2,000
shares of Stock.
(C) The exercise price per share for the Stock covered by a Stock
Option granted under this Section 5(c) shall be equal to the Fair
Market Value of the Stock on the date the Stock Option is granted.
(ii) Exercise; Termination.
(A) Except as provided in Section 14, an Option granted under
Section 5(c) shall be exercisable after the second anniversary of the
grant date; provided, however, that any Option so granted shall become
exercisable upon the termination of service of the Independent
Director because of Disability or death. An Option issued under this
Section 5(c) shall not be exercisable after the expiration of ten
years from the date of grant.
(B) If an Independent Director ceases to be a Director for any
reason other than Cause or death, an Option granted under this Section
5(c) may thereafter be exercised, to the extent it was exercisable on
the date such optionee ceases to be a Director, for a person of six
months from such date or until the expiration of the stated term of
the Option, if earlier. If the optionee ceases to be a Director for
Cause, all rights in an Option granted under this Section 5(c) shall
terminate immediately on the date he ceases to be a Director.
(C) Notwithstanding paragraph (B) above, any Option granted to an
Independent Director and outstanding on the date of his death may be
exercised by the legal representative or legatee of the optionee for a
period of twelve months from the date of death or until the expiration
of the stated term of the option, if earlier.
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(D) Options granted under this Section 5(c) may be exercised only
by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to be
purchased may be made by one or more of the methods specified in
Section 5(a)(v). An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not
as to unexercised Stock Options.
(iii) Limited to Independent Directors. The provisions of this Section 5(c)
shall apply only to Options granted or to be granted to Independent Directors,
and shall not be deemed to modify, limit or otherwise apply to any other
provision of this Plan or to any Option issued under this Plan to a participant
who is not an Independent Director of the Company. To the extent inconsistent
with the provisions of any other Section of this Plan, the provisions of this
Section 5(c) shall govern the rights and obligations of the Company and
Independent Directors respecting Options granted or to be granted to Independent
Directors. The provisions of this Section 5(c) which affect the price, date of
exercisability, option period or amount of shares of Stock under an Option shall
not be amended more than once in any six-month period, other than to comport
with changes in the Code or ERISA.
(d) Non-transferability of Options. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may
provide in an option agreement that the optionee may transfer, without
consideration for the transfer, his Stock Options to members of his immediate
family, to trusts for the benefit of such family members and to partnerships in
which such family members are the only partners.
(e) Form of Settlement. Shares of Stock issued upon exercise of a Stock
Option shall be free of all restrictions under the Plan, except as otherwise
provided in the Plan.
SECTION 6. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. The Committee may grant Restricted
Stock Awards to any employee or key person of the Company or any Subsidiary. A
Restricted Stock Award is an Award entitling the recipient to acquire, at no
cost or for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) Rights as a Stockholder. Upon execution of a written instrument setting
forth the Restricted Stock Award and paying any applicable purchase price, a
participant shall have
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the rights of a stockholder with respect to the voting of the Restricted Stock,
subject to such conditions contained in the written instrument evidencing the
Restricted Stock Award. Unless the Committee shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 6(e)
below.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award. In
the case of Restrict Stock granted to an employee, if the participant's
employment with the Company and its Subsidiaries terminates for any reason other
than death or Disability, the Company shall have the right, at the discretion of
the Committee, to repurchase Restricted Stock with respect to which conditions
have not lapsed at their purchase price, or to require forfeiture of such shares
to the Company if acquired at no cost, from the participant or the participant's
legal representative. The Company must exercise such right of repurchase or
forfeiture not later than the 90th day following such termination of employment
(unless otherwise specified in the written instrument evidencing the Restricted
Stock Award). Restricted Stock granted to a key person who is not an employee
shall be subject to such forfeiture and repurchase provisions as the Committee
shall specify.
(d) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." A participant whose employment is terminated for
reason of death or Disability shall become fully vested on his termination date
in any Restricted Stock he received as an employee to the extent such vesting is
otherwise contingent only on continued service with the Company. Where vesting
is contingent on attainment of pre-established performance goals, the vesting of
Restricted Stock in the case of death or Disability shall remain dependent on
the attainment of such goals and shall be determined as of such date or dates
specified by the Committee.
(e) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.
SECTION 7. UNRESTRICTED STOCK AWARDS
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee) an
Unrestricted Stock Award to any employee or key person of the Company or any
Subsidiary, pursuant to which such employee or key person may receive shares of
Stock free of any restrictions ("Unrestricted
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Stock") under the Plan. Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past services or other valid
consideration, or in lieu of any cash compensation due to such employee or key
person.
(b) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon
the request of an employee or a key person and with the consent of the
Committee, each employee or key person may, pursuant to an irrevocable written
election delivered to the Company no later than the date or dates specified by
the Committee, receive a portion of the cash compensation otherwise due to such
employee or key person in the form of shares of Unrestricted Stock (valued at
Fair Market Value on the date or dates the cash compensation would otherwise be
paid). With respect to any employee who is subject to Section 16 of the Act,
such irrevocable election shall become effective no earlier than six months and
one day following the date of such election and the revocation of such election
shall be effective six months and one day following the date of the revocation.
(c) Elections to Receive Unrestricted Stock in Lieu of Director Fees. Each
Independent Director may, pursuant to an irrevocable written election delivered
to the Company, receive all or a portion of such Independent Director's director
fees in shares of Unrestricted Stock (valued at Fair Market Value on the date or
dates that the director fees would otherwise be paid in cash). Such election
shall be effective no earlier than six months and one day following the date of
such election. Any revocation of such election shall be effective six months and
one day following the date of the revocation.
(d) Deferral of Awards. Each Independent Director who has made an election
to receive shares of Unrestricted Stock under Section 8(c) above will have the
right to defer receipt of up to 100% of such shares of Unrestricted Stock
payable to such Independent Director in accordance with such rules and
procedures as may from time to time be established by the Company for that
purpose, and such election shall be effective on the later of the date six
months and one day from the date of such election or the beginning of the next
calendar year. The deferred Unrestricted Stock shall be entitled to receive
Dividend Equivalent Rights settled in shares of Stock.
(e) Restrictions on Transfers. The right to receive Unrestricted Stock on a
deferred basis may not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution.
SECTION 8. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees or
key persons of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the
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Company. The Committee in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals applicable
under each such Award, the periods during which performance is to be measured,
and all other limitations and conditions applicable to the awarded Performance
Shares; provided, however, that the Committee may rely on the performance goals
and other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of employment (or other business relationship), a
participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment by (or business
relationship with) the Company and its Subsidiaries for any reason.
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 12, amend any or all of the goals, restrictions or conditions
imposed under any Performance Share Award.
SECTION 9. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or key person,
as a component of another Award or as a freestanding award. A Dividend
Equivalent Right may also be granted to an Independent Director pursuant to
Section 7(e). The terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights
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may be settled in cash or shares of Stock or a combination thereof, in a
single installment or installments. A Dividend Equivalent Right granted as
a component of another Award may provide that such Dividend Equivalent
Right shall be settled upon exercise, settlement, or payment of, or lapse
of restrictions on, such other award, and that such Dividend Equivalent
Right shall expire or be forfeited or annulled under the same conditions as
such other award. A Dividend Equivalent Right granted as a component of
another Award may also contain terms and conditions different from such
other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
SECTION 10. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) Payment in Stock. A participant may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the participant with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due. With respect to any participant who is subject to
Section 16 of the Act, the following additional restrictions shall apply:
(A) the election to satisfy tax withholding obligations relating to an
Award in the manner permitted by this Section 10(b) shall be made either
(1) during the period beginning on the third business day following the
date of release of quarterly or annual summary statements of sales and
earnings of the Company and ending on the twelfth business day following
such date, or (2) at least six months prior to the date as of which the
receipt of such an Award first becomes a taxable event for Federal income
tax purposes;
(B) such election shall be irrevocable;
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(C) such election shall be subject to the consent or disapproval
of the Committee; and
(D) the Stock withheld to satisfy tax withholding must pertain to
an Award which has been held by the participant for at least six
months from the date of grant of the Award.
Notwithstanding the foregoing, the provision of Section 10(b)(A)(1) shall not be
applicable until the Company has been subject to the reporting requirements of
Section 13(a) of the Act for at least a year prior to the election and has filed
all reports and statements required to be filed pursuant to that Section for
that year.
SECTION 11. TRANSFER, LEAVE OF ABSENCE, ETC
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 12. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Committee
may, at any time, amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan), but
such price, if any, must satisfy the requirements which would apply to the
substitute or amended Award if it were then initially granted under this Plan)
for the purpose of satisfying changes in law or for any other lawful purpose,
but no such action shall adversely affect rights under any outstanding Award
without the holder's consent. If and to the extent determined by the Committee
to be required by the Act to ensure that Awards granted under the Plan are
exempt under Rule 16b-3 promulgated under the Act, or that Incentive Stock
Options granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the Company stockholders.
SECTION 13. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee
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shall otherwise expressly determine in connection with any Award or Awards. In
its sole discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Awards hereunder, provided that the existence of such trusts or
other arrangements is consistent with the foregoing sentence.
SECTION 14. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 14:
(a) Each outstanding Stock Option shall automatically become fully
exercisable notwithstanding any provision to the contrary herein.
(b) Each Restricted Stock Award and Performance Share Award shall be
subject to such terms, if any, with respect to a Change of Control as have been
provided by the Committee in connection with such Award.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are defined in Rule
12b-2 under the Act) of such person, shall become the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25% or more of either
(A) the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of Directors
("Voting Securities") or (B) the then outstanding shares of Stock of the
Company (in either such case other than as a result of an acquisition of
securities directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority
of the Board, provided that any person becoming a director of the Company
subsequent to the Effective Date whose election or nomination for election
was approved by a vote of at least a majority of the Incumbent Directors
shall, for purposes of this Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
shareholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under
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the Act), directly or indirectly, shares representing in the aggregate 80%
or more of the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one transaction
or a series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the Company or
(C) any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding, increases (x) the
proportionate number of shares of Stock beneficially owned by any person to 25%
or more of the shares of Stock then outstanding or (y) the proportionate voting
power represented by the Voting Securities beneficially owned by any person to
25% or more of the combined voting power of all then outstanding Voting
Securities; provided, however, that if any person referred to in clause (x) or
(y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 15. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
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SECTION 16. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority
of the shares of Stock of the Company present or represented and entitled to
vote at a meeting of stockholders. Subject to such approval by the stockholders
and to the requirement that no Stock may be issued hereunder prior to such
approval, Stock Options and other Awards may be granted hereunder on and after
adoption of this Plan by the Board.
SECTION 17. GOVERNING LAW
This Plan shall be governed by the laws of the Commonwealth of
Massachusetts except to the extent such law is preempted by federal law.
SECTION 18. VANCOUVER STOCK EXCHANGE
It is the intention of the Company that the Plan, and the awards granted
hereunder, meet the rules of the Vancouver Stock Exchange, to the extent that
the grant of any option or award, or the issuance of Stock upon the exercise of
any such option or award, is subject to such rules. The Committee shall have the
power to include in any awards granted such additional provisions, limitations
or restrictions as may be required by the applicable rules of the Vancouver
Stock Exchange, provided however that the Committee may not expand the class of
individuals eligible to participate in the Plan, increase the number of shares
reserved for issuance under the Plan, extend the maximum term of options beyond
ten years or permit issuance of Incentive Options at below the price specified
in 5(a). The exercise price of shares in respect of any award granted hereunder
shall not be less than the exercise required under such rules of the Vancouver
Stock Exchange as may be applicable at the time of such grant.
DATE APPROVED BY BOARD OF DIRECTORS: March 19, 1996
DATE APPROVED BY SHAREHOLDERS: May 7, 1996
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