UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-5571
------------------------
TANDY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1047710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 415-3700
------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
The number of shares outstanding of the issuer's Common Stock, $1 par value, on
July 31, 1999 was 193,242,903.
Index to Exhibits is on Sequential Page No. 19. Total pages 128.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
(In millions, except per share amounts) 1999 1998 1999 1998
- --------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales and operating revenues $ 886.7 $1,192.8 $1,776.9 $2,451.1
Cost of products sold 418.7 727.1 858.2 1,511.1
-------- -------- -------- --------
Gross profit 468.0 465.7 918.7 940.0
-------- -------- -------- --------
Expenses (income):
Selling, general and administrative 340.7 388.4 680.1 768.0
Depreciation and amortization 21.3 26.5 42.3 52.3
Interest income (4.6) (1.5) (9.1) (3.2)
Interest expense 9.6 11.8 17.9 22.1
Provision for loss on sale of Computer City -- 73.2 -- 73.2
Restricted stock awards -- -- (5.1) --
-------- -------- -------- --------
367.0 498.4 726.1 912.4
-------- -------- -------- --------
Income (loss) before income taxes 101.0 (32.7) 192.6 27.6
Provision (benefit) for income taxes 39.4 (12.6) 75.1 10.6
-------- -------- -------- --------
Net income (loss) 61.6 (20.1) 117.5 17.0
Preferred dividends 1.4 1.4 2.8 2.9
-------- -------- -------- --------
Net income (loss) available to common shareholders $ 60.2 $ (21.5) $ 114.7 $ 14.1
======== ======== ======== ========
Net income (loss) available per common share:
Basic $ 0.31 $ (0.11) $ 0.59 $ 0.07
======== ======== ======== ========
Diluted $ 0.30 $ (0.11) $ 0.56 $ 0.07
======== ======== ======== ========
Shares used in computing earnings (loss) per
common share:
Basic 194.0 202.0 194.3 202.8
======== ======== ======== ========
Diluted 204.7 202.0 204.5 206.4
======== ======== ======== ========
Dividends declared per common share $ 0.05 $ 0.05 $ 0.10 $ 0.10
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
June 30, December 31, June 30,
1999 1998 1998
(In millions, except for share amounts) (Unaudited) (Unaudited)
- -------------------------------------- --------- ----------- ---------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 43.7 $ 64.5 $ 61.9
Accounts and notes receivable, less allowance for
doubtful accounts 204.6 215.2 231.6
Inventories, at lower of cost or market 855.9 912.1 1,187.3
Other current assets 96.4 106.8 132.7
-------- -------- --------
Total current assets 1,200.6 1,298.6 1,613.5
Property, plant and equipment, at cost, less accumulated
depreciation 433.3 433.8 526.0
Other assets, net of accumulated amortization 292.7 261.2 81.8
-------- -------- --------
$1,926.6 $1,993.6 $2,221.3
======== ======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt, including current maturities of
long-term debt $ 238.6 $ 233.2 $ 313.2
Accounts payable 161.3 206.4 309.9
Accrued expenses 236.4 334.4 301.5
Income taxes payable 104.8 105.5 10.7
-------- -------- --------
Total current liabilities 741.1 879.5 935.3
-------- -------- --------
Long-term debt, excluding current maturities 260.4 235.1 270.3
Other non-current liabilities 36.8 27.5 50.9
-------- -------- --------
Total other liabilities 297.2 262.6 321.2
-------- -------- --------
Common stock put options 27.4 3.3 --
Stockholders' Equity
Preferred stock, no par value, 1,000,000 shares
authorized
Series A junior participating; 100,000
shares authorized and none issued -- -- --
Series B convertible (TESOP), 100,000 shares
authorized and issued; 75,000, 77,000 and 78,000
shares outstanding, respectively 74.8 100.0 100.0
Common stock, $1 par value, 250,000,000 shares
authorized; 235,840,000, 139,184,000 and
138,332,000 shares issued, respectively 235.8 139.2 138.3
Additional paid-in capital 6.4 109.7 32.4
Retained earnings 1,202.1 1,693.4 1,670.9
Common stock in treasury, at cost; 42,310,000,
41,747,000 and 37,806,000 shares, respectively (638.2) (1,161.6) (942.6)
Unearned deferred compensation (25.6) (31.5) (32.3)
Accumulated other comprehensive gain (loss) 5.6 (1.0) (1.9)
-------- -------- --------
Total stockholders' equity 860.9 848.2 964.8
-------- -------- --------
Commitments and contingent liabilities
$1,926.6 $1,993.6 $2,221.3
======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
TANDY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
Six Months Ended
June 30,
-----------------------
(In millions) 1999 1998
------------ -------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 117.5 $ 17.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 42.3 52.3
Adjustment to 1998 restricted stock awards (5.1) --
Provision for loss on sale of Computer City -- 73.2
Other items 14.5 15.0
Changes in operating assets and liabilities:
Receivables 10.1 23.2
Inventories 56.2 16.8
Other current assets 9.4 14.3
Accounts payable, accrued expenses (including
restructuring charges) and income taxes (124.9) (112.8)
-------- --------
Net cash provided by operating activities 120.0 99.0
-------- --------
Investing activities:
Additions to property, plant and equipment (44.4) (68.2)
Proceeds from sale of property, plant and equipment 2.6 4.9
Investment in NorthPoint Communications, Inc. (20.0) --
Other investing activities (5.0) (3.8)
-------- --------
Net cash used by investing activities (66.8) (67.1)
-------- --------
Financing activities:
Purchases of treasury stock (130.2) (135.5)
Proceeds from sale of common stock put options 2.4 --
Sale of treasury stock to employee stock plans 21.8 20.7
Proceeds from exercise of stock options 23.3 13.9
Dividends paid (21.3) (22.6)
Changes in short-term borrowings, net 21.6 30.6
Additions to long-term borrowings 31.9 44.7
Repayments of long-term borrowings (23.5) (27.7)
-------- --------
Net cash used by financing activities (74.0) (75.9)
-------- --------
Decrease in cash and cash equivalents (20.8) (44.0)
Cash and cash equivalents, beginning of period 64.5 105.9
-------- --------
Cash and cash equivalents, end of period $ 43.7 $ 61.9
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1999. For further information, refer to the
consolidated financial statements and management's discussion and analysis of
results of operations and financial condition included in Tandy Corporation's
1998 Annual Report on Form 10-K for the year ended December 31, 1998.
NOTE 2 - STOCK SPLIT
On May 20, 1999, Tandy's Board of Directors declared a two-for-one split of
Tandy common stock for stockholders of record at the close of business on June
1, 1999, payable on June 21, 1999. This resulted in the issuance of 96.6 million
shares of common stock along with a corresponding decrease of $96.6 million in
additional paid-in capital. Treasury shares were not split. However, an
adjustment was made to the stockholders' equity section of the balance sheet to
split the cost of treasury stock (in effect a cancellation of treasury shares)
by reducing paid-in-capital and retained earnings. All references to the number
of shares of common stock issued or outstanding, per share prices, and income
(loss) per common share amounts in the consolidated financial statements, the
accompanying notes and management's discussion and analysis have been adjusted
to reflect the split on a retroactive basis. Previously awarded stock options,
restricted stock awards, and all other agreements payable in Tandy's common
stock have been adjusted or amended to reflect the split. Additionally, cash
dividends which were $0.10 per share per quarter prior to the two-for-one split
have been adjusted to $0.05 per share per quarter to reflect the two-for-one
split.
NOTE 3 - EARNINGS PER SHARE
Effective December 31, 1997, Tandy adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share" ("FAS 128"). FAS 128
established new standards for computing and presenting earnings per share
("EPS"). The statement requires dual presentation of basic and diluted EPS on
the face of the income statement for entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes the effect of potentially dilutive securities while diluted
EPS reflects the potential dilution that would have occurred if securities or
other contracts to issue common stock were exercised, converted, or resulted in
the issuance of common stock that would have then shared in the earnings of the
entity. The following schedule is a reconciliation of the numerators and
denominators used in computing the basic and diluted earnings per share
calculations for the three and six months ended June 30, 1999 and 1998,
respectively.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
-------------------------------------- ----------------------------------------
(Dollars and shares in millions, Income (Loss) Shares Per Share Income (Loss) Shares Per Share
except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------------------ ------------ ------------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ 61.6 $ (20.1)
Less: Preferred stock dividends (1.4) (1.4)
-------- --------
Basic EPS
Net income (loss) available to
common shareholders 60.2 194.0 $ 0.31 (21.5) 202.0 $ (0.11)
======== ========
Effect of dilutive securities:
Plus dividends on Series B
preferred stock 1.4 (1)
Additional contribution required
for TESOP if preferred stock had
been converted (1.0) 6.5 (1) (1)
Stock options 4.2 (1)
-------- -------- -------- --------
Diluted EPS
Net income (loss) available to
common shareholders plus assumed
conversions $ 60.6 204.7 $ 0.30 $ (21.5) 202.0 $ (0.11)
======== ======== ======== ======== ======== ========
(1) Not included in the calculation of diluted EPS because inclusion would be antidilutive.
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
-------------------------------------- ----------------------------------------
(Dollars and shares in millions, Income (Loss) Shares Per Share Income (Loss) Shares Per Share
except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------------------ ------------ ------------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 117.5 $ 17.0
Less: Preferred stock dividends (2.8) (2.9)
-------- --------
Basic EPS
Net income available to common
Shareholders 114.7 194.3 $ 0.59 14.1 202.8 $ 0.07
======== ========
Effect of dilutive securities:
Plus dividends on Series B
preferred stock 2.8 (1)
Additional contribution required
for TESOP if preferred stock had
been converted (2.1) 6.6 (1) (1)
Stock options 3.6 3.6
-------- -------- -------- --------
Diluted EPS
Net income available to common
shareholders plus assumed
conversions $ 115.4 204.5 $ 0.56 $ 14.1 206.4 $ 0.07
======== ======== ======== ======== ======== ========
(1) Not included in the calculation of diluted EPS because inclusion would be antidilutive.
</TABLE>
<PAGE>
NOTE 4 - SALE OF COMPUTER CITY, INC.
On August 31, 1998, Tandy completed the sale of 100% of the outstanding common
stock of its Computer City, Inc. subsidiary to CompUSA Inc. Tandy received
approximately $36.5 million in cash and an unsecured subordinated note for
$136.0 million as consideration for the sale. Tandy recognized a loss of $73.2
million in the second quarter of 1998, a loss of $30.0 million in the third
quarter of 1998 and a loss of $5.0 million in the fourth quarter of 1998 from
the sale of Computer City, which included certain liabilities and contractual
obligations incurred by Tandy. Computer City's results from operations through
June 30, 1998 are included in the accompanying Consolidated Financial
Statements.
Below is a summary of net sales and operating revenues and net losses, both in
total and per share, for Computer City for the three and six months ended June
30, 1999 and 1998, respectively.
Three Months Ended Six Months Ended
June 30, June 30,
(In millions, except -------------------- ---------------------
per share amounts) 1999 1998 1999 1998
----------------- -------- -------- --------- --------
Net sales and operating
revenues $ -- $ 431.3 $ -- $ 911.0
Net loss -- (22.4) -- (28.5)
Loss per share $ -- $ (0.11) $ -- $ (0.13)
NOTE 5 - RESTRICTED STOCK AWARDS
On February 1, 1998, Tandy granted, under the 1997 Incentive Stock Plan,
approximately 649,500 restricted stock awards consisting of 500 shares each to
1,299 RadioShack store managers not included in the February 1, 1997 restricted
stock grant to over 5,000 store managers. This restricted stock grant of
February 1998 will vest at the end of five years on February 2, 2003, if
managers receiving the grants are employed by Tandy at a store manager or higher
position at that time. However, the grants provide that the restricted shares
could vest early if Tandy common stock closes at $29 1/16 or more for any 20
consecutive trading days after February 1, 2000. Compensation expense, equal to
the fair market value of the shares, will be recognized over the remaining
vesting period when it becomes probable that the performance criteria will be
met or upon actual vesting. At June 30, 1999, there were 379,500 restricted
stock awards outstanding and eligible for ultimate vesting under this restricted
stock award.
NOTE 6 - COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) for the three months ended June 30, 1999 and 1998
was $68.3 million and $(20.3) million, respectively, and comprehensive income
for the six months ended June 30, 1999 and 1998 was $124.1 million and $16.9
million, respectively.
NOTE 7 - REVOLVING CREDIT FACILITY
In the second quarter of 1999, Tandy extended the maturity date of its $200.0
million 364-day revolving credit facility to June 2000. Tandy also has a $300.0
million five-year revolving credit facility maturing June 2003. The revolving
credit facilities are used as backup for the commercial paper program and may
also be utilized for general corporate purposes.
<PAGE>
NOTE 8 - SEGMENT DISCLOSURES
The table below summarizes net sales and operating revenues, operating profit
(loss) and assets for Tandy's reportable segments. Consolidated operating profit
(loss) is reconciled to Tandy's income before income taxes.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
(In millions) 1999 1998 1999 1998
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales and operating revenues:
RadioShack (1) $ 886.6 $ 761.4 $1,776.8 $1,539.9
Computer City (2) -- 431.3 -- 911.0
Closed units 0.1 0.1 0.1 0.2
-------- -------- -------- --------
$ 886.7 $1,192.8 $1,776.9 $2,451.1
======== ======== ======== ========
Operating profit (loss):
RadioShack $ 117.2 $ 93.9 $ 223.6 $ 178.6
Computer City (2) -- (36.5) -- (46.3)
Closed units -- (0.3) -- (0.3)
Corporate administration and other (11.2) (6.3) (22.2) (12.3)
Provision for loss on sale of Computer City -- (73.2) -- (73.2)
-------- -------- -------- --------
106.0 (22.4) 201.4 46.5
Interest income (3) 4.6 1.5 9.1 3.2
Interest expense (3) (9.6) (11.8) (17.9) (22.1)
-------- -------- -------- --------
Income (loss) before income taxes $ 101.0 $ (32.7) $ 192.6 $ 27.6
======== ======== ======== ========
At June 30,
--------------------
Assets: 1999 1998
-------- --------
RadioShack $1,371.3 $1,351.1
Computer City (2) -- 480.1
Corporate administration and other 555.3 390.1
-------- --------
$1,926.6 $2,221.3
======== ========
(1)Includes outside sales of $15.2 million and $24.0 million for the three
months ended June 30, 1999 and 1998, respectively, and $31.1 million and
$40.0 million for the six months ended June 30, 1999 and 1998, respectively,
related to retail support operations.
(2) Computer City was sold to CompUSA on August 31, 1998.
(3) Tandy does not allocate interest income or expense to its operating
segments.
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION ("MD&A")
Factors That May Affect Future Results
With the exception of historical information, the matters discussed in MD&A
contain forward-looking statements that involve various risks and uncertainties
and are indicated by words such as "anticipates," "expects," "believes,"
"plans," "could," and similar words and phrases. Factors that could cause Tandy
Corporation's actual results to differ materially from management's projections,
forecasts, estimates and expectations include, but are not limited to, the
following:
o changes in the amount and degree of promotional intensity exerted by current
competitors and potential new competition from both retail stores and
alternative methods or channels of distribution, such as e-commerce and
telephone shopping services and mail order;
o changes in general U.S. or regional U.S. economic conditions including, but
not limited to, consumer credit availability, interest rates, inflation,
personal discretionary spending levels and consumer sentiment about the
economy in general;
o the presence or absence of new services or products and product features in
the merchandise categories Tandy sells and changes in Tandy's actual
merchandise sales mix;
o the inability to negotiate profitable contracts or execute business plans
with providers of such services as cellular, PCS, direct-to-home satellite,
Internet service providers and home connectivity;
o the inability to collect the level of anticipated residuals and commissions
for products and services sold by RadioShack;
o lack of availability or access to sources of supply inventory (as a large
importer of consumer electronic products from Asia, unfavorable trade
imbalances could negatively affect Tandy);
o the inability to retain and grow an effective management team in a dynamic
environment or changes in the cost or availability of a suitable work force
to manage and support RadioShack's service-driven operating strategies;
o the potential negative impact of year 2000 issues; or
o the imposition of new restrictions or regulations regarding the sale of
products and/or services Tandy sells or changes in tax rules and regulations
applicable to Tandy.
Additionally, as a result of the Telecommunications Act of 1996, the deregulated
telecommunications market will continue to present both opportunities and
increased competition for the provision of telecommunication equipment and
services to consumers.
Segment Reporting Disclosures
All references to RadioShack and Computer City in MD&A refer to Tandy's
reportable segments, unless otherwise noted. The RadioShack segment includes the
RadioShack retail division and its related retail support operations. The
Computer City segment includes Computer City, Inc., which was sold to CompUSA
Inc. on August 31, 1998. The closed units segment includes all Tandy stores and
non-retail units which were part of the store closure plan announced in December
1996. The corporate administration and other segment includes corporate units
which serve all areas of Tandy and, also, income or expenses which were not
allocated to the RadioShack and Computer City segments. See "Note 8 Segment
Disclosures" for additional information on operating profit (loss) and assets
for each reportable segment.
Net Sales and Operating Revenues
Net sales and operating revenues for the periods ended June 30 were:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- % Increase -------------------- % Increase
(In millions) 1999 1998 (Decrease) 1999 1998 (Decrease)
- ------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
RadioShack $ 886.6 $ 761.4 16.4% $1,776.8 $1,539.9 15.4%
Computer City -- 431.3 (100.0) -- 911.0 (100.0)
-------- -------- -------- --------
Retail segments 886.6 1,192.7 (25.7) 1,776.8 2,450.9 (27.5)
Closed units 0.1 0.1 0.0 0.1 0.2 (50.0)
-------- -------- -------- --------
$ 886.7 $1,192.8 (25.7)% $1,776.9 $2,451.1 (27.5)%
======== ======== ======== ========
</TABLE>
Consolidated net sales and operating revenues decreased 25.7% and 27.5% for the
three and six month periods ended June 30, 1999, respectively, compared to the
same periods in 1998. The decrease is due to the sale of Computer City to
CompUSA on August 31, 1998. Consolidated comparable store sales for the three
and six month periods ended June 30, 1999 are not meaningful due to this sale.
RadioShack's overall sales increased 16.4% and 15.4% for the three and six
months ended June 30, 1999, respectively, compared to the corresponding prior
year three and six month periods. RadioShack comparable store sales increased
16.3% and 14.4% for the three and six months ended June 30, 1999, respectively,
compared to the same periods in the prior year. These sales increases were
driven primarily by strong sales of communications products, prepaid wireless
airtime, "direct-to-home" satellite systems and services and personal computers.
Sales of communications products increased approximately 21% and 22% during the
three and six months ended June 30, 1999, respectively, compared to the same
periods ended June 30, 1998, due to strong sales of PCS and cellular telephones.
Sales of personal computers increased approximately 40% during the second
quarter of 1999 compared to the second quarter of 1998, despite a 13% reduction
in the average selling price in the second quarter of 1999 compared to the
second quarter of 1998. Personal computer sales increased approximately 24% for
the six months ended June 30, 1999.
The audio and video category experienced a sales increase of approximately 19%
and 14% in the second quarter and first six months of 1999, respectively, when
compared to the same period in 1998, due primarily to an increase in sales of
direct-to-home satellite systems and services. On May 12, 1999, Tandy entered
into a multi-year retail sales and service agreement with Thomson Consumer
Electronics, Inc. ("Thomson"). Under this agreement, Thomson will supply
RadioShack with various RCA branded audio and video components such as
televisions, VCRs, camcorders, digital video disc (DVD) players, CD shelf
systems and other digital entertainment products, beginning in 2000. A few items
will be available in stores beginning in 1999. RCA products will be sold through
RCA Digital Entertainment Centers at RadioShack via a "store-within-a-store"
concept similar to the Sprint Store at RadioShack. Management believes this
agreement will allow RadioShack to be more competitive in the evolution of
digital technology, which will enhance sales in the audio and video category.
RETAIL OUTLETS
June 30, March 31, December 31, June 30,
1999 1999 1998 1998
-------- -------- -------- --------
RadioShack
Company-owned 5,020 5,037 5,039 4,992
Dealer/Franchise 2,007 1,989 1,991 1,963
-------- -------- -------- --------
7,027 7,026 7,030 6,955
Computer City --(1) --(1) --(1) 101
-------- -------- -------- --------
Total number of retail outlets 7,027 7,026 7,030 7,056
======== ======== ======== ========
(1) Computer City was sold on August 31, 1998.
Gross Profit
Tandy's gross profit as a percent of net sales and operating revenues was 52.8%
and 51.7% for the three and six months ended June 30, 1999, compared to 39.0%
and 38.4% for the corresponding 1998 periods. These increases in gross profit
were primarily the result of RadioShack sales accounting for all of Tandy's
consolidated net sales and operating revenues during the first and second
quarters of 1999, due to the sale of Computer City in 1998. Computer City had an
inherently lower gross margin than RadioShack.
RadioShack's gross profit increased 13.5% and 12.0% in dollars for the three and
six month periods ended June 30, 1999 versus 1998, respectively, but decreased
as a percentage of RadioShack's total sales by 1.4 and 1.6 percentage points
during the same periods. This percentage decrease was partly due to a shift
within RadioShack's product offerings to increased sales of prepaid wireless
airtime and personal computers, which have a significantly lower gross margin
than the overall RadioShack average gross margin, as well as to a percentage
point decrease in the gross margin of communication products. This decrease at
RadioShack was partially offset by an increase in residual income, which has
100% gross margin.
Selling, General and Administrative Expense
Selling, general and administrative ("SG&A") expense for Tandy as a percent of
net sales and operating revenues for the second quarter of 1999 was 38.4%,
compared to 32.6% during the second quarter of 1998; the respective percentages
for the six months ended June 30, 1999 and 1998 were 38.3% and 31.3%. The higher
SG&A percentages in 1999 were due primarily to the sale of Computer City, which
operated at lower relative SG&A expense levels than consolidated Tandy
Corporation. Excluding Computer City, comparable SG&A expense as a percentage of
sales for Tandy would have approximated 38.3% for the six months ended June 30,
1999 compared to 39.9% in the same period of the prior year. This decrease was
due primarily to an increase in sales at RadioShack, offset by an increase in
corporate overhead expense due to non-recurring gains in the second quarter of
1998.
RadioShack's SG&A expense increased by $31.5 million and $56.5 million,
respectively, but decreased as a percent of their sales and operating revenues
by 2.0 and 2.1 percentage points, respectively, for the three and six months
ended June 30, 1999, when compared to the same periods in the prior year. For
the three and six months ended June 30, 1999, RadioShack's advertising expense
and rent expense increased in dollars, but decreased as a percent of sales and
operating revenues when compared to the same period in the prior year. Rent
expense increased in dollars, due to new store openings and lease renewals at
slightly higher rates. Advertising expense increased in dollars due primarily to
increased television advertising during the first half of 1999. The decrease in
rent and advertising expenses as a percent of sales and operating revenues is
due primarily to the favorable effect of increased comparable store sales on
their respective expense rate structures. Salary expense increased in dollars
and increased slightly as a percent of RadioShack's sales and operating revenues
during the three and six months ended June 30, 1999, compared to the same
periods in 1998, due to retail store expansions, and increases in commissions,
bonuses and other incentives resulting from strong comparable store sales and
profits.
Restricted Stock Awards
On February 1, 1998, Tandy granted, under the 1997 Incentive Stock Plan,
approximately 649,500 restricted stock awards consisting of 500 shares each to
1,299 RadioShack store managers not included in the February 1, 1997 restricted
stock grant to over 5,000 store managers. This restricted stock grant of
February 1998 will vest at the end of five years on February 2, 2003, if
managers receiving the grants are employed by Tandy at a store manager or higher
position, at that time. However, the grants provide that the restricted shares
could vest early if Tandy common stock closes at $29 1/16 or more for any 20
consecutive trading days after February 1, 2000. Compensation expense, equal to
the fair market value of the shares, will be recognized over the remaining
vesting period when it becomes probable that the performance criteria will be
met or upon actual vesting. At June 30, 1999, there were 379,500 restricted
stock awards outstanding and eligible for ultimate vesting under this restricted
stock award. Tandy does not plan to continue granting restricted stock awards to
RadioShack store managers.
1999 Incentive Stock Plan
In February 1999, Tandy, based upon the Board of Directors' authorization,
adopted the Tandy Corporation 1999 Incentive Stock Plan ("1999 ISP"), which
authorizes the grants of non-qualified stock options and stock appreciation
rights to broad based employee groups and other eligible employees. Grants of
restricted stock, performance awards and options intended to qualify as
incentive stock options under the Internal Revenue Code are not authorized under
the 1999 ISP. In addition, repricing of outstanding options is not permitted
under the plan. The 1999 ISP is administered by an independent committee of the
Board as a broadly based plan to provide stock option incentives primarily to
RadioShack's 5,000 plus store managers and to other eligible employees of Tandy.
A total of 9.5 million shares of Tandy common stock was reserved for issuance
under the 1999 ISP.
The Organization and Compensation Committee of the Board granted approximately
2.2 million stock options under the 1999 ISP at fair market value on February
24, 1999, primarily to RadioShack's 5,000 plus store managers employed as of
that date.
Sale of Computer City, Inc.
On August 31, 1998, Tandy completed the sale of 100% of the outstanding common
stock of its Computer City subsidiary to CompUSA. Tandy received approximately
$36.5 million in cash and an unsecured subordinated note for $136.0 million as
consideration for the sale. The note bears interest at 9.48% per annum and is
payable over a ten year period. Interest is payable on June 30 and December 31
of each year; the first payment was made on December 31, 1998. Beginning on
December 31, 2001, principal payments will be due semiannually until the note
matures on June 30, 2008. Tandy recognized a loss of $73.2 million in the second
quarter of 1998, a loss of $30.0 million in the third quarter of 1998 and a loss
of $5.0 million in the fourth quarter of 1998 from the sale of Computer City,
which included certain liabilities and contractual obligations incurred by
Tandy. Although no significant additional provisions are expected in 1999
relating to the sale of Computer City, unexpected contractual requirements
associated with the sale, among other factors, could result in additional
charges.
Net Interest Expense
Net interest expense for the three and six months ended June 30, 1999 was $5.0
million and $8.8 million versus $10.3 million and $18.9 million for the
comparable three and six months in 1998, respectively. Interest expense
decreased $2.2 million and $4.2 million for the three and six months ended June
30, 1999 versus June 30, 1998, respectively, due, in part, because Tandy no
longer incurred interest expense on Computer City capital lease obligations
after the sale of this subsidiary. Also, Tandy reduced its average short-term
debt outstanding during the first half of 1999 when compared to the same period
in the prior year. Interest income increased $3.1 million and $5.9 million for
the three and six months ended June 30, 1999, respectively, compared to the
prior year periods, due to interest received from the CompUSA note receivable.
Net interest expense is expected to decrease moderately during the remainder of
1999, when compared to the prior year.
Provision for Income Taxes
Provision for income taxes for each quarterly period is based on the estimate of
the annual effective tax rate for the fiscal year, as evaluated at the end of
each quarter. The effective tax rates for the second quarter of 1999 and 1998
were 39.0% and 38.5%, respectively. The increase in the effective tax rate over
the prior year is due primarily to an increase in the effective state tax rate,
which results from a higher percentage of income being earned in states with
higher tax rates.
Cash Flow and Financial Condition
Cash flow provided by operating activities approximated $120.0 million in the
six month period ended June 30, 1999 compared to $99.0 million in the prior
year. This change was due in part to an $11.7 million increase in net income
after adjustments for non-cash items in the first six months of 1999, compared
to the first six months of 1998. The increase in cash flow from operating
activities for the first six months of 1999 was also positively affected by
changes in working capital, which increased cash flow by $9.3 million from the
prior year.
Investing activities used $66.8 million in cash flow in the six months ended
June 30, 1999, compared to $67.1 million during the same period of the prior
year. Investing activities for the six months ended June 30, 1999 included
capital expenditures totaling $44.4 million, primarily for retail expansion and
upgrade of information systems. Additionally, Tandy made a $20.0 million
investment in NorthPoint Communications, Inc. ("NorthPoint") in April 1999. See
"Recent Events" for further information. Management anticipates that capital
expenditure requirements will approximate $70.0 million to $80.0 million for the
remainder of 1999, primarily to support RadioShack future store expansions and
refurbishments, and to update additional information systems.
Cash used by financing activities for the six months ended June 30, 1999 was
$74.0 million, compared to $75.9 million in the previous year. Purchases of
treasury stock required $130.2 million for the six months ended June 30, 1999,
compared to $135.5 million during the same period of 1998. The current year's
stock repurchases were partially offset by $45.1 million received from stock
option exercises and the sale of treasury stock to employee stock plans.
Medium-term notes issued by Tandy under its 1997 Debt Shelf Registration
provided approximately $32.0 million in cash flow for the six months ended June
30, 1999.
Cash and cash equivalents at June 30, 1999 were $43.7 million, compared to $64.5
million at December 31, 1998 and $61.9 million at June 30, 1998. Total debt as a
percentage of total capitalization was 36.7% at June 30, 1999, compared to 35.6%
at December 31, 1998 and 37.7% at June 30, 1998. Long-term debt as a percentage
of total capitalization was 19.2% at June 30, 1999, compared to 17.9% at
December 31, 1998 and 17.5% at June 30, 1998.
In March 1997, Tandy announced its Board of Directors had authorized management
to purchase up to 20.0 million additional shares of its common stock through its
existing share repurchase program. The share repurchase program was initially
authorized in December 1995 and increased in October 1996 and was undertaken as
a result of management's view of the economic value of its stock. This increase
brought the total authorization to 60.0 million shares, of which approximately
53.9 million shares, totaling $806.8 million, had been purchased as of June 30,
1999. During the quarter ended June 30, 1999, Tandy repurchased approximately
0.6 million shares for $25.4 million under the program and for the six months
ended June 30, 1999, Tandy repurchased 2.0 million shares totaling $61.0 million
under the program. Additionally, on October 26, 1998, Tandy announced its Board
of Directors had authorized the repurchase of up to 10.0 million shares of Tandy
common stock for an indefinite period of time to be used to offset the dilution
of grants under Tandy's incentive stock plans. As of June 30, 1999, Tandy had
purchased approximately 4.0 million shares for $107.0 million under this
program, which included the repurchase of approximately 0.6 million shares and
1.2 million shares for $25.5 million and $43.2 million during the second quarter
and six months ended June 30, 1999, respectively. Purchases will continue to be
made from time to time in the open market and it is expected that funding of
these programs will come primarily from operating cash flow and existing funding
sources.
In connection with the share repurchase program, the Board of Directors, at
their October 23, 1998 meeting, authorized management to sell up to two million
put options on Tandy common stock. Such options grant the purchaser the right to
sell shares of Tandy's common stock to Tandy at specified prices upon exercise
of the options. These put options are exercisable only at maturity and can be
settled in cash at Tandy's option, in lieu of repurchasing the stock. The issued
put options have a maturity of six months. Tandy has sold approximately 1.0
million options since the inception of the program. Tandy had 0.8 million
options outstanding at June 30, 1999 and approximately 0.7 million outstanding
at July 31, 1999. The options expire on various dates through January 2000. At
June 30, 1999, the full redemption value of the options was classified as common
stock put options in the accompanying Consolidated Balance Sheet. The related
offset was recorded in common stock in treasury, net of premiums received. Put
options will continue to be sold from time to time in order to take advantage of
attractive share price levels, as determined by management. The timing and terms
of the transactions, including maturities, depend on market conditions, Tandy's
liquidity and other considerations.
In May 1997, Tandy filed a $300.0 million Debt Shelf Registration Statement
("Shelf Registration") with the S.E.C., which was declared effective in August
1997. In August 1997, Tandy issued $150.0 million of 10 year unsecured notes
under the Shelf Registration. The interest rate on the notes is 6.95% per annum
with interest payable on September 1 and March 1 of each year, commencing March
1, 1998. The notes are due September 1, 2007. In December 1997 and January 1998,
Tandy issued $4.0 million and $45.0 million, respectively, in medium-term notes
under the remaining $150.0 million Shelf Registration. An additional $32.0
million of medium-term notes was issued in January 1999. Tandy's medium and
long-term notes outstanding at June 30, 1999 under the 1991 and 1997 shelf
registrations totaled $232.0, compared to $205.0 million outstanding at June 30,
1998. The interest rates at June 30, 1999 for the outstanding $81.8 million in
medium-term notes ranged from 6.09% to 7.25% with a weighted average coupon rate
of 6.2%. As of July 31, 1999, Tandy had remaining availability of $69.0 million
under the 1997 Shelf Registration.
Inventory
Total inventories at June 30, 1999 decreased $56.2 million or 6.2% since
December 31, 1998 and decreased $331.4 million or 27.9% since June 30, 1998. The
decrease in inventory since year end was due to normal seasonal fluctuations and
strong sales at RadioShack. The decrease since the second quarter of 1998 was
due primarily to the sale of Computer City and to a $38.9 million reduction at
RadioShack resulting from strong sales.
Accounts Receivable
Total accounts receivable at June 30, 1999 decreased $10.6 million or 4.9% since
December 31, 1998 and decreased $27.0 million or 11.7% since June 30, 1998. The
decrease in accounts receivable since December 31, 1998 was due to normal
seasonal fluctuations. The decrease since June 30, 1998 was due primarily to the
sale of Computer City, offset by an increase in RadioShack's accounts receivable
relating to residuals and brand name vendor support. Residuals are recurring
revenue from wireless telephone carriers and from long distance, digital
satellite service and pager activation providers.
Accrual for 1996 Business Restructuring
In the fourth quarter of 1996, Tandy initiated certain restructuring programs to
exit its Incredible Universe business, close 21 unprofitable Computer City
stores and close its 53 remaining McDuff stores. These restructuring programs
were undertaken as a result of the highly competitive environment in the
electronics industry. See Tandy's 1998 Annual Report for a discussion of the
1996 restructuring reserve transactions. The following schedule is an analysis
of additional reserves and amounts charged against the reserve during the six
months ended June 30, 1999. Real estate obligations shown below primarily
represent estimated amounts to be incurred in terminating remaining leases.
<PAGE>
Charges
Balance Additional 1/1/99- Balance
(In millions) 12/31/98 Reserves 6/30/99 6/30/99
- ------------- -------- -------- -------- --------
Real estate obligations $ 19.4 -- (4.3) $ 15.1
Other 0.8 -- (0.1) 0.7
-------- -------- -------- --------
$ 20.2 -- (4.4) $ 15.8
======== ======== ======== ========
Although no significant additional provisions are expected in 1999 relating to
the 1996 restructuring, unexpected defaults by sub-tenants, among other factors,
could result in additional charges.
Changes in Stockholders' Equity
Outstanding
(In millions) Common Shares Dollars
------------- --------
Balance at December 31, 1998 97.4 $ 848.2
Foreign currency translation adjustments,
net of deferred taxes -- (0.2)
Sale of treasury stock to employee stock
plans 0.3 21.8
Purchases of treasury stock (2.3) (127.3)
Common stock put options -- (21.7)
Exercise of stock options and grant of stock
awards 1.5 37.6
Repurchase of preferred stock -- (6.2)
Preferred stock dividends, net of tax -- (1.8)
TESOP and restricted stock deferred
compensation earned -- 5.9
Common stock dividends -- (19.4)
Unrealized gain on NorthPoint Communications,
net of tax -- 6.8
Two-for-one split of common stock 96.6 (0.3)
Net income -- 117.5
--------- --------
Balance at June 30, 1999 193.5 $ 860.9
========= ========
Recent Events
On May 21, 1999, Tandy announced it has entered into a definitive agreement to
acquire AmeriLink Corporation ("AmeriLink") in an all stock transaction valued
at approximately $75.0 million. AmeriLink designs, installs and maintains
cabling systems for the transmission of video, voice and data, primarily for
home use. AmeriLink will continue to provide these services to outside parties
as well as to RadioShack. The transaction became effective July 30, 1999 and
will be accounted for under the purchase method in accordance with the
provisions of Accounting Principles Board Opinion No. 16. The purchase price
will be allocated to the assets acquired and liabilities assumed based on their
estimated fair values at the date of acquisition. The excess purchase price over
the fair value of the assets will be allocated to goodwill.
On April 21, 1999, Tandy announced it had entered into a strategic agreement
with NorthPoint, a provider of Digital Subscriber Line ("DSL") technology. DSL
technology transports data at guaranteed speeds up to 25 times faster than
common dial-up modems, allowing for high-speed Internet access and other
data-intensive applications. Management anticipates this alliance will
accelerate the adoption rate of these services at an affordable price to the
mass market. Additionally, NorthPoint will provide RadioShack with DSL services
for consumer display purposes in many of its retail stores, as well as for
internal use. NorthPoint currently operates in 24 markets in the U.S. and
expects to expand its service territory to 28 markets by the end of 1999.
Management believes these two agreements are significant steps towards achieving
Tandy's strategic plan for RadioShack to become "America's Connectivity Store,"
similar to its existing concept of "America's Telephone Store." Connectivity
will provide solutions for connecting to and utilizing high-speed bandwidth.
Bandwidth refers to volume at which data can be transmitted and, depending on
the volume delivered, may enable consumers to have such capabilities as instant
and/or high speed Internet, movies on demand and multiple phone/fax connections
through a single phone line.
Additionally, on May 3, 1999, Tandy announced the formation of a new e-commerce
business unit called radioshack.com, which management expects will be launched
in the fall of 1999. Radioshack.com will initially offer approximately 20,000
products, as well as unique services.
Year 2000 Readiness Disclosure
Tandy's management recognizes the importance of taking necessary action in order
that its operations and relationships with key vendors, service providers,
customers and other third parties will not be adversely impacted by software
processing errors arising from calculations using the year 2000 and beyond. Like
many companies, a significant number of Tandy's computer applications and
systems require modifications in order for these systems to be ready for the
year 2000. All statements made and referred to here are Year 2000 Readiness
Disclosures under the "Year 2000 Information and Readiness Disclosure Act."
State of Readiness: Tandy has been and will continue to use a combination of
internal and external resources to identify, assess, remediate and test its many
different information technology ("IT") systems such as point of sale, payroll,
credit, purchase ordering, merchandise distribution, management reporting,
manufacturing, mainframe, and client/server applications, as well as its non-IT
systems (e.g. heating, ventilating and air conditioning systems, building
security systems, etc.).
Since beginning the project in 1995, Tandy has completed identifying and
assessing 100% of its internal mid-range and mainframe IT applications, data
communication and telecommunication systems, servers and most of its personal
computer hardware for year 2000 readiness. As of June 30, 1999, remediation and
unit testing was approximately 99% complete for mid-range and mainframe
applications. Unit testing determines the accuracy of the programming changes to
the code. For data communication systems, telecommunication systems and servers,
verification of year 2000 readiness was approximately 97%, 87% and 100% complete
as of June 30, 1999, respectively, and is expected to be 100% complete by
September 30, 1999.
Testing to validate that all of Tandy's mission critical systems will interface
and operate effectively to process data containing dates subsequent to January
1, 2000 is expected to be completed by the end of 1999. Third-party software
systems, including financial systems, point-of-sale and manufacturing, have been
or will be implemented during 1999. The vendors of these third-party software
packages have stated that they are year 2000 ready; however, Tandy continues to
conduct its own testing in 1999 which will be completed by year end.
With respect to non-IT system issues, Tandy has identified and assessed its
significant building and process and production control systems for any year
2000 issues relating to the operations of its facilities. Identification and
assessment of security access, building control systems and elevators in the
buildings which serve as Tandy's corporate headquarters have been completed.
Approximately 95% have either been certified by the vendor or manufacturer or
determined by other evaluation methods to be year 2000 ready at June 30, 1999.
Tandy has also identified and assessed non-IT year 2000 issues of its remote
locations, such as its distribution centers, manufacturing plants, and
administrative offices, and has taken appropriate action to ensure year 2000
readiness. All of Tandy's significant non-IT systems are expected to be year
2000 ready or appropriate workarounds and contingency plans in place by October
1999.
Although unforeseen circumstances may arise, Tandy expects its remediation
program to be completed by November 1999. Tandy will continue communicating with
its key suppliers, utilities, financial institutions, customers and others
throughout the remainder of 1999 to determine and monitor their state of year
2000 readiness, to coordinate year 2000 conversions where appropriate and to
determine the extent to which Tandy's interface systems are vulnerable.
Costs: In management's opinion, the financial impact of being year 2000 ready is
not expected to be material to Tandy's consolidated financial position, results
of operations or cash flows. Management anticipates that total expenditures
associated with the year 2000 internal modifications will range from $12.0
million to $15.0 million, which has been and will continue to be funded from
operating cash flow. As of June 30, 1999, approximately $8.6 million
representing internal payroll and related benefits, depreciation expense,
machine time and incentive bonuses, among other costs, has been spent on these
internal modifications. An additional $1.1 million has been paid to external
parties for consulting and professional fees. As required by generally accepted
accounting principles, all of these costs are expensed as incurred. Combined,
internal and external costs related to the year 2000 project account for
approximately 7.0% of Tandy's annual IT budget. Additionally, Tandy has
purchased and is installing third party financial software packages and related
hardware totaling approximately $25.0 million in light of the year 2000 issue.
These purchases are in addition to other capital investments made in the normal
course of business for certain third party software systems and applications
which address the ongoing retail and operational needs of Tandy.
The Risks of Year 2000 Issues: With respect to the risks associated with its IT
and non-IT systems, Tandy believes that the most reasonably likely worst case
scenario is that some of Tandy's store operating and inventory management
systems could fail in one or more geographic areas of the United States. The
consequence of such failure could include the inability of those affected
RadioShack stores to electronically record sales transactions. This could
further result in a breakdown in Tandy's supply chain as Tandy relies on
electronic information to replenish its stores. Such an occurrence would result
in a loss of revenue; however, due to the variables involved it is not possible
to quantify the possible range of such loss.
There can be no assurance that the systems of third party providers on which
Tandy's systems rely will be converted timely and that the systems will not have
an adverse effect on Tandy's systems or ongoing operations. However, concerning
the risks associated with third parties, Tandy believes that the most reasonably
likely worst case scenario is that some of Tandy's merchandise vendors will not
be compliant and will have difficulty filling and distributing orders. Failure
of one or more third party service providers on whom Tandy relies to address
year 2000 issues could also result, in a worst case scenario, in some business
interruption. The lost revenues, if any, resulting from such failures would
depend on the time period in which the failure goes uncorrected and on how
widespread the impact is.
Tandy has catalogued and identified RadioShack branded products it has sold
since 1993 which have a time and/or date function. A listing of these products
and their functionality subsequent to January 1, 2000, if known to RadioShack
through its evaluation, is available at the web site: www.radioshack.com. Since
the fourth quarter of 1996, RadioShack has required correct date manipulation
for any new RadioShack products with date and time functions that are cognizant
of the year, and has adopted related testing and evaluation procedures. Tandy
has considered the implications of possible year 2000-related claims regarding
products it has manufactured or sold, or is currently manufacturing or selling.
However, the outcomes of any year 2000 claims and the impact of such claims
cannot be determined at this time; such outcomes will depend on the facts and
circumstances of each situation and an evolving state of law as these types of
claims are addressed by legal systems in the United States and worldwide.
Tandy has limited the scope of its risk assessment to those factors upon which
it can reasonably be expected to have an influence. For example, Tandy has made
the assumption that financial institutions and the Federal Reserve System, as
well as most utility companies and national telecommunications providers, will
continue to operate. The lack of such services could have a material effect on
Tandy's ability to operate, but Tandy has little, if any, ability to influence
such an outcome, or to reasonably make alternative arrangements in advance for
such services in the event they are unavailable.
Contingency Plans: Tandy has completed a prioritization of year 2000 issues in
order to develop and document year 2000 contingency plans. Tandy has identified
its critical applications to be its merchandising and inventory systems, which
include purchasing, receiving and distribution and store replenishment and its
point-of-sale store operating system, as well as its financial systems, which
include payroll, accounts payable and receivable, banking and other financial
applications. Should any or all of the critical applications fail to perform
properly subsequent to January 1, 2000, Tandy will resort to temporary manual
processing for recording sales, ordering product and replenishing its retail
stores, which is not expected to have a material adverse impact on its
operations in the short-term. Management anticipates having a formal documented
contingency plan to deal with this scenario and others completed by November
1999. Tandy's 11 distribution centers are located in various geographic areas of
the United States. Should one or more of these distribution centers fail to
operate due to regional power outages or other unforeseen circumstances, Tandy's
other distribution centers which may be operating could replenish stores
typically serviced by those distribution centers for a relatively short period
of time. Management anticipates having a formal documented contingency plan to
deal with this scenario by November 1999. No single internal or third party
supplier accounts for a material portion of Tandy's sales and operating
revenues. As such, management has determined that a formal list of alternative
suppliers is not needed.
All statements concerning year 2000 issues other than historical statements,
including, without limitation, estimated costs and the projected timetable of
year 2000 compliance, constitute "forward-looking statements," as defined in the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements should be read in conjunction with Tandy's disclosures under the
heading "Factors That May Affect Future Results."
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Tandy has various claims, lawsuits, disputes with third parties, investigations
and pending actions involving allegations of negligence, product defects,
discrimination, infringement of intellectual property rights, tax deficiencies,
violations of permits or licenses, and breach of contract and other matters
against Tandy and its subsidiaries incident to the operation of its business.
The liability, if any, associated with these matters was not determinable at
June 30, 1999. Although occasional adverse settlements or resolutions may occur
and negatively impact earnings in the year of settlement, it is the opinion of
management that their ultimate resolution will not have a materially adverse
effect on Tandy's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of Stockholders held on May 20, 1999, the Company elected
directors to serve for the ensuing year. Out of the 100,237,898 eligible votes,
85,728,383 votes were cast at the meeting either by proxies solicited in
accordance with Schedule 14A or by security holders voting in person. There were
9,928,123 broker non-votes which are not included in the following table as they
were not treated as being present at the meeting. In the case of directors,
abstentions are treated as votes withheld and are included in the table. The
tabulation of votes for each nominee is set forth below under Item No. 1:
Item No. 1
- ----------
NOMINEES FOR DIRECTORS
- ----------------------
VOTES VOTES
DIRECTORS FOR WITHHELD
- --------- --- --------
Frank J. Belatti 83,127,545 2,600,837
James I. Cash, Jr. 84,326,407 1,401,976
Ronald E. Elmquist 83,106,973 2,621,410
Lewis F. Kornfeld, Jr. 84,188,191 1,540,192
Jack L. Messman 84,672,849 1,055,534
William G. Morton, Jr. 84,983,688 744,695
Thomas G. Plaskett 84,711,780 1,016,602
John V. Roach 83,839,591 1,888,791
Leonard H. Roberts 84,943,118 785,265
Alfred J. Stein 84,568,131 1,160,252
William E. Tucker 84,192,750 1,535,633
Edwina D. Woodbury 83,251,145 2,477,238
Item No. 2
- ----------
Adoption of the Compensation Plan for Executive Officers:
FOR AGAINST ABSTAIN
--- ------- -------
80,478,526 3,611,065 1,638,791
ITEM 5. OTHER INFORMATION.
Leonard H. Roberts, President and Chief Executive Officer, Tandy Corporation and
President of RadioShack, was elected Chairman of the Board, Tandy Corporation by
the Board of Directors at their May 20, 1999 meeting.
Tandy announced on July 26,1999 the appointment of Robert Kamerschen to the
Board of Directors of Tandy Corporation. Mr. Kamerschen is currently a private
investor and senior management consultant, and was formerly Chairman and Chief
Executive Officer of ADVO, Inc., a direct mail marketing company.
On July 26, 1999, Tandy also announced that James I. Cash, Jr., a member of
Tandy's Board of Directors since 1989, would retire from the board effective
August 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits Required by Item 601 of Regulation S-K.
A list of the exhibits required by Item 601 of Regulation S-K and
filed as part of this report is set forth in the Index to Exhibits on
page 19, which immediately precedes such exhibits.
b) Reports on Form 8-K.
1) On May 13, 1999, the Company announced that it had entered into a
strategic alliance with Thomson Consumer Electronics. The Form 8-K
was filed on May 14, 1999.
2) On May 21, 1999, the Company announced that it had entered into a
definitive agreement to acquire AmeriLink Corporation in an
all-stock transaction. The Form 8-K was filed on May 24, 1999.
3) On May 25, 1999, the Company announced a 2-for-1 split of Tandy
common stock. The Form 8-K was filed on May 25, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tandy Corporation
(Registrant)
Date: August 11, 1999 By /s/ Richard L. Ramsey
--------------------------------
Richard L. Ramsey
Vice President and Controller
(Authorized Officer)
Date: August 11, 1999 /s/ Dwain H. Hughes
---------------------------------
Dwain H. Hughes
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
<TABLE>
TANDY CORPORATION
INDEX TO EXHIBITS
<CAPTION>
Exhibit Sequential
Number Description Page No.
- ------ ----------- ----------
<S> <C> <C>
2c Stock Purchase Agreement as of July 17, 1997 by and among Tandy
Corporation as Seller, EVP Colonial, Inc. as Company and Eureka
Venture Partners III LLP as Purchaser (without exhibits), (filed
as Exhibit 2g to Tandy's Form 10-Q filed on August 8, 1997 and
incorporated herein by reference).
3a(i) Restated Certificate of Incorporation of Tandy Corporation dated
July 26, 1999. 22
3a(ii) Certificate of Elimination of Series C Conversion Preferred Stock
of Tandy Corporation 39 dated July 26, 1999.
3a(iii) Amended Certificate of Designations, Preferences and Rights of
Series A Junior 40 Participating Preferred Stock of Tandy
Corporation dated July 26, 1999.
3b Tandy Corporation Bylaws, restated as of December 16, 1998 (filed
as Exhibit 3b to Tandy's Form 10-K filed on March 29, 1998 and
incorporated herein by reference).
4a Amended and Restated Rights Agreement dated as of July 26, 1999. 45
4b Revolving Credit Agreement (Facility A) dated as of June 25, 1998
among Tandy Corporation, NationsBank, N.A., as Agent and Lender,
Citibank, N.A., as Syndication Agent and Lender, Bank of America
National Trust & Savings Association, as Documentation Agent and
Lender, BankBoston, N.A., Co-Agent and Lender, The Bank of New
York, Co-Agent and Lender, First Union National Bank, Co-Agent
and Lender, Fleet National Bank, Co-Agent and Lender, and twelve
other banks as Lenders (filed as Exhibit 4n to Tandy's Form 10-Q
filed on August 13, 1998 and incorporated herein by reference).
4c First Amendment to Revolving Credit Agreement (Facility A) dated 69
as of June 24, 1999 among Tandy Corporation, NationsBank, N.A. as
Agent and Lender, Citibank, N.A. as Syndication Agent and Lender,
The Bank of New York, as Documentation Agent, and BankBoston,
N.A., First Union National Bank, Fleet National Bank and The
First National Bank of Chicago as Co-Agents and certain other
lenders, which renewed and extended the maturity date of the
Revolving Credit Agreement (Facility A)dated as of June 25,1998.
4d Revolving Credit Agreement (Facility B) dated as of June 25, 1998
among Tandy Corporation, NationsBank, N.A., as Agent and Lender,
Citibank, N.A., as Syndication Agent and Lender, Bank of America
National Trust & Savings Association, as Documentation Agent and
Lender, BankBoston, N.A., Co-Agent and Lender, The Bank of New
York, Co-Agent and Lender, First Union National Bank, Co-Agent
and Lender, Fleet National Bank, Co-Agent and Lender, and twelve
other banks as Lenders (filed as Exhibit 4o to Tandy's Form 10-Q
filed on August 13, 1998 and incorporated herein by reference).
4e First Amendment to Revolving Credit Agreement (Facility B) dated 77
as of June 24, 1999 among Tandy Corporation, NationsBank, N.A. as
Agent and Lender, Citibank, N.A. as Syndication Agent and Lender,
The Bank of New York, as Documentation Agent, and BankBoston,
N.A., First Union National Bank, Fleet National Bank and The
First National Bank of Chicago as Co-Agents and certain other
lenders, which renewed and extended the maturity date of the
Revolving Credit Agreement (Facility B) dated as of June 25,1998.
10a* Salary Continuation Plan for Executive Employees of Tandy
Corporation and Subsidiaries including amendment dated June 14,
1984 with respect to participation by certain executive
employees, as restated October 4, 1990 (filed as Exhibit 10a to
Tandy's Form 10-K filed on March 30, 1994 and incorporated herein
by reference).
10b* Post Retirement Death Benefit Plan for Selected Executive
Employees of Tandy Corporation and Subsidiaries as restated June
10, 1991 (filed as Exhibit 10c to Tandy's Form 10-K filed on
March 30, 1994 and incorporated herein by reference).
10c* Tandy Corporation Officers Deferred Compensation Plan as restated
July 10, 1992 (filed as Exhibit 10d to Tandy's Form 10-K filed on
March 30, 1994 and incorporated herein by reference).
10d* Director Fee Resolution (filed as Exhibit 10h to Tandy's Form
10-K filed on March 30, 1994 and incorporated herein by
reference).
10e* Tandy Corporation 1985 Stock Option Plan as restated effective
August 1990 (filed as Exhibit 10i to Tandy's Form 10-K filed on
March 30, 1994 and incorporated herein by reference).
10f* Tandy Corporation 1993 Incentive Stock Plan as amended and 84
restated on February 24, 1998.
10g* Tandy Corporation Officers Life Insurance Plan as amended and
restated effective August 22, 1990 (filed as Exhibit 10k to
Tandy's Form 10-K filed on March 30, 1994 and incorporated herein
by reference).
10h* First Restated Trust Agreement Tandy Employees Supplemental Stock
Program through Amendment No. IV dated January 1, 1996 (filed as
exhibit 4d to Tandy's Form 10-K filed on March 28, 1996 and
incorporated herein by reference).
10i* Forms of Termination Protection Agreements for (i) Corporate
Executives, (ii) Division Executives, and (iii) Subsidiary
Executives (filed as Exhibit 10m to Tandy's Form 10-Q filed on
August 14, 1995 and incorporated herein by reference).
10j* Tandy Corporation Termination Protection Plans for Executive
Employees of Tandy Corporation and its Subsidiaries (i) the Level
I and (ii) Level II Plans (filed as Exhibit 10n filed on August
14, 1995 and incorporated herein by reference).
10k* Forms of Bonus Guarantee Letter Agreements with certain Executive
Employees of Tandy Corporation and its Subsidiaries (i) Formula,
(ii) Discretionary, and (iii) Pay Plan (filed as Exhibit 10o to
Tandy's Form 10-K filed on March 30, 1994 and incorporated herein
by reference).
10l* Form of Indemnity Agreement with Directors, Corporate Officers
and two Division Officers of Tandy Corporation (filed as Exhibit
10p to Tandy's Form 10-K filed on March 28, 1996 and incorporated
herein by reference).
10m* Tandy Corporation 1997 Incentive Stock Plan as amended and 99
restated February 24, 1998.
10n* Form of Deferred Compensation Agreement dated October 2, 1997
with selected Executive Employees of Tandy Corporation, (filed as
Exhibit 10s to Tandy's Form 10-K filed on March 26, 1998 and
incorporated herein by reference).
10o* Form of Deferred Compensation Agreement dated October 2, 1997
with selected Executive Employees of Tandy Corporation, (filed as
Exhibit 10t to Tandy's Form 10-K filed on March 26, 1998 and
incorporated herein by reference).
10p* Form of December 1997 Deferred Salary and Bonus Agreement (Stock
Investment) with selected Executive Employees of Tandy
Corporation, (filed as Exhibit 10u to Tandy's Form 10-K filed on
March 26, 1998 and incorporated herein by reference).
10q* Form of December 1997 Salary and Bonus Agreement with selected
Executive Employees of Tandy Corporation, (filed as Exhibit 10v
to Tandy's Form 10-K filed on March 26, 1998 and incorporated
herein by reference).
10r* Tandy Corporation Executive Deferred Compensation Plan, effective
April 1, 1998, (filed as Exhibit 10w to Tandy's Form 10-K filed
on March 26, 1998 and incorporated herein by reference).
10s* Tandy Corporation Executive Deferred Stock Plan, effective April
1, 1998, (filed as Exhibit 10x to Tandy's Form 10-K filed on
March 26, 1998 and incorporated herein by reference).
10t* Form of September 30, 1997 Deferred Compensation Agreement
between Tandy Corporation and John V. Roach (filed as Exhibit 10z
to Tandy's Form 10-Q filed on May 13, 1998 and incorporated
herein by reference).
10u* Form of September 30, 1997 Deferred Compensation Agreement
between Tandy Corporation and Leonard H. Roberts (filed as
Exhibit 10aa to Tandy's Form 10-Q filed on May 13, 1998 and
incorporated herein by reference).
10v* Form of Executive Pay Plan Letters (filed as Exhibit 10b to
Tandy's Form 10-K filed on March 29, 1999 and incorporated herein
by reference).
10w* Severance Agreement dated October 23, 1998 between Leonard H.
Roberts and Tandy Corporation (filed as Exhibit 10z to Tandy's
Form 10-K filed on March 29, 1999 and incorporated herein by
reference).
10x* Tandy Corporation Unfunded Deferred Compensation Plan for
Directors as amended and restated June 1, 1999. 114
10y* Tandy Corporation 1999 Incentive Stock Plan dated February 24, 117
1999.
11 Statement of Computation of Ratios of Earnings to Fixed Charges. 128
27 Financial Data Schedule.
- -----------------------
* Each of these exhibits is a "management contract or compensatory plan, contract, or arrangement."
</TABLE>
<PAGE>
EXHIBIT 3a(i)
RESTATED CERTIFICATE OF INCORPORATION
OF
TANDY CORPORATION
This Restated Certificate of Incorporation of Tandy Corporation (the
"Corporation") was duly approved by the Board of Directors of the Corporation
and only restates and integrates but does not further amend the provisions of
the Corporation's Certificate of Incorporation, as heretofore amended or
supplemented; and there is no discrepancy between the provisions of the original
Certificate of Incorporation, as amended or supplemented, and the provisions of
the Restated Certificate of Incorporation set forth below except as permitted by
Section 245 of the General Corporation Law. The original Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on December 19, 1967.
FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is TANDY CORPORATION.
SECOND:The registered office of the Corporation in the State of Delaware
is located at 1209 Orange Street, in the City of Wilmington, County of New
Castle, Delaware 19801. The registered agent in charge thereof upon whom process
against the Corporation may be served, is The Corporation Trust Company.
THIRD: The nature of the business of the Corporation and the objects and
purposes to be transacted, promoted and carried on by it are as follows:
(a) To carry on a general business as manufacturers and merchants, and
to manufacture, produce, finish, treat, cure, tan or otherwise process, buy,
sell, import, export and generally trade and deal in and with any and all kinds
of materials, goods, wares and merchandise.
(b) To subscribe for or cause to be subscribed for, to purchase, invest
in, acquire, hold, own, sell, assign, transfer, mortgage, pledge, exchange,
distribute or otherwise dispose of the whole or any part of the shares of stock,
bonds, mortgages, debentures, notes, coupons and other securities, obligations,
contracts, and evidences of indebtedness of any corporation, domestic or
foreign, and to issue in exchange therefor its shares of stock, bonds or other
obligations; to exercise in respect to any such shares of stock, bonds or other
securities, any and all rights, powers and privileges of individual owners or
holders, including the right to vote thereon and to aid in any manner permitted
by law any corporation or association of which any bonds or other securities or
evidences of indebtedness or stock are held by the Corporation, and to do any
acts or things designed to protect, preserve, improve, or enhance the value of
any such stock, bonds or other securities or evidences of indebtedness, and to
organize or promote or facilitate the organization of subsidiary companies.
(c) To buy, lease or otherwise acquire the goodwill, franchises, rights,
and property, both real, personal and mixed, of any person, firm, association or
corporation, and to pay for the same in cash, property, stocks or bonds of the
Corporation or otherwise and to hold and use or in any manner dispose of the
whole or any part of the property so acquired; to conduct, carry on, operate,
manage, control, improve and develop the whole or any part of any business or
property so acquired, either in the name of such other person or persons, firm
or corporation, and to exercise all the powers necessary or convenient in and
about the conduct and management of such business.
(d) To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
(e) To do any and all things necessary, suitable, useful or proper in
the accomplishment of any of the purposes and powers hereinabove set forth,
either as principal or as agent, and in connection therewith to maintain
offices, to appoint agents, to make contracts, to borrow money, to acquire,
hold, mortgage, pledge, lease, sell, grant licenses with respect to or otherwise
dispose of real and personal property, and to do any and all other acts and
things, all to the same extent and as fully as natural persons might or could
lawfully do in any part of the world, but only within the limits permitted to
corporations organized under General Corporation Law of Delaware.
The foregoing enumeration of purposes, powers and objects shall not be
deemed to limit or restrict in any manner the general powers of the Corporation
under the General Corporation Law of Delaware or the laws of any state,
territory, district or foreign country where the Corporation may be authorized
to do business.
FOURTH:The total number of shares which the Corporation shall have
authority to issue is two hundred fifty-one million (251,000,000) of which one
million (1,000,000) shares without par value shall be Preferred Stock and two
hundred fifty million (250,000,000) shares of the par value of one dollar
($1.00) per share shall be Common Stock. The Preferred Stock shall be issued
from time to time in one or more series with such distinctive serial
designations and (a) may have such voting powers, full or limited, or may be
without voting powers; (b) may be subject to redemption at such time or times
and at such prices; (c) may be entitled to receive dividends (which may be
cumulative or noncumulative) at such rate or rates, on such conditions, and at
such times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes of stock; (d) may have such rights upon
the dissolution of, or upon any distribution of the assets of, the Corporation;
(e) may be made convertible into, or exchangeable for, shares of any other class
or classes or of any other series of the same or any other class or classes of
stock of the Corporation, at such prices or prices or at such rates of exchange,
and with such adjustments; and (f) shall have such other relative,
participating, optional or other special rights, qualifications, limitations or
restrictions thereof, all as shall hereinafter be stated and expressed in the
resolution or resolutions providing for the issue of such Preferred Stock from
time to time adopted by the Board of Directors pursuant to authority so to do
which is hereby granted to and vested in the board.
Each share of Common Stock shall entitle the holder thereof to one vote,
in person or by proxy, at any and all meetings of the stockholders of the
Corporation.
No stockholder, as such, shall have any preemptive right to subscribe
for or purchase any additional shares of stock or securities convertible into or
carrying warrants or options to acquire shares of stock of the Corporation.
Any and all right, title, interest and claim in or to any dividends
declared by the Corporation, whether in cash, stock or otherwise, which are
unclaimed by the stockholder entitled thereto for a period of six years after
the close of business on the payment date, shall be and be deemed to be
extinguished and abandoned; and such unclaimed dividends in the possession of
the Corporation, its transfer agents or other agents or depositaries, shall at
such time become the absolute property of the Corporation, free and clear of any
and all claims of any persons whatsoever.
A. Series A Junior Participating Preferred Stock
Section 1. Designation, Par Value and Amount.
There shall be a series of preferred stock of the Corporation
designated as the "Series A Junior Participating Preferred Stock," without par
value (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 300,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock, to a number less
than that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of shares of
Common Stock, par value $1.00 per share, of the Corporation and any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the fifteenth day of March, June, September and December in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred Stock
in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$500 or (b) 10,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock, or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after July 26, 1999, (i) declare any dividend on the Common
Stock payable in Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine or consolidate the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $500 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share by share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to 10,000 votes on all matters submitted to a vote of the
stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock,
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (a
"default period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Preferred Stock, then
outstanding shall have been declared and paid or set apart for payment. During
each default period, the holders of the Series A Preferred Stock with dividends
in arrears in an amount equal to six (6) quarterly dividends thereon, voting as
a class, shall have the right to elect two (2) directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of preferred stock, if any, to increase, in certain cases, the
authorized number of directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Series A Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Series A Preferred
Stock of such voting right. At any meeting at which the holders of Series A
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
to two (2) directors, or if such right is exercised at an annual meeting, to
elect two (2) directors. If the number of directors that may be so elected at
any special meeting does not amount to the required number, the holders of the
Series A Preferred Stock shall have the right to make such increase in the
number of directors as shall be necessary to permit the election by them of the
required number. After the holders of the Series A Preferred Stock shall have
exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be increased or
decreased except by vote of the holders of Series A Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of Series A
Preferred Stock, which meeting shall thereupon be called by the Chairman,
President, a Vice-President or the Corporate Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Series A
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Series A Preferred Stock by mailing a copy
of such notice to him or her at his or her last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 10 days and not later than 60 days after such order or request or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of directors until the holders of Series A
Preferred Stock shall have exercised their right to elect two (2) directors
voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Series A Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining directors theretofor elected by the holders
of the class of stock which elected the director whose office shall have become
vacant. References in this paragraph (C) to directors elected by the holders of
a particular class of stock shall include directors elected by such directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series A Preferred Stock, as a class to elect directors
shall cease, (y) the term of any directors elected by the holders of Series A
Preferred Stock as a class shall terminate, and (z) the number of directors
shall be such number as may be provided for in, or pursuant to, the Restated
Certificate of Incorporation or Bylaws irrespective of any increase made
pursuant to the provisions of paragraph (C) (ii) of this Section 3 (such number
being subject, however to change thereafter in any manner provided by law or in
the Restated Certificate of Incorporation or Bylaws). Any vacancies in the Board
of Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors, even though
less than a quorum.
(D) Except as set forth herein (or as otherwise required by
applicable law), holders of Series A Preferred Stock shall have no general or
special voting rights and their consent shall not be required for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts as to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Restated Certificate of Incorporation, in any other Certificate
of Designations, Preferences and Rights creating a series of Preferred Stock or
as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) With respect to any liquidation, dissolution or winding up
(voluntary or otherwise) of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $10,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 10,000 (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Preferred Stock and Common Stock, respectively, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of Series A Preferred Stock
and the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after July 26,
1999, (i) declare any dividend on the Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 10,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after July 26, 1999,
(i) declare any dividend on the Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds (66 2/3%) or more of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share, which are one ten-thousandths or integral
multiples of one ten-thousandths of a share, which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
B. Series B TESOP Convertible Preferred Stock
Section 1. Designation and Amount; Special Purpose Restricted Transfer
Issue.
(A) The shares of this series of Preferred Stock shall be
designated as Series B TESOP Convertible Preferred Stock ("Series B Preferred
Stock") and the number of shares constituting such series shall be one hundred
thousand (100,000) shares.
(B) Shares of Series B Preferred Stock shall be issued only to a
trustee acting on behalf of an employee stock ownership plan or other employee
benefit plan of the Company. In the event of any transfer of shares of Series B
Preferred Stock to any person other than the issuance of Series B Preferred
Stock to any such plan trustee, the shares of Series B Preferred Stock so
transferred, upon such transfer and without any further action by the Company or
the holder, shall be automatically converted into shares of Common Stock (as
defined herein) on the terms otherwise provided for the conversion of shares of
Series B Preferred Stock into shares of Common Stock pursuant to Section 5
hereof and no such transferee shall have any of the voting powers, preferences
and relative, participating, optional or other special rights ascribed to shares
of Series B Preferred Stock hereunder but, rather, only the powers and rights
pertaining to the Common Stock into which such shares of Series B Preferred
Stock shall be so converted; provided, however, that the pledge of Series B
Preferred Stock by an employee stock ownership plan or other employee benefit
plan of the Company shall not constitute a transfer for the purposes of this
Section 1. Certificates representing shares of Series B Preferred Stock shall be
legended to reflect the foregoing provisions. Notwithstanding the foregoing
provisions of this paragraph (B) of Section 1, shares of Series B Preferred
Stock (i) may be converted into shares of Common Stock as provided by Section 5
hereof and the shares of Common Stock issued upon such conversion may be
transferred by the holder thereof as permitted by law and (ii) shall be
redeemable by the Company upon the terms and conditions provided by Sections 6,
7 and 8 hereof.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cash dividends ("Preferred Dividends") in amount per share
equal to $75.00 per share per annum, payable semi-annually in arrears, one-half
on June 30 and one-half on December 31 of each year (each a "Dividend Payment
Date") commencing on December 31, 1990, to holders of record at the start of
business on such Dividend payment Date; provided, however, that if as of a given
Dividend Payment Date $37.50 is less than an amount (the "Common Stock
Equivalent Dividend") equal to (i) the aggregate amount of all cash dividends
(excluding an amount equal to the Fair Market Value of an Extraordinary
Distribution made during such period as defined in paragraph (G) of Section 9)
declared per share of Common Stock since the immediately preceding Dividend
Payment Date multiplied by (ii) the number of shares of Common Stock into which
such shares of Series B Preferred Stock was convertible at the time each such
dividend was declared (including, without limitation, any and all adjustments as
provided in Section 9 hereof), then the Preferred Dividend payable for such
period shall equal the Common Stock Equivalent Dividend amount. In the event
that any Dividend Payment Date shall fall on any day other than a "business day"
(as hereinafter defined), the dividend payment due on such Dividend Payment Date
shall be paid on the business day immediately preceding such Dividend Payment
Date. Preferred Dividends shall begin to accrue on outstanding shares of Series
B Preferred Stock from the date of issuance of such shares of Series B Preferred
Stock. Preferred Dividends shall accrue on a daily basis whether or not the
Company shall have earnings or surplus at the time. Preferred Dividends accrued
after the date of issuance thereof on the shares of Series B Preferred Stock for
any period less than a full semi-annual period between Dividend Payment Dates
shall be computed on the basis of a 360-day year of twelve 30-day months. A
proportional dividend shall accrue for the period from the date of issuance
until December 31, 1990 and shall be calculated based on the fixed Preferred
Dividend amount. Accrued but unpaid Preferred Dividends shall cumulate as of the
Dividend Payment Date on which they first become payable, but no interest shall
accrue on accumulated but unpaid Preferred Dividends.
(B) So long as any Series B Preferred stock shall be outstanding,
no dividend shall be declared or paid or set apart for payment on any other
series of stock ranking on a parity with the Series B Preferred Stock as to
dividends, unless there shall also be or have been declared and paid or set
apart for payment on the Series B Preferred Stock, like dividends for all
dividend payment periods of the Series B Preferred Stock ending on or before the
dividend payment date of such parity stock, ratably in proportion to the
respective amounts of dividends accumulated and unpaid through such dividend
payment period on the Series B Preferred Stock and accumulated and unpaid or
payable on such parity stock through the dividend payment period on such parity
stock next preceding such dividend payment date. In the event that full
cumulative dividends on the Series B Preferred Stock have not been declared and
paid or set apart for payment when due, the Company shall not declare or pay or
set apart for payment any dividends or make any other distributions on, or make
any payment on account of the purchase, redemption or other retirement of, any
other class of stock or series thereof of the Company ranking, as to dividends
or as to distributions in the event of a liquidation, dissolution or winding-up
of the Company, junior to the Series B Preferred Stock until full cumulative
dividends on the Series B Preferred Stock shall have been paid or declared and
set aside for payment; provided, however, that the foregoing shall not apply to
(i) any dividend payable solely in any shares of any stock ranking, as to
dividends and as to distributions in the event of a liquidation, dissolution or
winding-up of the Company, junior to the Series B Preferred Stock, or (ii) the
acquisition of shares of any stock ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up of the
Company, junior to the Series B Preferred Stock.
Section 3. Voting Rights. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(A) The holders of Series B Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Company, voting together with the holders of Common Stock as one class. Each
share of the Series B Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Series B
Preferred Stock could be converted on the record date for determining the
stockholders entitled to vote, rounded to the nearest one-tenth of a vote; it
being understood that whenever the "Conversion Price" (as defined in Section 5
(A) hereof) is adjusted as provided in Section 9 hereof, the voting rights of
the Series B Preferred Stock shall also be similarly adjusted.
(B) Except as otherwise required by law or set forth herein,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
(C) The Restated Certificate of Incorporation, as amended, of the
Company or this Resolution (including, without limitation, any such alteration,
amendment or repeal affected by any merger or consolidation in which the company
is a surviving or resulting corporation) shall not be amended in any manner that
would materially alter or change the powers, preferences or special rights of
the Series B Preferred Stock so as to affect the holders thereof adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series B Preferred Stock, voting together as a single class.
Section 4. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Series B Preferred stock shall be
entitled to receive out of the assets of the Company which remain after
satisfaction in full of all valid claims of creditors of the Company and which
are available for payment to stockholders and subject to the rights of the
holders of any stock of the Company ranking senior to or on a parity with the
Series B Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Company, before any amount shall be paid or
distributed among the holders of Common Stock or any other shares ranking junior
to the Series B Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Company, liquidating distributions in the
amount of $1,000 per share (the "Liquidation Price"), plus an amount equal to
all accrued and unpaid dividends thereon to the date fixed for distribution, and
no more. If, upon any liquidation, dissolution or winding up of the Company, the
amounts payable with respect to the Series B Preferred Stock and any other
parity stock ranking as to any such distribution on a parity with the Series B
Preferred stock are not paid in full, the holders of the Series B Preferred
Stock and such other stock shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After payment of the full amount to which they are entitled as
provided by the foregoing provisions of this Section 4(A), the holders of shares
of Series B Preferred Stock shall not be entitled to any further right or claim
to any of the remaining assets of the Company.
(B) Neither the merger or consolidation of the Company with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Company, nor the sale, transfer or lease of all or
any portion of the assets of the Company, shall be deemed to be a dissolution,
liquidation or winding up of the affairs of the Company for purposes of this
Section 4, but the holders of Series B Preferred Stock shall nevertheless be
entitled in the event of any such merger or consolidation to the rights provided
by Section 8 hereof.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, stating the payment date or dates
when, and the place or places where, the amounts distributable to holders of
Series B Preferred Stock in such circumstances shall be payable, shall be given
by first-class mail, postage prepaid, mailed not less than twenty (20) days
prior to any payment date stated therein, to the holders of Series B Preferred
Stock, at the address shown on the books of the Company or any transfer agent
for the Series B Preferred Stock.
Section 5. Conversion into Common Stock.
(A) A holder of shares of Series B Preferred Stock shall be
entitled, at any time (but not after the close of business on a date fixed for
redemption of such shares pursuant to Sections 6, 7 and 8 hereof), to cause any
or all of such shares to be converted into shares of Common Stock, initially at
a conversion rate equal to the ratio of (i) $1,000 to (ii) the amount which (A)
initially shall be equal to 125% of the Fair Market Value (as defined herein) of
the Common Stock on the date of issuance of the Series B Preferred Stock, and
(B) shall be adjusted as hereinafter provided (such amount, as it may be so
adjusted form time to time, is hereinafter sometimes referred to as the
"Conversion Price").
(B) Any holder of shares of Series B Preferred Stock desiring to
convert such shares into shares of Common Stock shall surrender the certificate
or certificates representing the shares of Series B Preferred Stock being
converted, duly assigned or endorsed for transfer to the Company (or accompanied
by duly executed stock powers relating thereto), at the principal executive
office of the Company or the offices of the transfer agent for the Series B
Preferred Stock or such office or offices in the continental United States of an
agent for conversion as may from time to time be designated by notice to the
holders of the Series B Preferred Stock by the Company or the transfer agent for
the Series B Preferred Stock, accompanied by written notice of conversion. Such
notice of conversion shall specify (i) the number of shares of Series B
Preferred Stock to be converted and the name or names in which such holder
wishes the certificate or certificates for Common Stock and for any shares of
Series B Preferred Stock not to be so converted to be issued, and (ii) the
address to which such holder wishes delivery to be made of such new certificates
to be issued upon such conversion.
(C) Upon surrender of a certificate representing a share or
shares of Series B Preferred Stock for conversion, the Company shall issue and
send by hand delivery (with receipt to be acknowledged) or by first class mail,
postage prepaid, to the holder thereof or to such holder's designee, at the
address designated by such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered a certificate or
certificates representing shares of Series B Preferred Stock, only part of which
are to be converted, the Company shall issue and deliver to such holder or such
holder's designee a new certificate or certificates representing the number of
shares of Series B Preferred Stock which shall not have been converted.
(D) The issuance by the Company of shares of Common Stock upon a
conversion of shares of Series B Preferred Stock into shares of Common Stock
made at the option of the holder thereof shall be effective as of the earlier of
(i) the delivery to such holder or such holder's designee of the certificates
representing the shares of Common Stock issued upon conversion thereof or (ii)
the commencement of business on the second business day after the surrender of
the certificate or certificates for the shares of Series B Preferred Stock to be
converted, duly assigned or endorsed for transfer to the Company (or accompanied
by duly executed stock powers relating thereto) as provided by this Resolution.
On and after the effective day of conversion, the person or persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock, but no
allowance or adjustment shall be made in respect of dividends payable to holders
of Common Stock in respect of any period prior to such effective date. The
Company shall not be obligated to pay any dividends which shall have been
declared and shall be payable to holders of shares of Series B Preferred Stock
on a Dividend Payment Date if such Dividend Payment Date for such dividend shall
coincide with or be on or subsequent to the effective date of conversion of such
shares.
(E) The Company shall not be obligated to deliver to holders of
Series B Preferred Stock any fractional share or shares of Common Stock issuable
upon any conversion of such shares of Series B Preferred Stock, but in lieu
thereof may make a cash payment in respect thereof in any manner permitted by
law.
(F) The Company shall at all times reserve and keep available out
of its authorized and unissued Common Stock, or Common Stock held as Treasury
Stock, solely for issuance upon the conversion of shares of Series B Preferred
Stock as herein provided, free from any preemptive rights, such number of shares
of Common Stock as shall from time to time be issuable upon the conversion of
all the shares of Series B Preferred Stock then outstanding. Nothing contained
herein shall preclude the Company from issuing shares of Common Stock held in
its treasury upon the conversion of shares of Series B Preferred Stock into
Common Stock pursuant to the terms hereof. The Company shall prepare and shall
use its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all requirements as to registration or qualification of Common Stock, in order
to enable the Company lawfully to issue and deliver to each holder of record of
Series B Preferred Stock such number of shares of its Common Stock as shall from
time to time be sufficient to effect the conversion of all shares of Series B
Preferred Stock then outstanding and convertible into shares of Common Stock.
(G) The Company has entered into an Amended Restated Shareholder
Rights Agreement dated as of June 22, 1990 (the "Rights Agreement") governing
the issuance to holders of Common Stock of rights to purchase capital stock or
other securities of the Company. Whenever the Company shall issue shares of
Common Stock as contemplated by this Section 5, the Company shall comply with
the terms of the Rights Agreement or any successor rights agreement and
applicable resolutions of the Board of Directors relating to rights dividends
with respect to the issuance of rights together with the issuance of such shares
of Common Stock.
Section 6. Redemption At the Option of the Company.
(A) The Series B Preferred Stock shall be redeemable in whole or
in part, at the option of the Company at any time after July 1, 1994, or on or
before July 1, 1994 if permitted by paragraph (D) of this Section 6, at the
following redemption prices per share, expressed as a percentage of the
Liquidation Price per share:
During the Twelve-
Month Period Price Per
Beginning July 1, Share
----------------- -------
1990 107.50%
1991 106.75%
1992 106.00%
1993 105.25%
1994 104.50%
1995 103.75%
1996 103.00%
1997 102.25%
1998 101.50%
1999 100.75%
2000 100.00%
and thereafter at $1,000 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption. Payment
of the redemption price shall be made by the Company in cash or shares of Common
Stock, or a combination thereof, as permitted by paragraph (E) of this Section
6. From and after the date fixed for redemption, dividends on shares of Series B
Preferred Stock called for redemption will ceases to accrue, such shares will no
longer be deemed to be outstanding and all rights in respect to such shares of
the Company shall cease, except the right to receive the redemption price. If
less than all of the outstanding shares of Series B Preferred Stock are to be
redeemed, the Company shall either redeem a portion of the shares of each holder
determined pro rata based on the number of shares held by each holder or shall
select the shares to be redeemed, by lot, as may be determined by the Board of
Directors of the Company.
(B) Unless otherwise required by law, notice of redemption for
any redemption made pursuant to this Section 6 will be sent to the holders of
Series B Preferred Stock at the address shown on the books of the Company or any
transfer agent for the Series B Preferred Stock by first class mail, postage
prepaid, mailed not less than twenty (20) days nor more than sixty (60) days
prior to the redemption date. Each such notice shall state: (i) the redemption
date; (ii) the total number of shares of the Series B Preferred Stock to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date; and (vi)
the conversion rights of the shares to be redeemed, the period within which
conversion rights may be exercised (which shall be no less than twenty (20)
days), and the Conversion Price and number of shares of Common Stock issuable
upon conversion of a share of Series B Preferred Stock on the date such notice
is sent. The foregoing notice provisions may be amended, if necessary, so as to
comply with the optional redemption provisions for preferred stock as
"qualifying employer securities" or "employer securities" within the meaning of
Sections 4975(e)(8) and 409(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), or under any successor provision thereof or as "qualifying
employer securities" under Section 407(d)(5) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or under any successor provision
thereof. Upon surrender of the certificates for any shares so called for
redemption and not previously converted (properly endorsed or assigned for
transfer, if the Board of Directors of the Company shall so require and the
notice shall so state), such shares shall be redeemed by the Company at the date
fixed for redemption and at the redemption price set forth in this Section 6.
(C) (i) In the event of a change in the federal tax laws of the
United States of America (or any regulations or rulings promulgated thereunder),
or any change in the application, enforcement or interpretation in respect of
such laws, regulations or rulings, including any of the foregoing taken by a
court of competent jurisdiction, which has the effect of precluding the Company
from claiming any of the tax deductions for dividends paid on the Series B
Preferred Stock (other than a change treating the dividends as a preference item
for purposes of determining alternative minimum tax) when such dividends are
used as provided under Section 404(k)(2) of the Code and in effect on the date
shares of Series B Preferred Stock are initially issued, or (ii) upon a
determination by the Internal Revenue Service that the Company's employee stock
ownership plan (the "Plan"), as amended, or any successor plan is not qualified
under Sections 401(a), 401(k) and 4975(e)(7) of the Code, the Company may, in
its sole discretion and notwithstanding anything to the contrary in paragraph
(A) of this Section 6, elect to redeem such shares for the amount payable in
respect of the shares upon liquidation of the Company pursuant to Section 4
hereof. Notice of such redemption shall be provided in accordance with the
procedures set forth in paragraph (B) of this Section 6, provided, however, that
notice of redemption for any redemption made pursuant to clause (i) of this
paragraph 6(C) shall be mailed not more than ninety (90) days after the later to
occur of (i) the effective date, or (ii) the date of enactment, of the change
permitting such redemption.
(D) If the Company terminates or partially terminates the Plan,
then, notwithstanding anything to the contrary in paragraph (A) of this Section
6, the Company may elect to redeem any and all of the shares of Series B
Preferred Stock at any time prior to July 1, 1994, on the terms and conditions
set forth in paragraphs (A) and (B) of this Section 6.
(E) The Company shall make payment of the redemption price
required upon redemption of shares of Series B Preferred Stock in cash, or if
the Company so elects, in shares of Common Stock, or in a combination of such
shares and cash, any such shares to be valued for such purpose at their Fair
Market Value (as defined in paragraph (G) of Section 9 hereof). Notwithstanding
anything herein to the contrary (including Section 7 hereof), in the event that
the Company elects, by a resolution of its Board of Directors, to make payment
of all future redemption prices solely in cash or solely in shares of Common
Stock of the Company and notifies the holders of Series B Preferred Stock of
such election, all such payments thereafter shall be made in compliance with
such election and such election shall be irrevocable.
Section 7. Other Redemption Rights.
For consideration as provided in paragraph (E) of Section 6,
shares of Series B Preferred Stock shall be redeemed by the Company at a
redemption price equal to the greater of the Fair Market Value (as hereinafter
defined) or the Liquidation Price of the Series B Preferred Stock plus an amount
equal to all accrued and unpaid dividends thereon to the date fixed for
redemption, at the option of the holder, at any time and from time to time upon
notice to the Company given not less than five (5) business days prior to the
date fixed by the holder in such notice for such redemption, when and to the
extent necessary (i) for such holder to provide for distributions required to be
made to participants under, or to satisfy an investment election provided to
participants in accordance with, the Plan, or any successor Plan, (ii) for such
holder to make payment of principal, interest or premium due and payable
(whether as scheduled or upon acceleration) on indebtedness of the trust under
such Plan or any indebtedness incurred by the holder for the benefit of the
Plan, or (iii) when and if it shall be established to the satisfaction of the
holder that the Plan has not initially been determined by the Internal Revenue
Service to be qualified as an employee stock ownership plan within the meaning
of Sections 401(a) or 4975(e)(7) of the Code, respectively.
Section 8. Consolidation, Merger, etc.
(A) In the event that the Company shall consummate any
consolidation, merger or similar business transaction, however named, pursuant
to which the outstanding shares of Common Stock are by operation of law
exchanged solely for or changed, reclassified or converted solely into stock of
any successor or resulting company (including the Company) that constitutes
"employer securities" with respect to a holder of Series B Preferred Stock
(within the meaning of Section 409(1) of the Code) and "qualifying employer
securities" (within the meaning of Section 407(d)(5) of ERISA, or any successor
provisions of law) and, if applicable, for a cash payment in lieu of fractional
shares, if any, the shares of Series B Preferred Stock of such holder shall be
assumed and shall become preferred stock of such successor or resulting company,
having in respect of such company insofar as possible the same powers,
preferences and relative, participating, optional or other special rights
(including the redemption rights provided by Sections 6, 7 and 8 hereof), and
the qualifications, limitations or restrictions thereon, that the Series B
Preferred Stock had immediately prior to such transaction, except that after
such transaction each share of the Series B Preferred Stock shall be
convertible, otherwise on the terms and conditions provided by Sections 5 and 7
hereof, into the number and kind of qualifying employer securities so receivable
by a holder of the number of shares of Common Stock into which such shares of
Series B Preferred Stock could have been converted immediately prior to such
transaction if such holder of Common Stock failed to exercise any rights of
election to receive any kind or amount of stock, securities, cash or other
property (other than such qualifying employer securities and a cash payment, if
applicable, in lieu of fractional shares) receivable upon such transaction
(provided that, if the kind or amount of qualifying employer securities
receivable upon such transaction is not the same for each non-electing share of
Common Stock, then the kind and amount of qualifying employer securities
receivable upon such transaction for each non-electing share of Common Stock
shall be the kind and amount so receivable per share by a plurality of the
non-electing shares of Common Stock). The rights of the Series B Preferred Stock
as preferred stock of such successor or resulting company shall successively be
subject to adjustment pursuant to Section 9 hereof after any such transaction as
nearly equivalent to the adjustments provided for by such section prior to such
transaction. The Company shall not merger, consolidation or similar transaction
unless all then outstanding shares of the Series B Preferred Stock shall be
assumed and authorized by the successor or resulting company as aforesaid.
(B) In the event that the Company shall consummate any
consolidation or merger or similar transaction, however named, pursuant to which
the outstanding shares of Common Stock are by operation of law exchanged for or
changed, reclassified or converted into other stock or securities or cash or any
other property, or any combination thereof, other than any such consideration
which is constituted solely of qualifying employer securities (as referred to in
paragraph (A) of this Section 8) and cash payments, if applicable, in lieu of
fractional shares, outstanding shares of Series B Preferred Stock shall, without
any action on the part of the Company or any holder thereof (but subject to
paragraph (C) of this Section 8), be automatically converted by virtue of such
merger, consolidation or similar transaction immediately prior to such
consummation into the number of shares of Common Stock into which such shares of
Series B Preferred Stock could have been converted at such time so that each
share of Series B Preferred Stock shall, by virtue of such transaction and on
the same terms as apply to the holders of Common Stock, be converted into or
exchanged for the aggregate amount of stock, securities, cash or other property
(payable in like kind) receivable by a holder of the number of shares of Common
Stock into which such shares of Series B Preferred Stock could have been
converted immediately prior to such transaction if such holder of Common Stock
failed to exercise any rights of election as to the kind or amount of stock,
securities, cash or other property receivable upon such transaction (provided
that, if the kind or amount of stock, securities, cash or other property
receivable upon such transaction is not the same for each non-electing share of
Common Stock, then the kind and amount of stock, securities, cash or other
property receivable upon such transaction for each non-electing share of Common
Stock shall be the kind and amount so receivable per share by a plurality of the
non-electing shares of Common Stock).
(C) In the event the Company shall enter into any agreement
providing for any consolidation, merger, or similar transaction described in
paragraph (B) of this Section 8, then the Company shall as soon as practicable
thereafter (and in any event at least ten (10) business days before consummation
of such transaction) give notice of such agreement and the material terms
thereof to each holder of Series B Preferred Stock and each such holder shall
have the right to elect, by written notice to the Company, to receive, upon
consummation of such transaction (if and when such transaction is consummated),
from the Company of the successor of the Company, out of funds legally available
therefor, in redemption and retirement of such Series B Preferred Stock, a cash
payment equal to the amount payable in respect of shares of Series B Preferred
Stock upon redemption pursuant to paragraph (A) of Section 6 hereof. No such
notice of redemption shall be effective unless given to the Company prior to the
close of business on the second business day prior to consummation of such
transaction, unless the Company or the successor of the Company shall waive such
prior notice, but any notice of redemption so given prior to such time may be
withdrawn by notice of withdrawal given to the Company prior to the close of
business on the second business day prior to consummation of such transaction.
Section 9. Anti-dilution Adjustments.
(A) In the event the Company shall, at any time or from time to
time while any of the shares of Series B Preferred Stock are outstanding, (i)
pay a dividend or make a distribution in respect of the Common Stock in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
in each case whether by reclassification of shares, recapitalization of the
Company (including a recapitalization effected by a merger or consolidation to
which Section 8 hereof does not apply) or otherwise, subject to the provisions
of subparagraphs E and F of this Section 9, the Conversion Price in effect
immediately prior to such action shall be adjusted by multiplying such
Conversion Price by the fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event. An adjustment made pursuant to this paragraph 9(A) shall be given effect,
upon payment of such a dividend or distribution, as of the record date for the
determination of shareholders entitled to receive such dividend or distribution
(on a retroactive basis) and in the case of a subdivision or combination shall
become effective immediately as of the effective date thereof.
(B) In the event that the Company shall, at any time or from time
to time while any of the shares of Series B Preferred Stock are outstanding,
issue to holders of shares of Common Stock as a dividend or distribution,
including by way of a reclassification of shares or a recapitalization of the
Company, any right or warrant to purchase shares of Common Stock (but not
including as such a right or warrant (i) any security convertible into or
exchangeable for shares of Common Stock or (ii) any rights issued pursuant to or
governed by the Rights Agreement or any successor rights agreement thereto) at a
purchase price per share less than the Fair Market Value (as hereinafter
defined) of a share of Common Stock on the date of issuance of such right or
warrant, then, subject to the provisions of paragraphs (E) and (F) of this
Section 9, the Conversion Price shall be adjusted by multiplying such Conversion
Price by the fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the number of shares of Common Stock which could be purchased at the Fair
Market Value of a share of Common Stock at the time of such issuance for the
maximum aggregate consideration payable upon exercise in full of all such rights
or warrants and the denominator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants plus
the maximum number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants.
(C) In the event the Company shall, at any time or from time to
time while any of the shares of Series B Preferred Stock are outstanding, issue,
sell or exchange shares of Common Stock (other than pursuant to (i) any right or
warrant to purchase or acquire shares of Common Stock (including as such a right
or warrant any security convertible into or exchangeable for shares of Common
Stock), (ii) any rights issued pursuant to or governed by the Rights Agreement
or any successor rights agreement, and (iii) any employee or director incentive
or benefit plan or arrangement, including any employment, severance or
consulting agreement, of the Company or any subsidiary of the Company heretofore
or hereafter adopted) for a consideration having a Fair Market Value of Common
Stock on the date of such issuance, sale or exchange less than the Fair Market
Value of such shares of Common Stock on the date of such issuance, sale or
exchange, then, subject to the provisions of paragraphs (E) and (F) of this
Section 9, the Conversion Price shall be adjusted by multiplying such Conversion
Price by the fraction the numerator of which shall be the sum of (i) the Fair
Market Value of all the shares of Common Stock outstanding on the day
immediately preceding the first public announcement of such issuance, sale or
exchange plus (ii) the Fair Market Value of the consideration received by the
Company in respect of such issuance, sale or exchange of shares of Common Stock,
and the denominator of which shall be the product of (i) the Fair Market Value
of a share of Common Stock on the day immediately preceding the first public
announcement of such issuance, sale or exchange multiplied by (ii) the sum of
the number of shares of Common Stock outstanding on such day plus the number of
shares of Common Stock so issued, sold or exchanged by the Company. In the event
the Company shall, at any time or from time to time while any shares of Series B
preferred Stock are outstanding, issue, sell or exchange any right or warrant to
purchase or acquire shares of Common Stock (including as such a right or warrant
any security convertible into or exchangeable for shares of Common Stock), other
than any such issuance (i) to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or a
recapitalization of the Company), (ii) or rights issued pursuant to or governed
by the Rights Agreement or any successor rights agreement thereto, and (iii)
pursuant to any employee or director incentive or benefit plan or arrangement
(including any employment, severance or consulting agreement) of the Company or
any subsidiary of the Company heretofore or hereafter adopted, for a
consideration having a Fair Market Value on the date of such issuance, sale or
exchange less than the Non-Dilutive Amount (as hereinafter defined), then,
subject to the provisions of paragraphs (E) and (F) of this Section 9, the
Conversion Price shall be adjusted by multiplying such Conversion Price by the
fraction the numerator of which shall be the sum of (i) the Fair Market Value of
all the shares of Common Stock outstanding on the day immediately preceding the
first public announcement of such issuance, sale or exchange plus (ii) the Fair
Market Value of the consideration received by the Company in respect of such
issuance, sale or exchange of such right or warrant plus (iii) the Fair Market
Value at the time of such issuance of the consideration which the Company would
receive upon exercise in full of all such rights or warrants, and the
denominator of which shall be product of (i) the Fair Market Value of a share of
Common Stock on the day immediately preceding the first public announcement of
such issuance, sale or exchange multiplied by (ii) the sum of the number of
shares of Common Stock outstanding on such day plus the maximum number of shares
of Common Stock which could be acquired pursuant to such right or warrant at the
time of the issuance, sale or exchange of such right or warrant (assuming shares
of Common Stock could be acquired pursuant to such right or warrant at such
time).
(D) In the event the Company shall, at any time or from time to
time while any of the shares of Series B Preferred Stock are outstanding, make
an Extraordinary Distribution (as hereinafter defined) in respect of the Common
Stock, whether by dividend, distribution, reclassification of shares or
recapitalization of the Company (including a recapitalization or
reclassification effected by a merger or consolidation to which Section 8 hereof
does not apply) or effect a Pro Rata Repurchase (as hereinafter defined) of
Common Stock, the Conversion Price in effect immediately prior to such
Extraordinary Distribution or Pro Rata Repurchase shall, subject to paragraphs
(E) and (F) of this Section 9, be adjusted by multiplying such Conversion Price
by the fraction, the numerator of which is (i) the product of (x) the number of
shares of Common Stock outstanding immediately before such Extraordinary
Distribution or Pro Rata Repurchase multiplied by (y) the Fair Market Value (as
herein defined) of a share of Common Stock on the day before the ex-dividend
date with respect to an Extraordinary Distribution which is paid in cash and on
the distribution date with respect to an Extraordinary Distribution which is
paid other than in cash, or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata Repurchase, or on
the date of purchase with respect to any Pro Rata Repurchase which is not a
tender offer, as the case may be, minus (ii) the Fair Market Value of the
Extraordinary Distribution or the aggregate purchase price of the Pro Rata
Repurchase, as the case may be, and the denominator of which shall be the
product of (A) the number of shares of Common Stock outstanding immediately
before such Extraordinary Dividend or Pro Rata Repurchase minus, in the case of
a Pro Rata Repurchase, the number of shares of Common Stock repurchased by the
Company multiplied by (B) the Fair Market Value of a share of Common Stock on
the day before the ex-dividend date with respect to an Extraordinary
Distribution which is paid in cash and on the distribution date with respect to
an Extraordinary Distribution which is paid other than in cash or on the
applicable expiration date (including all extensions thereof) of any tender
offer which is a Pro Rata Repurchase or on the date of purchase with respect to
any Pro Rata Repurchase which is not a tender offer, as the case may be. The
Company shall send each holder of Series B Preferred Stock (i) notice of its
intent to make any dividend or distribution and (ii) notice of any offer by the
Company to make a Pro Rata Repurchase, in each case at the same time as, or as
soon as practicable after, such offer is first communicated (including by
announcement of a record date in accordance with the rules of any stock exchange
on which the Common Stock is listed or admitted to trading) to holders of Common
Stock. Such notice shall indicate the intended record date and the amount and
nature of such dividend or distribution, or the number of shares subject to such
offer for a Pro Rata Repurchase and the purchase price payable by the Company
pursuant to such offer, as well as the Conversion Price and the number of shares
of Common Stock into which a share of Series B Preferred Stock may be converted
at such time.
(E) Notwithstanding any other provisions of this Section 9, the
Company shall not be required to make any adjustment of the Conversion Price
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Conversion Price. Any lesser adjustment shall be carried
forward and shall be made no later than the time of, and together with, the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least one percent
(1%) in the Conversion Price.
(F) If the Company shall make any dividend or distribution on the
Common Stock or issue any Common Stock, other capital stock or other security of
the Company or any rights or warrants to purchase or acquire any such security,
which transaction does not result in an adjustment to the Conversion Price
pursuant to the foregoing provisions of this Section 9, the Board of Directors
of the Company shall consider whether such action is of such a nature that an
adjustment to the Conversion Price should equitably be made in respect of such
transaction. If in such case the Board of Directors of the Company determines
that an adjustment to the Conversion Price should be made, an adjustment shall
be made effective as of such date, as determined by the Board of Directors of
the Company, which adjustment shall in no event adversely affect the powers,
preferences or special rights of the Series B Preferred Stock as set forth
herein. The determination of the Board of Directors of the Company as to whether
an adjustment to the Conversion Price should be made pursuant to the foregoing
provisions of this paragraph 9(F), and, if so, as to what adjustment should be
made and when, shall be final and binding on the Company and all stockholders of
the Company. The Company shall be entitled to make such additional adjustments
in the Conversion Price, in addition to those required by the foregoing
provisions of this Section 9, as shall be necessary in order that any dividend
or distribution in shares of capital stock of the Company, subdivision,
reclassification or combination of shares of stock of the Company or any
recapitalization of the Company shall not be taxable to holders of the Common
Stock.
(G) For purposes of this [Resolution], the following definitions
shall apply:
The term "business day" shall mean each day that is not a Saturday,
Sunday or a day on which state or federally chartered banking institutions in
New York, New York or Fort Worth, Texas are not required to be open.
"Extraordinary Distribution" shall mean any dividend or other
distribution to holders of Common Stock (effected while any of the shares of
Series B Preferred Stock are outstanding) (i) of cash, where the aggregate
amount of such cash dividend or distribution together with the amount of all
cash dividends and distributions made during the preceding period of 12 months,
when combined with the aggregate amount of all Pro Rata Repurchases (for this
purpose, including only that portion of the aggregate purchase price of such Pro
Rata Repurchase which is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the applicable expiration date, including all
extensions thereof, of any tender offer or exchange offer which is a Pro Rata
Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase which is not a tender offer or exchange offer made during such
period), exceeds ten percent (10%) of the aggregate Fair Market Value of all
shares of Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution and (ii) of any
shares of capital stock of the Company (other than shares of Common Stock),
other securities of the Company (other than securities of the type referred to
in paragraph (B) of this Section 9), evidences of indebtedness of the Company or
any other person or any other property (including shares of any subsidiary of
the Company), or any combination thereof. The Fair Market Value of an
Extraordinary Distribution for purposes of paragraph (D) of this Section 9 shall
be the sum of the Fair Market Value of such Extraordinary Distribution plus the
amount of any cash dividends which are not Extraordinary Distributions made
during such twelve month period and not previously included in the calculation
of an adjustment pursuant to paragraph (D) of this Section 9.
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Company or any other issuer
which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the Adjustment
Period (as hereinafter defined). "Current Market Price" of publicly traded
shares of Common Stock or any other class of capital stock or other security of
the Company or any other issuer for a day shall mean (i) for purposes of
Sections 6 and 7 hereof, the mean between the highest and lowest reported sales
price on such day and (ii) for all other purposes hereof, the last reported
sales price, regular way, or, in case no sale takes place on such day, the
average of the reported closing bid and asked prices, regular way, in either
case as reported on the New York Stock Exchange Composite Tape or, if such
security is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market System or, if such security
is not quoted on such National Market System, the average of the closing bid and
asked prices on each such day in the over-the-counter market as reported by
Nasdaq or, if bid and asked prices for such security on each such day shall not
have been reported through Nasdaq, the average of the bid and asked prices for
such day as furnished by any New York Stock Exchange member firm regularly
making a market in such security selected for such purpose by the Board of
Directors of the Company or a committee thereof on each trading day during the
Adjustment Period. "Adjustment Period" shall mean the period of five (5)
consecutive trading days, selected by the Board of Directors of the Company or a
committee thereof in a manner determined by such Board of Directors or committee
to be most favorable to the holders of the Series B Preferred Stock, during the
twenty (20) trading days preceding, and including, the date as of which the Fair
Market Value of a security is to be determined. The "Fair Market Value" of any
security (except with respect to the Series B Preferred Stock) which is not
publicly traded or of any other property shall mean the fair value thereof as
determined by an independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good faith by the Board
of Directors of the Company or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the Board of
Directors or such committee available to make such determination, as determined
in good faith by the Board of Directors of the Company or such committee. The
"Fair Market Value" of the Series B Preferred Stock shall be the value
determined by an independent appraisal firm appointed by the Trustee, provided
that in determining such value, such appraisal firm shall not take into account
any accrued but unpaid Preferred Dividends.
"Non-Dilutive Amount" in respect of an issuance, sale or exchange by the
Company of any right or warrant to purchase or acquire shares of Common Stock
(including any security convertible into or exchangeable for shares of Common
Stock) shall mean the remainder of (i) the product of the Fair Market Value of a
share of Common Stock on the day preceding the first announcement of such
issuance, sale or exchange multiplied by the maximum number of shares of Common
Stock which could be acquired on such date upon the exercise in full of such
rights and warrants (including upon the conversion or exchange of all such
convertible or exchangeable securities), whether or not exercisable (or
convertible or exchangeable) at such date, minus (ii) the aggregate amount
payable to the Company pursuant to such right or warrant to purchase or acquire
such maximum number of shares of Common Stock; provided, however, that in no
event shall the Non-Dilutive Amount be less than zero. For purposes of the
foregoing sentence, in the case of a security convertible into or exchangeable
for shares of Common Stock, the amount payable pursuant to a right or warrant to
purchase or acquire shares of Common Stock shall be the Fair Market Value of
such security on the date of the issuance, sale or exchange of such security by
the Company.
"Pro Rata Repurchase" shall mean any purchase of shares of Common Stock
by the Company or any subsidiary thereof, whether for cash, shares of capital
stock of the Company, other securities of the Company, evidences of indebtedness
of the Company or any other person or any other property (including shares of a
subsidiary of the Company), or any combination thereof, affected while any of
the shares of Series B Preferred Stock are outstanding, pursuant to any tender
offer or exchange offer subject to Section 13(e) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor provision of law, or
pursuant to any other offer available to substantially all holders of Common
Stock; provided, however, that no purchase of shares by the Company or any
subsidiary thereof made in open market transactions shall be deemed a Pro Rata
Repurchase. For purposes of this paragraph 9(G), shares shall be deemed to have
been purchased by the Company or any subsidiary thereof "in open market
transactions" if they have been purchased substantially in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act, on the date
shares of Series B Preferred Stock are initially issued by the Company or on
such other terms and conditions as the Board of Directors of the Company or a
committee thereof shall have determined are reasonably designed to prevent such
purchases from having a material affect on the trading market for the Common
Stock.
(H) Whenever an adjustment to the Conversion Price and the
related voting rights of the Series B Preferred Stock is restored pursuant to
this Resolution, the Company shall forthwith place on file with the transfer
agent for the Common Stock and the Series B Preferred Stock if there be one, and
with the Secretary of the Company, a statement signed by two officers of the
Company stating the adjusted Conversion Price determined as provided herein and
the resulting conversion ratio, and the voting rights (as appropriately
adjusted), of the Series B Preferred Stock. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show the reason and the
manner of computing such adjustment, including any determination of Fair Market
Value involved in such computation. Promptly after each adjustment to the
Conversion Price and the related voting rights of the Series B Preferred Stock,
the Company shall mail a notice thereof and of the then prevailing conversion
ratio to each holder of shares of the Series B Preferred Stock.
Section 10. Ranking; Attributable Capital and Adequacy of Surplus;
Retirement of Shares.
(A) The Series B Preferred Stock shall rank senior to (i) the
Common Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up of the Company, and (ii) the Series A
Junior Participating Preferred Stock as to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding-up. Unless
otherwise provided in the Restated Certificate of Incorporation of the Company,
as amended, or a Certificate of Designations relating to a subsequent series of
Preferred Stock, without par value, of the Company, the Series B Preferred Stock
shall rank junior to all other subsequent series of the Company's Preferred
Stock, without par value, as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up.
(B) The capital of the Company allocable to the Series B
Preferred Stock for purposes of the Delaware General Corporation Law (the
"Corporation Law") shall be $1.00 per share. In addition to any vote of
stockholders required by law, the vote of the holders of a majority of the
outstanding shares of Series B Preferred Stock shall be required to increase the
par value of the Common Stock or otherwise increase the capital of the Company
allocable to the Common Stock for the purpose of the Corporation Law if, as a
result thereof, the surplus of the Company for purposes of the Corporation Law
would be less than the amount of Preferred Dividends that would accrue on the
then outstanding shares of Series B Preferred Stock during the following three
years.
(C) Any shares of Series B Preferred Stock acquired by the
Company by reason of the conversion or redemption of such shares as provided by
this Resolution, or otherwise so acquired, shall be retired as shares of Series
B Preferred Stock and restored to the status of authorized but unissued shares
of Preferred Stock, without par value, of the Company, undesignated as to
series, and may thereafter be reissued as part of a new series of such Preferred
Stock as permitted by law.
Section 11. Miscellaneous.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the earlier of receipt
thereof or three (3) business days after the mailing thereof if sent by
registered mail (unless first-class mail shall be specifically permitted for
such notice under the terms of this Resolution) with postage prepaid, addressed:
(i) if to the Company, to its office at 1800 One Tandy Center, Fort Worth, Texas
76102, (Attention: Marc C. Hill, Vice President, General Counsel, and Corporate
Secretary) or to the transfer agent for the Series B Preferred Stock, or other
agent of the Company designated as permitted by this Resolution or (ii) if to
any holder of the Series B Preferred Stock or Common Stock, as the case may be,
to such holder at the address of such holder as listed in the stock record books
of the Company (which may include the records of any transfer agent for the
Series B Preferred Stock or Common Stock, as the case may be) or (iii) to such
other address as the Company or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The term "Common Stock" as used in this [Resolution] means
the Company's Common Stock of $1.00 par value, as the same exists at the date of
filing of a Certificate of Designations relating to Series B Preferred Stock, or
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value. In the event
that, at any time as a result of an adjustment made pursuant to Section 9 of
this Resolution, the holder of any share of the Series B Preferred Stock upon
thereafter surrendering such shares for conversion shall become entitled to
receive any shares or other securities of the Company other than shares of
Common Stock, the Conversion Price in respect of such other shares or securities
so receivable upon conversion of shares of Series B Preferred Stock shall
thereafter be adjusted, and shall be subject to further adjustment from time to
time, in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in Section 9 hereof, and the
provisions of Sections 1 through 8 and 10 and 11 of this Resolution with respect
to the Common Stock shall apply on like or similar terms to any such other
shares or securities.
(C) The Company shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series B Preferred Stock or shares of Common Stock or
other securities issued on account of Series B Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Company shall not,
however, be required to pay any such tax which may be payable in respect of any
transfer involved in the issuance or delivery of shares of Series B Preferred
Stock or Common Stock or other securities in a name other than that in which the
shares of Series B Preferred Stock with respect to which such shares or other
securities are issued or delivered were registered, or in respect of any payment
to any person with respect to any such shares or securities other than a payment
to the registered holder thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the Company the amount of any
such tax or has established, to the satisfaction of the Company, that such tax
has been paid or is not payable.
(D) In the event that a holder of shares of Series B Preferred
Stock shall not by written notice designate the name in which shares of Common
Stock to be issued upon conversion of such shares should be registered or to
whom payment upon redemption of shares of Series B Preferred Stock should be
made or the address to which the certificate or certificates representing such
shares, or such payment, should be sent, the Company shall be entitled to
register such shares, and make such payment, in the name of the holder of such
Series B Preferred Stock as shown on the records of the Company and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Company.
(E) Unless otherwise provided in the Restated Certificate of
Incorporation, as amended, of the Company, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation or
winding-up or otherwise made upon the shares of Series B Preferred Stock and any
other stock ranking on a parity with the Series B Preferred Stock and any other
stock ranking on a parity with the Series B Preferred Stock with respect to such
dividend or distribution shall be made pro rata, so that amounts paid per share
on the Series B Preferred Stock and such other stock shall in all cases bear to
each other the same ratio that the required dividends, distributions or
payments, as the case may be, then payable per share on the shares of the Series
B Preferred Stock and such other stock bear to each other.
(F) The Company may appoint, and from time to time discharge and
change, a transfer agent for the Series B Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Company shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of Series
B Preferred Stock.
FIFTH: The number of directors of the Corporation shall be such as from
time to time shall be fixed by or in the manner provided in the bylaws but shall
not be less than three.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the bylaws of the Corporation; to
issue, sell, grant options to purchase and dispose of shares of the authorized
and previously unissued stock of any class of the Corporation and shares of its
outstanding stock of any class held in its treasury; to issue, sell and dispose
of the bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation, including bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation convertible into
stock of any class of the Corporation; to authorize and cause to be executed
mortgages and liens upon the real and personal property of the Corporation
including after-acquired property; to declare and pay dividends on the stock of
any class of the Corporation; to set apart out of any of the funds of the
Corporation available for dividends or otherwise a reserve or reserves for any
proper purpose and to abolish any such reserve in the manner in which it was
created.
(b) To designate one or more committees, by resolution passed by a
majority of the whole board, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in the resolution or
in the bylaws of the Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it, and each committee shall have such name as may be
stated in the bylaws of the Corporation or as may be determined from time to
time by resolution adopted by the Board of Directors.
(c) When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all of the property and assets of the
Corporation, including its goodwill and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as the Board of Directors shall deem expedient and for the best
interests of the Corporation.
(d) To exercise all other corporate powers and to do all other acts and
things as may be exercised or done by the Corporation, subject, however, to the
provisions of the statutes of the State of Delaware and of this Certificate of
Incorporation and the bylaws of the Corporation.
SEVENTH: Elections of directors need not be by ballot unless the bylaws
of the Corporation shall so provide.
EIGHTH:The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of subsection
(b) of Section 102 of the General Corporation Law of Delaware, as the same may
be amended and supplemented. No amendment to or repeal of this Article EIGHTH
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to the right reserved in this Article
NINTH.
in witness whereof, this Restated Certificate of Incorporation,
which restates, integrates but does not further amend the provisions of the
Corporation's Certificate of Incorporation, as theretofore amended or
supplemented, having been duly adopted by the Board of Directors of the
Corporation in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware, has been executed this 26th day of
July, 1999.
TANDY CORPORATION
By: _______________________________
Name: Dwain H. Hughes
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT 3a(ii)
Certificate of ELIMINATION
of
Series C CONVERSION Preferred Stock
of
TANDY CORPORATION
a Delaware corporation
Pursuant to ss. 151(g) of the General Corporation Law
of the State of Delaware
Pursuant to Section 151(g) of the Delaware General Corporation Law, Tandy
Corporation, a Delaware corporation (the "Corporation"), does hereby certify
that the following resolutions were duly adopted by the Corporation's Board of
Directors on July 24, 1999:
RESOLVED, that none of the shares of preferred stock, without par value, of
the Corporation designated as Series C Conversion Preferred Stock pursuant
to the Certificate of Designation filed by the Corporation with the
Secretary of State of the State of Delaware on February 14, 1992 (the
"Certificate of Designation") are outstanding and none of such shares will
be issued subject to the Certificate of Designation; and
RESOLVED FURTHER, that the officers of the Corporation are hereby
authorized and directed to prepare and file with the Secretary of
State of the State of Delaware a certificate pursuant to Section
151(g) of the Delaware General Corporation Law setting forth this
resolution in order to eliminate from the Corporation's
certificate of incorporation all matters set forth in the
Certificate of Designation with respect to the Series C
Conversion Preferred Stock and to do all acts and things which
may be necessary or proper in their opinion to carry into effect
the purposes and intent of this and the foregoing resolution.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Elimination, as of this 26th day of July, 1999.
TANDY CORPORATION
By: _______________________________
Name: Dwain H. Hughes
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT 3a(iii)
AMENDED CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
of
TANDY CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Tandy Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY THAT:
1. No shares of the Corporation's Series A Junior Participating
Preferred Stock have been issued.
2. That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation, the Board of
Directors on July 24, 1999, adopted the following resolution amending the
Certificate of Designation, Preferences and Rights filed with the Secretary of
State of the State of Delaware on November 13, 1986 (as amended on June 25,
1990) that sets forth the terms of a series of preferred stock ("Preferred
Stock") designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article FOURTH of the Restated Certificate of
Incorporation, the Certificate of Designations, Preferences and Rights
originally filed with the Secretary of State of the State of Delaware on
November 13, 1986 (and amended on June 25, 1990) that created a series of
preferred stock designated as "Series A Junior Participating Preferred Stock" of
the Corporation be, and it hereby is, further amended, and that the designation
and amount of the Series A Junior Participating Preferred Stock and the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation, Par Value and Amount.
There shall be a series of preferred stock of the Corporation designated
as the "Series A Junior Participating Preferred Stock," without par value (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 300,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock, to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of shares of
Common Stock, par value $1.00 per share (the "Common Stock"), of the Corporation
and any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifteenth day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $500 or (b) 10,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event the Corporation shall at any
time after July 26, 1999, (i) declare any dividend on the Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine
or consolidate the outstanding Common Shares into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $500 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share by share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to 10,000 votes on all matters submitted to a vote of the
stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock,
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock,
then outstanding shall have been declared and paid or set apart for payment.
During each default period, the holders of the Series A Preferred Stock with
dividends in arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, shall have the right to elect two (2) directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of any
other series of preferred stock, if any, to increase, in certain cases, the
authorized number of directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Series A Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Series A Preferred
Stock of such voting right. At any meeting at which the holders of Series A
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
to two (2) directors, or if such right is exercised at an annual meeting, to
elect two (2) directors. If the number of directors which may be so elected at
any special meeting does not amount to the required number, the holders of the
Series A Preferred Stock shall have the right to make such increase in the
number of directors as shall be necessary to permit the election by them of the
required number. After the holders of the Series A Preferred Stock shall have
exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be increased or
decreased except by vote of the holders of Series A Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of Series A
Preferred Stock, which meeting shall thereupon be called by the Chairman,
President, a Vice-President or the Corporate Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Series A
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Series A Preferred Stock by mailing a copy
of such notice to him or her at his or her last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 10 days and not later than 60 days after such order or request or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of directors until the holders of Series A
Preferred Stock shall have exercised their right to elect two (2) directors
voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Series A Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining directors theretofor elected by the holders
of the class of stock which elected the director whose office shall have become
vacant. References in this paragraph (C) to directors elected by the holders of
a particular class of stock shall include directors elected by such directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series A Preferred Stock, as a class to elect directors
shall cease, (y) the term of any directors elected by the holders of Series A
Preferred Stock as a class shall terminate, and (z) the number of directors
shall be such number as may be provided for in, or pursuant to, the Restated
Certificate of Incorporation or Bylaws irrespective of any increase made
pursuant to the provisions of paragraph (C) (ii) of this Section 3 (such number
being subject, however to change thereafter in any manner provided by law or in
the Restated Certificate of Incorporation or Bylaws). Any vacancies in the Board
of Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors, even though
less than a quorum.
(D) Except as set forth herein (or as otherwise required by
applicable law), holders of Series A Preferred Stock shall have no general or
special voting rights and their consent shall not be required for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts as to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Restated Certificate of Incorporation, in any other Certificate
of Designations, Preferences and Rights creating a series of Preferred Stock or
as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) With respect to any liquidation, dissolution or winding up
(voluntary or otherwise) of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $10,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 10,000 (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Preferred Stock and Common Stock, respectively, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of Series A Preferred Stock
and the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after July 26,
1999, (i) declare any dividend on the Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 10,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after July 26, 1999,
(i) declare any dividend on the Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds (66 2/3%) or more of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share, which are one ten-thousandths or integral
multiples of one ten-thousandths of a share, which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, I have executed and subscribed this Amended
Certificate of Designations, Preferences and Rights, as of this 26th day of
July, 1999.
TANDY CORPORATION
By: _______________________________
Name: Dwain H. Hughes
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT 4a
TANDY CORPORATION
and
BANKBOSTON, N.A.,
Rights Agent
Amended and Restated Rights Agreement
Dated as of July 26, 1999
<TABLE>
Table of Contents
-----------------
<CAPTION>
<S> <C> <C>
Section 1. Certain Definitions....................................................... 2
Section 2. Appointment of Rights Agent............................................... 6
Section 3. Issuance of Rights Certificates........................................... 6
Section 4. Form of Rights Certificates............................................... 9
Section 5. Countersignature and Registration......................................... 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.............................................................. 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............. 12
Section 8. Cancellation and Destruction of Rights Certificates....................... 15
Section 9. Reservation and Availability of Preferred Shares.......................... 15
Section 10. Record Date............................................................... 17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights....................................................... 17
Section 12. Certificate of Adjusted Purchase Price or Number of Shares................ 28
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.......................................................... 29
Section 14. Fractional Rights and Fractional Shares................................... 32
Section 15. Rights of Action.......................................................... 34
Section 16. Agreement of Rights Holders............................................... 35
Section 17. Rights Certificate Holder Not Deemed a Stockholder........................ 36
Section 18. Concerning the Rights Agent............................................... 36
Section 19. Merger or Consolidation or Change of Name of Rights Agent................. 37
Section 20. Duties of Rights Agent.................................................... 38
Section 21. Change of Rights Agent.................................................... 41
Section 22. Issuance of New Rights Certificates....................................... 42
Section 23. Redemption and Termination................................................ 43
Section 24. Exchange.................................................................. 45
Section 25. Notice of Certain Events.................................................. 47
Section 26. Notices................................................................... 48
Section 27. Supplements and Amendments................................................ 49
Section 28. Determination and Actions by the Board of Directors, etc.................. 50
Section 29. Successors................................................................ 51
Section 30. Benefits of this Agreement................................................ 51
Section 31. Severability.............................................................. 51
Section 32. Governing Law............................................................. 51
Section 33. Counterparts.............................................................. 51
Section 34. Descriptive Headings...................................................... 51
Exhibit A -- Form of Amended Certificate of Designation of
Series A Junior Participating Preferred Stock............................A-1
Exhibit B -- Form of Rights Certificate..............................................B-1
Exhibit C -- Form of Summary of Rights...............................................C-1
</TABLE>
<PAGE>
<TABLE>
DEFINED TERM CROSS REFERENCE SHEET
<CAPTION>
<S> <C>
Acquiring Person..................................................................Section 1(a)
Act...............................................................................Section 1(b)
Adjusted Number of Shares...................................................Section 11(a)(iii)
Adjusted Purchase Price.....................................................Section 11(a)(iii)
Adjustment Fraction..............................................................Section 11(q)
Adjustment Shares............................................................Section 11(a)(ii)
Affiliate.........................................................................Section 1(c)
Associate.........................................................................Section 1(c)
Beneficial Owner..................................................................Section 1(d)
Beneficially Own..............................................................Section 1(d)(ii)
Business Day......................................................................Section 1(e)
Capital Stock Equivalent....................................................Section 11(a)(iii)
Close of Business.................................................................Section 1(f)
Common Shares.....................................................................Section 1(g)
Company................................................................................Preface
Current Per Share Market Price................................................Section 11(d)(i)
Distribution Date.................................................................Section 3(a)
Equivalent Preferred Shares......................................................Section 11(b)
Exchange Act......................................................................Section 1(c)
Exchange Ratio...................................................................Section 24(a)
Final Expiration Date.............................................................Section 7(a)
Interested Stockholder............................................................Section 1(j)
Original Agreement.....................................................................Preface
Permitted Offer...................................................................Section 1(k)
Person............................................................................Section 1(l)
Preferred Shares..................................................................Section 1(m)
Principal Party..................................................................Section 13(b)
Proration Factor............................................................Section 11(a)(iii)
Purchase Price....................................................................Section 4(a)
Record Date............................................................................Preface
Redemption Date...................................................................Section 7(a)
Redemption Price..............................................................Section 23(a)(i)
Right..................................................................................Preface
Rights Agent...........................................................................Preface
Rights Agreement.......................................................................Preface
Rights Certificate................................................................Section 3(a)
Section 11(a)(ii) Event ..........................................................Section 1(o)
Section 13 Event..................................................................Section 1(p)
Security......................................................................Section 11(d)(i)
Shares Acquisition Date...........................................................Section 1(q)
Subsidiary........................................................................Section 1(r)
Summary of Rights.................................................................Section 3(b)
Then Outstanding.............................................................Section 1(d)(iii)
Trading Day...................................................................Section 11(d)(i)
Triggering Event..................................................................Section 1(s)
Voting Securities................................................................Section 13(a)
</TABLE>
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of July 26, 1999
(the "Rights Agreement"), between Tandy Corporation, a Delaware corporation (the
"Company"), and BankBoston, N.A., a national banking association (the "Rights
Agent"), amends and restates the Amended and Restated Rights Agreement, dated as
of June 22, 1990 (the "First Amended and Restated Agreement"), between the
Company and the Rights Agent, which amended and restated the Rights Agreement,
dated as of August 15, 1986 (the "Original Agreement"), between the Company and
the Rights Agent.
WITNESSETH:
WHEREAS, on August 15, 1986, the Board of Directors of the Company
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Company
outstanding as of the close of business on August 29, 1986 (the "Record Date"),
each Right representing the right to purchase one ten-thousandth of a share of
Series A Junior Participating Preferred Stock, without par value, of the Company
having the rights and preferences set forth in the form of Certificate of
Designations filed with the Secretary of the State of Delaware on November 13,
1986 (as amended on June 25, 1990), upon the terms and subject to the conditions
set forth in the Original Agreement, and further authorized the issuance of one
Right with respect to each Common Share that became outstanding after the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are defined in Sections 3 and 7 of the Original Agreement);
WHEREAS, on June 24, 1988, the Board of Directors of the Company
resolved to amend the Original Agreement and such amendments became effective by
agreement with the Rights Agent;
WHEREAS, on June 22, 1990, the Board of Directors of the Company
resolved further to amend and to restate in its entirety the Original Agreement,
and such amendments became effective by agreement with the Rights Agent;
WHEREAS, on July 24, 1999, the Board of Directors of the Company
determined that it is advisable and in the best interests of the Company and its
stockholders to amend and restate in its entirety the First Amended and Restated
Agreement on the terms and conditions set forth herein; and
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, without the prior approval of at
least a majority of the members of the Board of Directors, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding (other
than as a result of a Permitted Offer (as hereinafter defined)) or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 15% or more of the then outstanding
Common Shares. Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company, or
(iv) any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan; and (B) no Person shall become an
"Acquiring Person" as a result of the acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding, increases
the proportional number of shares beneficially owned by such Person together
with all Affiliates and Associates of such Person, provided that if after such
share acquisition by the Company, such Person or an Affiliate or Associate of
such Person becomes the Beneficial Owner of any additional Common Shares, then
such Person shall be deemed an Acquiring Person; and (C) no Person shall become
an Acquiring Person if (1) within five Business Days after such Person would
otherwise have become an Acquiring Person (but for the operation of this clause
(C)), such Person notifies the Board of Directors that such Person did so
inadvertently, and (2) within two Business Days after such notification (or such
greater period of time as may be determined by action of the Board of Directors,
but in no event greater than five Business Days), such Person divests itself of
a sufficient number of Common Shares so that such Person is the Beneficial Owner
of less than 15% of the outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) relating to the acquisition,
holding, voting (except to the extent permitted by subparagraph (ii)(B) of this
paragraph (d)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, Sunday, or
Federal holiday; or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., Boston
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Boston time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean
shares of Common Stock, par value $1.00 per share, of the Company or, in the
event of a subdivision, combination or consolidation with respect to such shares
of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(j) "Interested Stockholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest which represents
in excess of 5% of the total combined economic or voting power of such Person,
or any other Person acting directly or indirectly on behalf of or in concert
with any such Acquiring Person, Affiliate or Associate.
(k) "Permitted Offer" shall mean a tender or exchange offer for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board of Directors to be adequate (taking into account all
factors that such directors deem relevant including, without limitation, prices
that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and otherwise in the best
interests of the Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is being made) taking
into account all factors that such directors may deem relevant.
(l) "Person" shall mean any individual, firm, partnership, corporation,
limited liability company, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company having the
relative rights, preferences and limitations set forth in the Form of Amended
Certificate of Designations, Preferences and Rights attached to this Agreement
as Exhibit A.
(n) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(o) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(p) "Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
(q) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such; provided that if such
Person is determined not to have become an Acquiring Person pursuant to Section
1(a) hereof, then no Shares Acquisition Date shall be deemed to have occurred.
(r) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person, or which
is otherwise controlled by such Person.
(s) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such Co-Rights Agent. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights Agent
and any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii) the
Close of Business on the tenth day (or such later date as may be determined by
action of the Company's Board of Directors), after the date of the commencement
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person or entity organized, appointed or established by the Company or of any
Subsidiary of the Company for or pursuant to the terms of any such plan) of, or
of the first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any Person or entity organized, appointed
or established by the Company or of any Subsidiary of the Company for or
pursuant to the terms of any such plan) to commence (which intention to commence
remains in effect for five Business Days after such announcement), a tender or
exchange offer the consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both (i) and (ii), any such date
which is after the date of this Agreement and prior to the issuance of the
Rights), the earlier of such dates being herein referred to as the "Distribution
Date," (x) the Rights will be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and (y) the right to
receive Rights Certificates will be transferable only in connection with the
transfer of the underlying Common Shares (including a transfer to the Company);
provided, however, that if a tender offer is terminated prior to the occurrence
of a Distribution Date, then no Distribution Date shall occur as a result of
such tender offer. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent, by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate substantially in the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each Common Share so held. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As soon as practicable after the date of this Agreement, the Company
will send a copy of an amended Summary of Rights to Purchase Preferred Shares,
in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the date of this Agreement, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
outstanding as of the date of this Agreement, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof (together with a copy of the Summary of Rights). Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the date of this Agreement, with or without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with such Common Shares.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the date of this Agreement but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date,
shall be deemed also to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Rights
Agreement between Tandy Corporation and BankBoston, N.A. dated as
of July 26, 1999 (the "Rights Agreement"), as amended from time
to time, the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive offices of Tandy Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Tandy Corporation will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement) and certain related persons, whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Rights Certificates, whenever distributed, on their face
shall entitle the holders thereof to purchase such number of one ten-thousandths
of a Preferred Share as shall be set forth therein at the price per one
ten-thousandth of a Preferred Share set forth therein (the "Purchase Price"),
but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
of this Agreement and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement) or certain
related persons. Accordingly, this Rights Certificate and the
Rights represented hereby are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration. The Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary, or an Assistant Secretary, of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at the office of the Rights Agent designated for such purposes, records
for registration and transfer of the Rights Certificates issued hereunder. Such
records shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date and certificate number of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. Subject
to the provisions of Sections 4(b), 7(e), 11 and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Rights Certificate or Rights Certificates may be transferred, split up, combined
or exchanged for another Rights Certificate or Rights Certificates, entitling
the registered holder to purchase a like number of one ten-thousandths of a
Preferred Share (or, following a Triggering Event, other securities, as the case
may be) as the Rights Certificate or Rights Certificates surrendered then
entitled such holder (or its transferor in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Rights Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split-up, combined or exchanged, with the
form of assignment and certificate appropriately executed, at the principal
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to
the provisions of Sections 4(b), 7(e), 11 and 14 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Rights
Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for the total
number of one ten-thousandths of a Preferred Share (or other securities as the
case may be) as which such surrendered Rights are exercised, at or prior to the
earliest of (i) the Close of Business on July 26, 2009 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), (iii) the time at which the Rights are exchanged
as provided in Section 24 hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof.
(b) The Purchase Price for each one ten-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $250, shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the appropriate form of election to purchase and the certificate
duly executed, accompanied by payment of the Purchase Price for the Preferred
Shares (or other securities, as the case may be) to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 6 and Section 9 hereof by
certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon, subject to Section 20(k), promptly
(i) (A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing such
number of one ten-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such requests, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities
(including Common Shares) of the Company pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such Rights
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the Rights represented by such Rights
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Rights
Certificate were so exercised, the Rights Agent shall indicate on the Rights
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall
exercise (except pursuant to Section 11(a)(ii)) less than all the Rights
evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent and delivered
to the registered holder of such Rights Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof, or the Rights Agent
shall place an appropriate notation on the Rights Certificate with respect to
those Rights exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders
of equity interest in such Acquiring Person or to any Person with whom the
Acquiring Person has a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise (other than a
partial exercise), transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or if surrendered to the Rights
Agent, shall be canceled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares. The Company
covenants and agrees that at all times prior to the occurrence of a Section
11(a)(ii) Event it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares, or any authorized and issued Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights and, after
the occurrence of a Section 11(a)(ii) Event, shall to the extent reasonably
practicable so reserve and keep available a sufficient number of Common Shares
(and/or other securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the occurrence of a Section
11(a)(ii) Event, Common Shares or any other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares (or Common Shares and/or
other securities, as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any Preferred Shares (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Rights Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates or depositary receipts for
Preferred Shares (or Common Shares and/or other securities as the case may be)
upon the exercise of any Rights, until any such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
The Company shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date, (or, if required by law, at
such earlier time following the Distribution Date as so required), a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights provided by Section
11(a)(ii). The Company will also take such action as may be appropriate under
the blue sky laws of the various states.
Section 10. Record Date. Each person in whose name any certificate for
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares subject to
purchase upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except as provided below
and in Section 7(e) hereof) shall, for a period of 60 days after the later of
the occurrence of any such event or the effective date of an appropriate
registration statement under the Act pursuant to Section 9 hereof, have a right
to receive, upon exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement, such number of Common
Shares (or, in the discretion of the Board of Directors, one ten-thousandths of
a Preferred Share) as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one ten-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and dividing that product by (y) 50% of
the then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued (and unreserved) Common Shares to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) and the Rights become so exercisable (and the Board has determined to make
the Rights exercisable into fractions of a Preferred Share), notwithstanding any
other provision of this Agreement, to the extent necessary and permitted by
applicable law, each Right shall thereafter represent the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, (x) a number of (or fractions of) Common Shares (up to the
maximum number of Common Shares which may permissibly be issued) and (y) a
number of (or fractions of) one ten-thousandths of a Preferred Share or a number
of, or fractions of other equity securities of the Company (or, in the
discretion of the Board of Directors, debt) which the Board of Directors of the
Company has determined to have the same aggregate current market value
(determined pursuant to Sections 11(d)(i) and (ii) hereof, to the extent
applicable), as one Common Share (such number of, or fractions of, Preferred
Shares, debt, or other equity securities or debt of the Company being referred
to as a "capital stock equivalent"), equal in the aggregate to the number of
Adjustment Shares; provided, however, if sufficient Common Shares and/or capital
stock equivalents are unavailable, then the Company shall, to the extent
permitted by applicable law, take all such action as may be necessary to
authorize additional Common Shares or capital stock equivalents for issuance
upon exercise of the Rights, including the calling of a meeting of stockholders;
and provided, further, that if the Company is unable to cause sufficient Common
Shares and/or capital stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter represent the
right to receive the Adjusted Number of Shares upon exercise at the Adjusted
Purchase Price (as such terms are hereinafter defined). As used herein, the term
"Adjusted Number of Shares" shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to the product of (x) the
number of Adjustment Shares and (y) a fraction, the numerator of which is the
number of Common Shares (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon exercise in full
of all Rights (assuming there were a sufficient number of Common Shares
available) (such fraction being referred to as the "Proration Factor"). The
"Adjusted Purchase Price" shall mean the product of the Purchase Price and the
Proration Factor. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Shares and capital
stock equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(d) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price (as determined pursuant to
Section 11(d) hereof) of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the denominator of
which shall be such current per share market price of the Preferred Shares;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of the Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
Security, or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("Nasdaq") or such other exchange or market system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If on any such date no such market maker is making
a market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day. Subject
to Section 11(d)(ii) hereof, if any Security is not publicly held or so listed
or traded, the "current per share market price" of such Security shall mean the
fair market value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares (or one ten-thousandth of a
Preferred Share) shall be determined in the same manner as set forth in clause
(i) of this Section 11(d). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof), multiplied by ten thousand. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of a Preferred Share, or one
hundred-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction that requires such adjustment or (ii)
the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one ten-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and 11(c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
ten-thousandths of a Preferred Share (calculated to the nearest one
ten-thousandth of a Preferred Share) obtained by (i) multiplying (x) the number
of Preferred Shares covered by a Right immediately prior to this adjustment of
the Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price as a result of the calculations made in Section 11(b) and (c) to
adjust the number of Rights, in lieu of any adjustment in the number of one
ten-thousandths of a Preferred Share purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one ten-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any date thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one ten-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofor and thereafter issued
may continue to express the Purchase Price per share and the number of one
ten-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
ten-thousandths of a Preferred Share, Common Shares or other securities issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such number of fully paid and non-assessable one
ten-thousandths of a Preferred Share, Common Shares or other securities at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one ten-thousandths of a Preferred Share, Common Shares, or other
securities of the Company, if any, issuable upon such exercise over and above
the number of one ten-thousandths of a Preferred Share, Common Shares, or other
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which does not violate Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which does not violate Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
does not violate Section 11(o) hereof), if (x) at the time of or immediately
after such consolidation, merger, sale or transfer there are any charter or
by-law provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action the purpose of which is to, or if at
the time such action is taken it is reasonably foreseeable that the effect of
such action is to, materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
(q) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine or consolidate the outstanding Common Shares into a smaller number
of shares or (iv) otherwise reclassify the outstanding Common Shares, then in
any such case, the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each Common Share following any such event shall equal the
result obtained by multiplying the number of Rights associated with each Common
Share immediately prior to such event by a fraction (the "Adjustment Fraction")
the numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the number of Rights
associated with one Common Share, the Company may elect to adjust the number of
one ten-thousandths of a Preferred Share purchasable upon the exercise of one
Right and the Purchase Price. If the Company makes such election, the number of
Rights associated with one Common Share shall remain unchanged, and the number
of one ten-thousandths of a Preferred Share purchasable upon exercise of one
Right and the Purchase Price shall be proportionately adjusted so that (i) the
number of one ten-thousandths of a Preferred Share purchasable upon exercise of
a Right following such adjustment shall equal the product of the number of one
ten-thousandths of a Preferred Share purchasable upon exercise of a Right
immediately prior to such adjustment multiplied by the Adjustment Fraction and
(ii) the Purchase Price following such adjustment shall equal the product of the
Purchase Price immediately prior to such adjustment multiplied by the Adjustment
Fraction. The adjustment provided for in this subsection shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares and the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any Interested Stockholder or, if in such merger or consolidation
all holders of Common Shares are not treated alike, any other Person, (y) the
Company shall consolidate with, or merge with, any Interested Stockholder or, if
in such merger or consolidation all holders of Common Shares are not treated
alike, any other Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the election of
directors ("voting securities") of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Interested Stockholder or
Person or, if in such transaction all holders of Common Shares are not treated
alike, any other Person (other than the Company or any Subsidiary of the Company
in one or more transactions each of which does not violate Section 11(o)
hereof), then, and in each such case (except as provided in Section 13(d)
hereof), proper provision shall be made so that (i) each holder of a Right
(except as provided in Section 7(e) hereof), shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of freely tradeable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal, or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one ten-thousandths
of a Preferred Share for which a Right is then exercisable (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii)) and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation (including, if applicable, the
Company if it is the surviving corporation ); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any of the foregoing
cases, (1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized Common Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Right Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all material respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clauses (x) and (y) of Section 13(a) if: (i) such transaction is consummated
with a Person or Persons who acquired Common Shares pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per Common Share offered in such transaction is not less than the price
per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq or such other system then is use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used and shall be binding as the Rights Agent.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are one ten-thousandths or integral multiples
of one ten-thousandths of a Preferred Share) upon exercise of the Rights or to
issue certificates which evidence fractional Preferred Shares (other than
fractions that are one ten-thousandths or integral multiples of one
ten-thousandths of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one ten-thousandths of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not one
ten-thousandths or integral multiples of one ten-thousandths of a Preferred
Share, the Company shall pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive Common Shares,
capital stock equivalents (other than Preferred Shares) or other securities upon
the exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such Common Shares, capital stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractions of such Common Shares, capital stock equivalents or other
securities. In lieu of fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share or unit of such Common Shares, capital stock equivalents or
other securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise, and if such capital
stock equivalent is not traded, each such capital stock equivalent shall have
the value of one ten-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Rights expressly
waives the right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of the Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or a beneficial interest in a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or other distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The
indemnity provided for herein shall survive the expiration of the Rights and the
termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability for, or
in respect of, any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
all or substantially all of the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name: and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
those duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
determination of the current market price of any Security) be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer or the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment, or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after receipt of a
certificate described in Section 12 hereof); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares, Common Shares or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares, Common Shares or other securities will, when issued, be
validly authorized and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, or the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or for any delay in actions
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Rights Agreement and
the date on or after which such action shall be taken or omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be less
than five Business Days after the date any such officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking such action (or the
effective date in the case of an omission), the Rights Agent has received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to Clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state of the United States, so long as such corporation complies with
the applicable rules and requirements of the New York Stock Exchange, as such
rules and requirements may be amended or modified from time to time, is
authorized to exercise stock transfer or corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 (or such lower number as approved by the Board), or (b) an
affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earliest of the Redemption
Date, the Final Expiration Date and the consummation of a transaction
contemplated by Section 13(d) hereof, the Company (a) shall with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of Directors
of the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) the
Company shall not be obligated to issue any such Rights Certificates if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Company may, at its option,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"), at any time prior to the earlier of (x) the occurrence of a Section
11(a)(ii) Event, or (y) the Final Expiration Date. The Company may, at its
option, pay the Redemption Price either in Common Shares (based on the "current
per share market price," as defined in Section 11(d)(i) hereof, of the Common
Shares at the time of redemption) or cash; provided that if the Company elects
to pay the Redemption Price in Common Shares, the Company shall not be required
to issue any fractional Common Shares and the number of Common Shares issuable
to each holder of Rights shall be rounded down to the next whole share.
(ii) Notwithstanding the provisions of Section 23(a)(i), the
Board of Directors of the Company may, at its option, at any time following a
Shares Acquisition Date but prior to any Section 13 Event, redeem all but not
less than all of the then outstanding Rights at the Redemption Price (x) in
connection with any merger, consolidation, or sale or other transfer (in one
transaction or in a series of related transactions) of assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), in which all holders of Common Shares are
treated alike and not involving (other than as a holder of Common Shares being
treated like all other such holders) an Interested Stockholder or (y) if and for
so long as the Acquiring Person is not thereafter the Beneficial Owner of 15% of
the Common Shares, and at the time of redemption there are no other persons who
are Acquiring Persons.
(iii) The Board of Directors of the Company may only redeem the
Rights if at least a majority of the members of the Board of Directors
authorizes such redemption.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the date for redemption set forth (or determined in the manner
specified in) in a resolution of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. In the case of a redemption permitted only under Section 23(a)(ii),
evidence of which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right to receive the
Redemption Price upon the later of ten Business Days following the giving of
such notice or the expiration of any period during which the rights under
Section 11(a)(ii) may be exercised. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within ten (10) days after such date for redemption set forth in a resolution of
the Board of Directors ordering the redemption of the Rights, the Company shall
mail a notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 except in
connection with the purchase of Common Shares prior to the Distribution Date.
(c) The Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior the Distribution Date, on the registry books of the Transfer Agent of the
Common Shares, and upon such action, all outstanding Rights and Rights
Certificates shall be null and void without any further action by the Company.
Section 24. Exchange. (a) Subject to Section 24(e), the Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Sections 7(e) and 11(a)(ii) hereof) for Common
Shares of the Company at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction involving either the Common Shares or the Preferred Shares occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, any entity holding Common Shares for or
pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 24(a) hereof and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights to be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Sections 7(e) and 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one ten-thousandth of a
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have the same
voting rights as one Common Share.
(d) The Board shall not authorize any exchange transaction referred to
in Section 24(a) hereof unless at the time such exchange is authorized there
shall be sufficient Common Shares or Preferred Shares issued but not
outstanding, or authorized but unissued, to permit the exchange of Rights as
contemplated in accordance with this Section 24.
(e) The Board of Directors may only exchange Rights pursuant to Section
24(a) hereof if at least a majority of the members of the Board of Directors
authorizes such exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with any Person
(other than a Subsidiary of the Company in a transaction which does not violate
Section 11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions each
of which does not violate Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of such proposed action to the extent feasible
and file a certificate with the Rights Agent to that effect, which shall specify
the record date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20) days prior
to the record date for determining holders of the Preferred Shares for purposes
of such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all references in the
preceding paragraph (a) to Preferred Shares shall be deemed thereafter to refer
also to Common Shares and/or, if appropriate, other securities of the Company.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by (i)
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company), (ii) courier or messenger service, whether overnight
or same day, or (iii) telecopy or facsimile, as follows:
Tandy Corporation
100 Throckmorton Street
Suite 1800
Fort Worth, TX 76102
Attention: Corporate Secretary
Facsimile: 817-415-3926
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by (i) first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company), (ii) courier or messenger
service, whether overnight or same day, or (iii) telecopy or facsimile, as
follows:
<PAGE>
BankBoston, N.A.
c/o EquiServe, Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Facsimile: 781-575-2549
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate or, if prior
to the Distribution Date, to the holder of certificates representing Common
Shares shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments.
(a) Prior to the Distribution Date, subject to Section 27(b) hereof, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
Common Shares. From and after the Distribution Date, subject to Section 27(b)
hereof, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights
(other than an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that such supplement or amendment does not
adversely affect the rights or obligations of the Rights Agent under Section 18
or Section 20 of this Agreement. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
(b) The Company shall not supplement or amend any provision of this
Agreement unless at least a majority of the members of the Board of Directors
authorizes such supplement or amendment.
Section 28. Determination and Actions by the Board of Directors, etc.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Rights Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties, and
(y) not subject the Board to any liability to the holders of the Rights
Certificates.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
TANDY CORPORATION
By: _______________________________
Name: Dwain H. Hughes
Title: Senior Vice President and
Chief Financial Officer
BankBoston, N.A., as Rights Agent
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 4c
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
(FACILITY A)
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (Facility A) (this "First
Amendment"), dated effective as of June 24, 1999, is entered into among TANDY
CORPORATION, a Delaware corporation (the "Company"), the Lenders listed on the
signature pages hereof (the "Lenders"), CITIBANK, N.A., as Syndication Agent for
the Lenders (in such capacity, the "Syndication Agent"), THE BANK OF NEW YORK,
as Documentation Agent for the Lenders (in such capacity, the "Documentation
Agent"), BANKBOSTON, N.A., FIRST UNION NATIONAL BANK, FLEET NATIONAL BANK and
THE FIRST NATIONAL BANK OF CHICAGO, as Co-Agents for the Lenders (in such
capacity, the "Co-Agents"), and NATIONSBANK, N.A., as Agent for the Lenders (in
such capacity, the "Agent").
BACKGROUND
The Company, the Lenders, the Syndication Agent, the Documentation Agent,
the Co-Agents and the Agent are parties to that certain Revolving Credit
Agreement (Facility A), dated as of June 25, 1998 (the "Credit Agreement";
the terms defined in the Credit Agreement and not otherwise defined herein
shall be used herein as defined in the Credit Agreement).
The Company, the Lenders, the Syndication Agent, the Documentation Agent,
the Co-Agents and the Agent desire to (i) make certain amendments to the
Credit Agreement and (ii) remove PNC Bank, N.A. ("PNC") as a Lender.
NOW, THEREFORE, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are all hereby acknowledged, the Company, the
Lenders, the Syndication Agent, the Documentation Agent, the Co-Agents and the
Agent covenant and agree as follows:
3. AMENDMENTS TO CREDIT AGREEMENT.
(1) The definition of "Applicable Fee Percentage" set forth in Section 1.1 of
the Credit Agreement is hereby amended to read as follows:
"'Applicable Fee Percentage' means, on any date, the applicable percentage set
forth below based upon the ratings applicable on such date to the Company's
senior, unsecured, non-credit-enhanced long term indebtedness for borrowed money
("Index Debt"):
Applicable Fee
Percentage
----------
Category 1
----------
A or higher by S&P; and 0.060%
A2 or higher by Moody's
Category 2
----------
A- by S&P; and 0.070%
A3 by Moody's
Category 3
----------
BBB+ by S&P; and 0.080%
Baa1 by Moody's
Category 4
----------
BBB by S&P; and 0.090%
Baa2 by Moody's
Category 5
----------
BBB- or lower by S&P; or 0.120%
Baa3 or lower by Moody's
For purposes of the foregoing, (a) if neither Moody's nor S&P shall have
in effect a rating for Index Debt, then both such rating agencies will
be deemed to have established ratings for Index Debt in Category 5; (b)
if only one of Moody's and S&P shall have in effect a rating for Index
Debt, the Company and the Lenders will negotiate in good faith to agree
upon another rating agency to be substituted by an amendment to this
Agreement for the rating agency which shall not have a rating in effect,
and pending the effectiveness of such amendment the Applicable Fee
Percentage will be determined by reference to the available rating; (c)
if the ratings established or deemed to have been established by Moody's
and S&P shall fall within different Categories, the Applicable Fee
Percentage shall be determined by reference to the superior (or
numerically lower) Category; provided, however, if the difference in the
ratings established by Moody's and S&P shall be more than two
Categories, the Applicable Fee Percentage shall be determined by
reference to the Category which is one Category below the superior (or
numerically lower) Category; and (d) if any rating established or deemed
to have been established by Moody's or S&P shall be changed (other than
as a result of a change in the rating system of either Moody's or S&P),
such change shall be effective as of the date on which such change is
first announced by the rating agency making such change. Each change in
the Applicable Fee Percentage shall apply during the period commencing
on the effective date of such change and ending on the date immediately
preceding the effective date of the next such change. If the rating
system of either Moody's or S&P shall change prior to the Maturity Date,
the Company and the Lenders shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such
changed rating system."
(2) The definition of "Applicable Margin" set forth in Section 1.1 of the Credit
Agreement is hereby amended by adding the following sentence to the end thereof:
"In addition, the Applicable Margin for Eurodollar Loans and Base Rate
Loans shall be increased above the per annum percentages set forth above
by 0.125 on each Utilization Premium Date."
(3) The definition of "Co-Agents" set forth in Section 1.1 of the Credit
Agreement is hereby amended to read as follows:
"'Co-Agents' means, collectively, BankBoston, N.A., First Union National
Bank, Fleet National Bank and The First National Bank of Chicago, and
any successors thereto."
(4) The definition of "Documentation Agent" set forth in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'Documentation Agent' means The Bank of New York, and any successors
thereto."
(5) The definition of "Maturity Date" set forth in Section 1.1 of the Credit
Agreement is hereby amended to read as follows:
"'Maturity Date' means June 22, 2000, or the earlier of termination of
the Commitments pursuant to Section 7.1."
(6) Section 1.1 of the Credit Agreement is hereby amended by adding the
following defined terms thereto in proper alphabetical order:
"Utilization Premium Date means any date on which the Utilization Rate
is greater than 1/3.
"Utilization Rate" means, at any date, a fraction (a) the numerator of
which is the aggregate principal amount of all Advances at such date and
(b) the denominator of which is the amount of the Total Commitment at
such date, determined in each case after giving effect to any
transactions at such date.
(7) Section 6.2(v) of the Credit Agreement is hereby amended to read as
follows:
"(v) any Subsidiary of the Company may merge into the Company or into
or with any Wholly-Owned Subsidiary or into or with any other Person so
long as (A) with respect to a merger into the Company, the Company is
the surviving entity, (B) with respect to a merger into or with a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary is the surviving
entity or the Subsidiary of the Company merging into or with the
Wholly-Owned Subsidiary is or becomes a Wholly-Owned Subsidiary and is
the surviving entity, or (C) with respect to a merger into or with any
other Person, the surviving entity is or becomes as a result of the
transaction a Wholly-Owned Subsidiary;"
<PAGE>
(8) Section 6.3(i) of the Credit Agreement is hereby amended to read as
follows:
"(i) other Investments of the Company and its Subsidiaries not
exceeding 15% of Consolidated Tangible Net Worth at any time; and"
(9) Exhibit 6.3 to the Credit Agreement is hereby amended to be in the form of
Exhibit 6.3 attached to this First Amendment.
(10) The Commitment of each Lender is hereby amended or reaffirmed to be the
amount indicated beside each such Lender's name on the signature pages hereof.
4. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution
and delivery hereof, the Company represents and warrants that, as of the date
hereof and after giving effect to the amendments contemplated by the foregoing
Section 1:
(1) the representations and warranties contained in the Credit Agreement and the
other Loan Documents are true and correct on and as of the date hereof as made
on and as of such date;
(2) no event has occurred and is continuing which constitutes a Default or
an Event of Default;
(3) the Company has full power and authority to execute and deliver this First
Amendment, the replacement Note payable to the order of each Lender
(collectively, the "Replacement Notes"), and the Credit Agreement, as amended
hereby, the Replacement Notes and this First Amendment constitute the legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by applicable
debtor relief laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights
to indemnity may be limited by federal or state securities laws;
(4) neither the execution, delivery and performance of this First Amendment, the
Replacement Notes or the Credit Agreement, as amended hereby, nor the
consummation of any transactions contemplated herein or therein, will conflict
with any law, rule or regulation, the articles of incorporation or bylaws of the
Company, or any indenture, agreement or other instrument to which the Company or
any of its property is subject; and
(5) no authorization, approval, consent, or other action by, notice to, or
filing with, any governmental authority or other Person, is required for the
execution, delivery or performance by the Company of this First Amendment or the
Replacement Notes.
5. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective as of
June 24, 1999 (including the amendment of the Applicable Fee Percentage set
forth in Section 1(a) of this First Amendment), subject to the following:
(1) the Agent shall have received counterparts of this First Amendment
executed by each of the Lenders;
(2) the Agent shall have received counterparts of this First Amendment executed
by the Company;
(3) the Agent shall have received from the Company, for the account of each
Lender, an amendment fee in an amount equal to the product of (A) 0.025%
multiplied by (B) the amount of the Commitment of each Lender;
(4) the Agent shall have received a certified resolution of the Board of
Directors of the Company authorizing the execution, delivery and performance of
this First Amendment;
(5) the Agent shall have received an opinion of counsel to the Company, in form
and substance satisfactory to the Agent, with respect to the matters set forth
in Section 2(c), (d) and (e) of this First Amendment;
(6) the Agent shall have received a duly executed Replacement Note for each
Lender;
(7) PNC shall have received payment in full of all amounts due and owing to it
under the Credit Agreement; and
(8) the Agent shall have received, in form and substance satisfactory to the
Agent and its counsel, such other documents, certificates and instruments as the
Agent shall require.
6. PNC. Upon satisfaction of the conditions set forth in Section 3 of this First
Amendment, PNC shall (a) not be a Lender under the Credit Agreement and shall no
longer have any rights or obligations with respect thereto, except for those
which expressly survive termination of the Credit Agreement or termination of
any Commitments thereunder and (b) mark its Note "PAID IN FULL" and return its
Note to the Company.
7. PURCHASE BY LENDERS. Simultaneously with the satisfaction of conditions of
effectiveness set forth in Section 3 hereof, each Lender shall purchase or sell
(as the case may be), without recourse, an amount of Loans outstanding such that
after giving effect to this First Amendment, the amount of each Lender's
Commitment under the Credit Agreement which has been utilized shall be pro rata
among the Lenders in the proportions that their respective Commitments bear to
the Total Commitments.
8. REFERENCE TO THE CREDIT AGREEMENT.
(1) Upon the effectiveness of this First Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", or words of like import shall mean
and be a reference to the Credit Agreement, as amended by this First Amendment.
(2) The Credit Agreement, as amended by this First Amendment, and all other Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed.
9. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all reasonable
costs and expenses of the Agent in connection with the preparation,
reproduction, execution and delivery of this First Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
under the Credit Agreement, as amended by this First Amendment).
10. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.
11. GOVERNING LAW: BINDING EFFECT. This First Amendment shall be governed by and
construed in accordance with the laws of the State of Texas (without regard to
principles of conflicts of law) and the United States of America, and shall be
binding upon the Company, the Syndication Agent, the Documentation Agent, each
Co-Agent, the Agent, and each Lender and their respective successors and
assigns.
12. HEADINGS. Section headings in this First Amendment are included herein for
convenience of reference only and shall not constitute a part of this First
Amendment for any other purpose.
13. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST AMENDMENT,
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as the
date first above written.
TANDY CORPORATION
By: _________________________________
Loren K. Jensen
Treasurer
<PAGE>
ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION 4 HEREOF ONLY AND NOT AS A
LENDER:
PNC BANK, N.A.
By: ___________________________
Name:
Title:
NATIONSBANK, N.A., as Agent and as a Lender
Commitment: $25,000,000
By:
Name:
Title:
CITIBANK, N.A., as Syndication Agent and as
a Lender
Commitment: $22,000,000
By:
Name:
Title:
THE BANK OF NEW YORK, as Documentation
Agent and as a Lender
Commitment: $22,000.000
By:
Name:
Title:
BANKBOSTON, N.A., as Co-Agent and as a
Lender
Commitment: $14,000,000
By:
Name:
Title:
FIRST UNION NATIONAL BANK, as Co-Agent and
as a Lender
Commitment: $14,000,000
By:
Name:
Title:
<PAGE>
FLEET NATIONAL BANK, as Co-Agent and as a
Lender
Commitment: $14,000,000
By:
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, as
Co-Agent and as a Lender
Commitment: $14,000,000
By:
Name:
Title:
NATIONAL CITY BANK
Commitment: $14,000,000
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
Commitment: $8,000,000
By:
Name:
Title:
SUNTRUST BANK, ATLANTA
Commitment: $8,000,000
By:
Name:
Title:
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
Commitment: $8,000,000
By:
Name:
Title:
FIFTH THIRD BANK
Commitment: $8,000,000
By:
Name:
Title:
WELLS FARGO BANK, N.A.
Commitment: $8,000,000
By:
Name:
Title:
By:
Name:
Title:
HIBERNIA NATIONAL BANK
Commitment: $7,000,000
By:
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
Commitment: $7,000,000
By:
Name:
Title:
FIRST HAWAIIAN BANK
Commitment: $7,000,000
By:
Name:
Title:
<PAGE>
Investments as of May 27, 1999
(Exhibit 6.3)
Unpaid balance of secured Real Estate Notes taken in $ 43,474,358.84
connection wit the sale of real property and secured by
the property sold. (seven notes with maturities of
twelve to twenty-four months from the date of this
Agreement.)
Unpaid balance of notes taken in connection with sale $ 3,731,135.99
of fixtures in various Incredible Universe locations
secured by the property sold. (Six notes with
maturities of up to 38 months from the date of this
Agreement.)
Unpaid balance of notes taken in connection with sale $ 2,950,520.18
of leasehold properties. (One note with maturity of 20
years.)
Investment in Common Stock of NorthPoint Communications $ 19,999,920.00
Group
Investment made as part of a community effort to Note Amount $ 330,000.00
provide low income housing, including a note maturing Ltd.
Partnership on 9-30-2022, and a limited partnership interest. $ 1,598,375.00
Total Investments $ 72,084,310.01
<PAGE>
EXHIBIT 4e
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
(FACILITY B)
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (Facility B) (this "First
Amendment"), dated effective as of June 24, 1999, is entered into among TANDY
CORPORATION, a Delaware corporation (the "Company"), the Lenders listed on the
signature pages hereof (the "Lenders"), CITIBANK, N.A., as Syndication Agent for
the Lenders (in such capacity, the "Syndication Agent"), THE BANK OF NEW YORK,
as Documentation Agent for the Lenders (in such capacity, the "Documentation
Agent"), BANKBOSTON, N.A., FIRST UNION NATIONAL BANK, FLEET NATIONAL BANK, and
THE FIRST NATIONAL BANK OF CHICAGO, as Co-Agents for the Lenders (in such
capacity, the "Co-Agents"), and NATIONSBANK, N.A., as Agent for the Lenders (in
such capacity, the "Agent").
BACKGROUND
1. The Company, the Lenders, the Syndication Agent, the Documentation Agent,
the Co-Agents and the Agent are parties to that certain Revolving Credit
Agreement (Facility B), dated as of June 25, 1998 (the "Credit Agreement";
the terms defined in the Credit Agreement and not otherwise defined herein
shall be used herein as defined in the Credit Agreement).
2. The Company, the Lenders, the Syndication Agent, the Documentation Agent,
the Co-Agents and the Agent desire to make certain amendments to the Credit
Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are all hereby acknowledged, the Company, the
Lenders, the Syndication Agent, the Documentation Agent, the Co-Agents and the
Agent covenant and agree as follows:
14. AMENDMENTS TO CREDIT AGREEMENT.
(1) The definition of "Applicable Margin" set forth in Section 1.1 of the Credit
Agreement is hereby amended by adding the following sentence to the end thereof:
"In addition, the Applicable Margin for Eurodollar Loans and Base
Rate Loans shall be increased above the per annum percentages set forth
above by 0.125 on each Utilization Premium Date."
(2) The definition of "Co-Agents" set forth in Section 1.1 of the Credit
Agreement is hereby amended to read as follows:
"'Co-Agents' means, collectively, BankBoston, N.A., First Union
National Bank, Fleet National Bank and The First National Bank of
Chicago, and any successors thereto."
(3) The definition of "Documentation Agent" set forth in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'Documentation Agent' means The Bank of New York, and any successors
thereto."
(4) Section 1.1 of the Credit Agreement is hereby amended by adding the
following defined terms thereto in proper alphabetical order:
"Utilization Premium Date" means any date on which the Utilization
Rate is greater than 1/3.
"Utilization Rate" means, at any date, a fraction (a) the numerator
of which is the aggregate principal amount of all Advances at such date
and (b) the denominator of which is the amount of the Total Commitment
at such date, determined in each case after giving effect to any
transactions at such date.
(5) Section 6.2(v) of the Credit Agreement is hereby amended to read as
follows:
"(v) any Subsidiary of the Company may merge into the Company or into
or with any Wholly-Owned Subsidiary or into or with any other Person so
long as (A) with respect to a merger into the Company, the Company is
the surviving entity, (B) with respect to a merger into or with a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary is the surviving
entity or the Subsidiary of the Company merging into or with the
Wholly-Owned Subsidiary is or becomes a Wholly-Owned Subsidiary and is
the surviving entity or (C) with respect to a merger into or with any
other Person, the surviving entity is or becomes as a result of the
transaction a Wholly-Owned Subsidiary;"
(6) Section 6.3(i) of the Credit Agreement is hereby amended to read as
follows:
"(i) other Investments of the Company and its Subsidiaries not
exceeding 15% of Consolidated Tangible Net Worth at any time; and"
(7) Exhibit 6.3 to the Credit Agreement is hereby amended to be in the form of
Exhibit 6.3 attached to this First Amendment.
15. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution
and delivery hereof, the Company represents and warrants that, as of the date
hereof and after giving effect to the amendments contemplated by the foregoing
Section 1:
(1) the representations and warranties contained in the Credit Agreement and the
other Loan Documents are true and correct on and as of the date hereof as made
on and as of such date;
(2) no event has occurred and is continuing which constitutes a Default or
an Event of Default;
(3) the Company has full power and authority to execute and deliver this First
Amendment, and the Credit Agreement, as amended hereby and this First Amendment
constitute the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms, except as enforceability may be
limited by applicable debtor relief laws and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and except as rights to indemnity may be limited by federal or state
securities laws;
(4) neither the execution, delivery and performance of this First Amendment or
the Credit Agreement, as amended hereby, nor the consummation of any
transactions contemplated herein or therein, will conflict with any law, rule or
regulation, the articles of incorporation or bylaws of the Company, or any
indenture, agreement or other instrument to which the Company or any of its
property is subject; and
(5) no authorization, approval, consent, or other action by, notice to, or
filing with, any governmental authority or other Person, is required for the
execution, delivery or performance by the Company of this First Amendment.
16. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective as
of June 24, 1999, subject to the following:
(1) the Agent shall have received counterparts of this First Amendment
executed by the Required Lenders;
(2) the Agent shall have received counterparts of this First Amendment executed
by the Company;
(3) the Agent shall have received a certified resolution of the Board of
Directors of the Company authorizing the execution, delivery and performance of
this First Amendment;
(4) the Agent shall have received an opinion of counsel to the Company, in form
and substance satisfactory to the Agent, with respect to the matters set forth
in Section 2(c), (d) and (e) of this First Amendment; and
(5) the Agent shall have received, in form and substance satisfactory to the
Agent and its counsel, such other documents, certificates and instruments as the
Agent shall require.
17. REFERENCE TO THE CREDIT AGREEMENT.
(1) Upon the effectiveness of this First Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", or words of like import shall mean
and be a reference to the Credit Agreement, as amended by this First Amendment.
(2) The Credit Agreement, as amended by this First Amendment, and all other Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed.
18. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all
reasonable costs and expenses of the Agent in connection with the preparation,
reproduction, execution and delivery of this First Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
under the Credit Agreement, as amended by this First Amendment).
3. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
4. GOVERNING LAW: BINDING EFFECT. This First Amendment shall be governed by and
construed in accordance with the laws of the State of Texas (without regard to
principles of conflicts of law) and the United States of America, and shall be
binding upon the Company, the Syndication Agent, the Documentation Agent, each
Co-Agent, the Agent, and each Lender and their respective successors and
assigns.
5. HEADINGS. Section headings in this First Amendment are included herein for
convenience of reference only and shall not constitute a part of this First
Amendment for any other purpose.
6. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST AMENDMENT,
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as the
date first above written.
TANDY CORPORATION
By: ________________________________
Loren K. Jensen
Treasurer
NATIONSBANK, N.A., as Agent and as a Lender
By:
Name:
Title:
CITIBANK, N.A., as Syndication Agent and as
a Lender
By:
Name:
Title:
BANKBOSTON, N.A., as Co-Agent and as a
Lender
By:
Name:
Title:
<PAGE>
THE BANK OF NEW YORK, as Documentation
Agent and as a Lender
By:
Name:
Title:
FIRST UNION NATIONAL BANK, as Co-Agent and
as a Lender
By:
Name:
Title:
FLEET NATIONAL BANK, as Co-Agent and as a
Lender
By:
Name:
Title:
FIRST NATIONAL BANK OF CHICAGO, as Co-Agent
and as a Lender
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
SUNTRUST BANK, ATLANTA
By:
Name:
Title:
By:
Name:
Title:
HIBERNIA NATIONAL BANK
By:
Name:
Title:
PNC BANK, N.A.
By:
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
Name:
Title:
FIFTH THIRD BANK
By:
Name:
Title:
FIRST HAWAIIAN BANK
By:
Name:
Title:
WELLS FARGO BANK, N.A.
By:
Name:
Title:
By:
Name:
Title:
NATIONAL CITY BANK
By:
Name:
Title:
<PAGE>
Investments as of May 27, 1999
(Exhibit 6.3)
Unpaid balance of secured Real Estate Notes taken in $ 43,474,358.84
connection wit the sale of real property and secured by
the property sold. (seven notes with maturities of
twelve to twenty-four months from the date of this
Agreement.)
Unpaid balance of notes taken in connection with sale $ 3,731,135.99
of fixtures in various Incredible Universe locations
secured by the property sold. (Six notes with
maturities of up to 38 months from the date of this
Agreement.)
Unpaid balance of notes taken in connection with sale $ 2,950,520.18
of leasehold properties. (One note with maturity of 20
years.)
Investment in Common Stock of NorthPoint Communications $ 19,999,920.00
Group
Investment made as part of a community effort to Note Amount $ 330,000.00
provide low income housing, including a note maturing Ltd.
Partnership on 9-30-2022, and a limited partnership interest. $ 1,598,375.00
Total Investments $ 72,084,310.01
<PAGE>
EXHIBIT 10f
TANDY CORPORATION
1993 INCENTIVE STOCK PLAN
(AMENDED AND RESTATED FEBRUARY 24, 1998)
1. Purpose.
The purpose of this Plan is to strengthen Tandy Corporation (the
"Company") by providing an incentive to its key employees, consultants and
advisors and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to directors, key employees,
consultants and advisors of the Company and its subsidiaries an added long-term
incentive for high levels of performance and unusual efforts through the grant
of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Units and Performance Shares (as each term
is hereinafter defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the term of
the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (ii) the Company
or its Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined).
(b) The individuals who, as of August 1, 1993, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving
the Company, unless
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
sixty percent (60%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation, or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities] has Beneficial Ownership of fifteen percent (15%)
or more of the combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) a transaction described in clauses (A) through
(C) shall herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the Company;
or
(iii) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any Person (other than
a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means the Organization and Compensation Committee of the
Board consisting of at least three (3) Disinterested Directors appointed by the
Board to administer the Plan and to perform the functions set forth herein.
2.10 "Company" means Tandy Corporation.
2.11 "Director Option" means an Option granted pursuant to Section 5.
2.12 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Grantee or
Optionee, as the case may be, from performing the customary duties of his or her
regular job with the Company.
2.13 "Disinterested Director" means a director of the Company who is
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
2.14 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.15 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options or Awards subject to the conditions set forth
herein.
2.16 "Employee Option" means an Option granted pursuant to Section 6.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the high and
low sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.19 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.20 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.21 "Nonemployee Director" means a director of the Company who is not
an employee of the Company or any Subsidiary.
2.22 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.23 "Option" means a Employee Option, a Director Option, or either or
both of them.
2.24 "Optionee" means a person to whom an Option has been granted under
the Plan.
2.25 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.26 "Performance Awards" means Performance Units, Performance Shares or
either or both of them.
2.27 "Performance Cycle" means the time period specified by the
Committee at the time a Performance Award is granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.28 "Performance Shares" means Shares issued or transferred to an
Eligible Employee under Section 10.
2.29 "Performance Unit" means Performance Units granted to an Eligible
Employee under Section 10.
2.30 "Restricted Stock" means Shares issued or transferred to an
Eligible Employee pursuant to Section 9.
2.31 "Retirement" means termination of service as a Director under
circumstances entitling the Director to a retirement benefit under the Company's
Directors Special Compensation Plan.
2.32 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.33 "Plan" means the Tandy Corporation 1993 Incentive Stock Plan.
2.34 "Shares" means the common stock, par value $1.00 per share, of
the Company.
2.35 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.36 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.37 "Ten-Percent Stockholder" means an Eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) select those Eligible Employees to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation Rights,
Performance Units, Performance Shares, and/or Shares of Restricted Stock to be
granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or performance criteria relating to such Performance
Units or Performance Shares, the maximum value of each Performance Unit and
Performance Share and make any amendment or modification to any Agreement
consistent with the terms of the Plan.
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and Awards
granted thereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and Grantees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan;
and
(d) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 6,000,000. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 12. The Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof expires,
is canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option or Award,
the Shares allocable to the expired, canceled or otherwise terminated portion of
the Option or Award may again be the subject of Options or Awards granted
hereunder.
4.4 Notwithstanding anything contained in this Section 4, the number of
Shares available for Options and Awards at any time under the Plan shall be
reduced to such lesser amount as may be required pursuant to the methods of
calculation necessary so that the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards. In addition, during the period that
any Options and Awards remain outstanding under the Plan, the Committee may make
good faith adjustments with respect to the number of Shares attributable to such
Options and Awards for purposes of calculating the maximum number of Shares
available for the granting of future Options and Awards under the Plan, provided
that following such adjustments the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards.
5. Director Plans.
5A. Option Grants for Non-employee Directors.
5A.1 Annual Grant. Director Options shall be granted to each Nonemployee
Director on the first trading day of September of each year that the Plan is in
effect. Each Director Option granted shall be in respect of 8,000 Shares. The
purchase price of each Director Option shall be as provided in Section 5A.3 and
such Options shall be evidenced by an Agreement containing such other terms and
conditions not inconsistent with the provisions of this Plan as determined by
the Board; provided, however, that such terms shall not vary the timing of
awards of Director Options, including provisions dealing with forfeiture or
termination of such Director Options.
5A.2 One Time Grant. Director Options shall be granted to each
Nonemployee Director elected by the stockholders on May 18, 1995, provided the
Plan is approved by the stockholders of the Company. Each newly appointed or
elected Nonemployee Director who has not previously received a one-time grant
hereunder, shall be granted an option on the date the Nonemployee Director
attends his or her first Company Board meeting. Each Director Option granted
under this section shall be in respect of 10,000 Shares. The purchase price of
each Director Option shall be as provided in Section 5A.3 and such Options shall
be evidenced by an Agreement containing such other terms and conditions not
inconsistent with the provisions of this Plan as determined by the Board;
provided, however, that such terms shall not vary the timing of awards of
Director Options, including provisions dealing with forfeiture or termination of
such Director Options.
5A.3 Purchase Price. The purchase price for Shares under each Director
Option shall be equal to 100% of the Fair Market Value of such Shares on the
trading date immediately preceding the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall become
exercisable with respect to one third (1/3) of the Shares subject thereto
effective as of each of the first, second and third anniversaries of the grant
date; provided, however, that the Optionee continues to serve as a Director as
of such dates. Notwithstanding the foregoing, if a Director's service terminates
by reason of his death, Disability or Retirement, all Director Options then held
by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date which is
the tenth anniversary of the grant date, unless terminated earlier as follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason
of the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of 12 months after such termination,
exercise his or her Option to the extent, and only to the extent that such
Option or portion thereof was vested and exercisable, as of the date the
Optionee's service as Director terminated, after which time the Option shall
automatically terminate in full.
(c) If an Optionee's service as a Director terminates for Cause,
the Option granted to the Optionee hereunder shall immediately terminate in full
and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) or
(b) of this Section 5A.5, the Option granted to the Optionee may be exercised at
any time within 12 months after the Optionee's death by the person or persons to
whom such rights under the Option shall pass by will, or by the laws of descent
or distribution, after which time the Option shall terminate in full.
5B. Stock Purchase for Director Retainer Fees.
5B.1 Election to Participate.
(a) Initial Year Election. Each Nonemployee Director may
participate in this Section 5B by filing an election to participate with the
Company Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to the Nonemployee Director's retainer fees payable to him or her under
the Nonemployee Director compensation plan in respect of each calendar month
commencing with the first calendar month commencing after the receipt of the
Initial Year Election by the Company Secretary and ending the subsequent May 31.
A Nonemployee Director may, pursuant to an Initial Year Election, participate in
this Section 5B only at either a 50% or 100% level and may not change his or her
level of participation except as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Nonemployee Director may, prior to May
1 of any year, elect to participate (or cease to participate) or change his or
her level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to the Nonemployee Director's
retainer fees payable to him or her under the Nonemployee Director compensation
plan in respect of the year commencing on June 1 next subsequent to the receipt
of the Annual Election by the Company Secretary and shall continue for
subsequent years unless changed pursuant to this Section 5B.1 (b). A Nonemployee
Director may, pursuant to an Annual Election, participate in this Section 5B
only at either a 50% or 100% level and may not change his or her level of
participation except as provided in this Section 5B.1(b).
5B.2 Payment in Stock.
(a) For the period commencing on the effective date of a
Nonemployee Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Nonemployee Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Nonemployee Director's annual
retainer divided by twelve (12), then multiplied by the number of calendar
months from the effective date of the Initial Year Election through the next
subsequent May 31; and (ii) Shares will be issued to each Nonemployee Director
participating at the 50% level according to the calculation in clause (i) of
this Section 5B.2 (a) but reduced by one-half. Shares will be issued as of the
effective date of the Initial Year Election.
(b) For each year commencing on June 1 in respect of which a
Nonemployee Director has elected to participate in this Section 5B pursuant to
an Annual Election, (i) Shares will be issued to each Nonemployee Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Nonemployee
Director's annual retainer; and (ii) Shares will be issued to each Nonemployee
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.
(c) The issuance of Shares to a Nonemployee Director
participating in this Section 5B shall represent payment in advance of, and
shall be in lieu of, 50% or 100%, as applicable, of the Nonemployee Director's
annual retainer for the period in respect of which the Initial Year Election or
the Annual Election is in effect.
5B.3 Distribution. Shares will be distributed to the Nonemployee
Director as soon as practicable after issuance. No fractional Share will be
issued to any Nonemployee Director. Any amount not used for the acquisition of a
Share will be paid to the Nonemployee Director in cash.
6. Option Grants for Eligible Employees.
6.1 Authority of Committee. Subject to the provisions of the Plan and to
Section 4.1 above, the Committee shall have full and final authority to select
those Eligible Employees who will receive Options (each an "Employee Option"),
the terms and conditions of which shall be set forth in an Agreement; provided,
however, that no person shall receive any Incentive Stock Options unless he or
she is an employee of the Company, a Parent or a Subsidiary at the time the
Incentive Stock Option is granted.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent, and (ii) no modification or
surrender of an outstanding option and the grant of new options in substitution
for them which results in a Purchase Price (as defined in Section 6.2 hereof)
that is lower than the Purchase Price of the originally issued Option shall be
effective until authorized by the shareholders of the Corporation.
7. Terms and Conditions Applicable to All Options.
7.1 Non-transferability. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the laws
of descent and distribution, and an Option may be exercised during the lifetime
of such Optionee only by the Optionee or his or her guardian or legal
representative. The terms of such Option shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by
a written notice delivered in person or by mail to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase price
for any Shares purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise by any one or a combination of the following: (i) cash
or (ii) transferring Shares to the Company upon such terms and conditions as
determined by the Committee. Notwithstanding the foregoing, the Committee shall
have discretion to determine at the time of grant of each Employee Option or at
any later date (up to and including the date of exercise) the form of payment
acceptable in respect of the exercise of such Employee Option. The written
notice pursuant to this Section 7.2 may also provide instructions from the
Optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's broker or dealer, designated as such on the written notice, in
payment for any Shares purchased pursuant to the exercise of an Option, the
Company shall issue such Shares directly to the designated broker or dealer. Any
Shares transferred to the Company as payment of the purchase price under an
Option shall be valued at their Fair Market Value on the day preceding the date
of exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee or his designated broker or
dealer and (iii) the Optionee's name or the name of his designated broker or
dealer shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan or an Agreement to the contrary, in the event of a Change in Control,
(i) all Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable and (ii) an Optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control,
any Option or portion of an Option to the extent not yet exercised and the
Optionee will be entitled to receive a cash payment in an amount equal to the
excess, if any, of (x) (A) in the case of a Nonqualified Stock Option, the
greater of (1) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option, the
Fair Market Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered, over (y) the aggregate
purchase price for such Shares under the Option or portion thereof surrendered;
provided, however, that in the case of an Option granted within six (6) months
prior to the Change in Control to any Optionee who may be subject to liability
under Section 16(b) of the Exchange Act, such Optionee shall be entitled to
surrender for cancellation his or her Option during the sixty (60) day period
commencing upon the expiration of six (6) months from the date of grant of any
such Option.
8. Stock Appreciation Rights. The Committee may, in its discretion,
either alone or in connection with the grant of an Option, grant Stock
Appreciation Rights in accordance with the Plan and the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either at the
time of grant, or at any time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 8.6, a Stock Appreciation Right
granted in connection with an Option shall be exercisable at such time or times
and only to the extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right
or the surrender of such Option, the Stock Appreciation Right shall be canceled
to the extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Employees Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.6), vesting and duration
as the Committee shall determine, but in no event shall they have a term of
greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by
a Grantee only by a written notice delivered in person or by mail to the
Corporate Secretary or the President of the Company at the Company's principal
executive office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Corporate
Secretary or President of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Grantee.
8.5 Form of Payment. Payment of the amount determined under Sections
8.2(b) or 8.3 may be made in the discretion of the Committee, solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash. Notwithstanding the foregoing, no payment
in the form of cash may be made upon the exercise of a Stock Appreciation Right
pursuant to Sections 8.2(b) or 8.3 to an officer of the Company or a Subsidiary
who is subject to liability under Section 16(b) of the Exchange Act, unless the
exercise of such Stock Appreciation Right is made during the period beginning on
the third business day and ending on the twelfth business day following the date
of release for publication of the Company's quarterly or annual statements of
earnings.
8.6 Restrictions. No Stock Appreciation Right or portion thereof may be
exercised before the date six (6) months after the date it is granted.
8.7 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Stock Appreciation Rights or accept
the surrender of outstanding Awards of Stock Appreciation Rights (to the extent
not exercised) and grant new Awards in substitution for them. Notwithstanding
the foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.
8.8 Effect of Change in Control. Notwithstanding anything contained in
this Plan to the contrary, in the event of a Change in Control, subject to
Section 8.6, all Stock Appreciation Rights shall become immediately and fully
exercisable. Notwithstanding Sections 8.3 and 8.5, upon the exercise of a Stock
Appreciation Right unrelated to an Option or any portion thereof during the
sixty (60) day period following a Change in Control, the amount payable shall be
in cash and shall be an amount equal to the excess, if any, of (A) the greater
of (x) the Fair Market Value, on the date preceding the date of exercise, of the
Shares subject to Stock Appreciation Right or portion thereof exercised and (y)
the Adjusted Fair Market Value, on the date preceding the date of exercise, of
the Shares over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised; provided, however, that in the case of a
Stock Appreciation Right granted within six (6) months prior to the Change in
Control to any Grantee who may be subject to liability under Section 16(b) of
the Exchange Act, such Grantee shall be entitled to exercise his Stock
Appreciation Right during the sixty (60) day period commencing upon the
expiration of six (6) months from the date of grant of any such Stock
Appreciation Right.
9. Restricted Stock.
9.1 Grant. The Committee may grant to Eligible Employees Awards of
Restricted Stock, and may issue Shares of Restricted Stock in payment in respect
of vested Performance Units (as hereinafter provided in Section 10.2), which
shall be evidenced by an Agreement between the Company and the Grantee. Each
Agreement shall contain such restrictions, terms and conditions as the Committee
may, in its discretion, determine and (without limiting the generality of the
foregoing) such Agreements may require that an appropriate legend be placed on
Share certificates. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing a Restricted Stock Award,
the appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require within
the time period prescribed by the Committee at the time the Award is granted,
the Award shall be null and void. At the discretion of the Committee, Shares
issued in connection with a Restricted Stock Award shall be deposited together
with the stock powers with an escrow agent (which may be the Company) designated
by the Committee. Unless the Committee determines otherwise and as set forth in
the Agreement, upon delivery of the Shares to the escrow agent, the Grantee
shall have all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
9.3 Non-transferability. Until any restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.
9.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine, which restrictions shall be set forth
in the Agreement evidencing the Award.
(b) Effect of Change in Control. Notwithstanding anything
contained in the Plan, unless the Agreement evidencing the Award provides to the
contrary, in the event of a Change in Control, all restrictions upon any Shares
of Restricted Stock shall lapse immediately and all such Shares shall become
fully vested in the Grantee.
9.5 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 Treatment of Dividends. At the time the Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.
10. Performance Awards.
10.1 Performance Objectives. Performance objectives for Performance
Awards may be expressed in terms of (i) earnings per Share, (ii) pre-tax
profits, (iii) net earnings or net worth, (iv) return on equity or assets, (v)
any combination of the foregoing, or (vi) any other standard or standards deemed
appropriate by the Committee at the time the Award is granted. Performance
objectives may be in respect of the performance of the Company and its
Subsidiaries (which may be on a consolidated basis), a Subsidiary or a Division.
Performance objectives may be absolute or relative and may be expressed in terms
of a progression within a specified range. Prior to the end of a Performance
Cycle, the Committee, in its discretion, may adjust the performance objectives
to reflect a Change in the Capitalization, a change in the tax rate or book tax
rate of the Company or any Subsidiary, or any other event which may materially
affect the performance of the Company, a Subsidiary or a Division, including,
but not limited to, market conditions or a significant acquisition or
disposition of assets or other property by the Company, a Subsidiary or a
Division.
10.2 Performance Units. The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Employees, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified performance objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
10.2(b) of (i) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of performance objective
attainment; provided, however, that the Committee may at the time a Performance
Unit is granted, specify a maximum amount payable in respect of a vested
Performance Unit. Each Agreement shall specify the number of the Performance
Units to which it relates, the performance objectives which must be satisfied in
order for the Performance Units to vest and the Performance Cycle within which
such objectives must be satisfied.
(a) Vesting and Forfeiture. A Grantee shall become vested with
respect to the Performance Units to the extent that the performance objectives
set forth in the Agreement are satisfied for the Performance Cycle.
(b) Payment of Awards. Payment to Grantees in respect of vested
Performance Units shall be made within sixty (60) days after the last day of the
Performance Cycle to which such Award relates unless the Agreement evidencing
the Award provides for the deferral of payment, in which event the terms and
conditions of the deferral shall be set forth in the Agreement. Subject to
Section 10.4, such payments may be made entirely in Shares valued at their Fair
Market Value as of the last day of the applicable Performance Cycle or such
other date specified by the Committee, entirely in cash, or in such combination
of Shares and cash as the Committee in its discretion, shall determine at any
time prior to such payment; provided, however, that if the Committee in its
discretion determines to make such payment entirely or partially in Shares of
Restricted Stock, the Committee must determine the extent to which such payment
will be in Shares of Restricted Stock and the terms of such Restricted Stock at
the time the Award is granted.
10.3 Performance Shares. The Committee, in its discretion, may grant
Awards of Performance Shares to Eligible Employees, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Each Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time an
Award of Performance Shares is made, the time or times at which the actual
Shares represented by such Award shall be issued in the name of the Grantee;
provided, however, that no Performance Shares shall be issued until the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Performance Shares. If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with an
Award of Performance Shares shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Except as restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow agent, the Grantee shall have, in the discretion of the Committee,
all of the rights of a stockholder with respect to such Shares, including the
right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 10.3(c) or 10.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deems appropriate.
(c) Lapse of Restrictions. Subject to Section 10.4, restrictions
upon Performance Shares awarded hereunder shall lapse and such Performance
Shares shall become vested at such time or times and on such terms, conditions
and satisfaction of performance objectives as the Committee may, in its
discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance
Shares is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on actual Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.
10.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event of a Change in Control:
(a) With respect to the Performance Units, the Grantee shall (i)
become vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and as set forth in
the Agreement and (ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in Control, a cash payment
within ten (10) days after such Change in Control in an amount as determined by
the Committee at the time of the Award of such Performance Unit and as set forth
in the Agreement.
(b) With respect to the Performance Shares, all restrictions
shall lapse immediately on all or a portion of the Performance Shares as
determined by the Committee at the time of the Award of such Performance Shares
and as set forth in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance
Units shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable performance objectives.
10.5 Non-transferability. No Performance Awards shall be transferable by
the Grantee otherwise than by will or the laws of descent and distribution.
10.6 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Performance Awards or accept the surrender of
outstanding Performance Awards and grant new Performance Awards in substitution
for them. Notwithstanding the foregoing, no modification of a Performance Award
shall adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
11. Effect of a Termination of Employment. The Agreement evidencing the
grant of each Employee Option and each Award shall set forth the terms and
conditions applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), as the Committee may, in its
discretion, determine at the time the Employee Option or Award is granted or
thereafter.
12. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the number and class
of Shares or other stock or securities which are subject to Director Options
issuable under Section 5; and (iii) the number and class of Shares or other
stock or securities which are subject to outstanding Options or Awards granted
under the Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, a Grantee of an
Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. Effect of Certain Transactions. Subject to Sections 7.4, 8.8, 9.4(b)
and 10.4, in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
14. Termination and Amendment of the Plan. The Plan shall terminate on
the day preceding the tenth anniversary of the date of its adoption by the Board
and no Option or Award may be granted thereafter. The Board may sooner terminate
the Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards theretofore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan;
(b) To the extent necessary under Section 16(b) of the Exchange
Act and the rules and regulations promulgated thereunder or other applicable
law, no amendment shall be effective unless approved by the stockholders of the
Company in accordance with applicable law and regulations; and
(c) The provisions of Section 5 shall not be amended more often
than once every six (6) months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award
other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to terminate the
employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
17. Regulations and Other Approvals; Governing Law.
17.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflicts of law
principles.
17.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
17.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
17.4 The Board may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any government authority, or to
obtain for Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations promulgated
thereunder.
17.5 Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
17.6 Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
18. Miscellaneous.
18.1 Multiple Agreements. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Employee during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.
18.2 Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Director, Optionee or Grantee, an
amount equal to the federal, state and local income taxes and other amounts as
may be required by law to be withheld (the "Withholding Taxes") with respect to
the receipt of any retainer fee, Option or Award. If a Director, Optionee or
Grantee is to experience a taxable event in connection with the receipt of
Shares pursuant to a payment in stock, Option exercise or payment of an Award (a
"Taxable Event"), the Director, Optionee or Grantee shall pay the Withholding
Taxes to the Company prior to the issuance, or release from escrow, of such
Shares. In satisfaction of the obligation to pay Withholding Taxes to the
Company, the Director, Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
or Company Secretary, as applicable, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes, provided
that in respect of a Director, Optionee or Grantee who may be subject to
liability under Section 16(b) of the Exchange Act either: (i) in the case of a
Taxable Event involving a payment in Stock, Option or an Award (A) the Tax
Election is made at least six (6) months prior to the date of the Taxable Event
and (B) the Tax Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; or (ii) in the case of the exercise of an Option
(A) the Optionee makes the Tax Election at least six (6) months after the date
the Option was granted, (B) the Option is exercised during the ten (10) day
period beginning on the third business day and ending on the twelfth business
day following the release for publication of the Company's quarterly or annual
statement of sales and earnings (a "Window Period") and (C) the Tax Election is
made during the Window Period in which the related Option is exercised or prior
to such Window Period and subsequent to the immediately preceding Window Period;
or (iii) in the case of a Taxable Event relating to the payment of an Award (A)
the Grantee makes the Tax Election at least six (6) months after the date the
Award was granted and (B) the Tax Election is made (x) in the case of a Taxable
Event occurring within a Window Period, during the Window Period in which the
Taxable Event occurs, or (y) in the case of a Taxable Event not occurring within
a window period, during the Window Period immediately preceding the Taxable
Event relating to the Award. Notwithstanding the foregoing, the Committee may,
by the adoption of rules or otherwise, (i) modify the provisions of this Section
18.2 (other than as regards Director Options) or impose such other restrictions
or limitations on Tax Elections as may be necessary to ensure that the Tax
Elections will be exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt transactions
under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
(c) The Committee shall have the authority, at the time of grant
of an Employee Option or Award under the Plan or at any time thereafter, to
award tax bonuses to designated Optionees or Grantees, to be paid upon their
exercise of Employee Options or payment in respect of Awards granted hereunder.
The amount of any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to determine the
amount of any such tax bonus and the terms and conditions affecting the vesting
and payment thereof.
19. Effective Date. The effective date of the Plan shall be the date of
its adoption by the Board, subject only to the approval by the affirmative vote
of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Texas within 12 months of
such adoption.
<PAGE>
EXHIBIT 10m
TANDY CORPORATION
1997 INCENTIVE STOCK PLAN
(includes Directors)
(as amended May 15, 1997
and
February 24, 1998)
1. Purpose.
The purpose of this Plan is to strengthen Tandy Corporation (the
"Company") by providing an incentive to its Eligible Employees (as hereinafter
defined), and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to, Eligible Employees of the Company
and its subsidiaries and to Eligible Directors an added long-term incentive for
high levels of performance and unusual efforts through the grant of Incentive
Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Performance Units and Performance Shares (as each term is hereinafter
defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation
Right, a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the term of
the Plan and during the term of any Option issued under the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (ii) the Company
or its Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined).
(b) The individuals who, as of March 1, 1997, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless
(A) the stockholders of the Company, immediately before
such merger, consolidation or
reorganization, own, directly or indirectly immediately following such merger,
consolidation or reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, consolidation or
reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the
execution of the agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation,
(C) no Person other than the Company, any Subsidiary, any
employee benefit plan (or
any trust forming a part thereof) maintained by the Company, the Surviving
Corporation, or any Subsidiary, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership of fifteen
percent (15%) or more of the then outstanding Voting Securities has Beneficial
Ownership of fifteen percent (15%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities, and
(D) a transaction described in clauses (A) through (C)
shall herein be referred to as
a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means a committee of the Board consisting of at least
two (2) members, all of who are Disinterested Directors appointed by the Board
to administer the Plan and to perform the functions set forth herein.
2.10 "Company" means Tandy Corporation, a Delaware Corporation.
2.11 "Director Option" means an Option granted pursuant to Section 5.
2.12 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Grantee or
Optionee, as the case may be, from performing the customary duties of his or her
regular job with the Company.
2.13 "Disinterested Director" means a director of the Company who is
both a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act, and a "Outside Director" within the meaning of Section 162(m) of
the Code.
2.14 "Division" means any of the operating units or divisions of the
Company.
2.15 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the Committee
as eligible to receive Options or Awards subject to the conditions set forth
herein.
2.16 "Eligible Director" means a director of the Company who is not an
employee at the time of grant of the Company or any Subsidiary.
2.17 "Employee Option" means an Option granted pursuant to Section 6.
2.18 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.19 "Fair Market Value" on any date means the average of the high and
low sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.20 "Grantee" means a person to whom an Award has been granted under
the Plan.
2.21 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.22 "93 ISP" means the Tandy Corporation 1993 Incentive Stock Plan.
2.23 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.24 "Option" means a Employee Option, a Director Option, or either or
both of them.
2.25 "Optionee" means a person to whom an Option has been granted under
the Plan.
2.26 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.27 "Performance Awards" means Performance Units, Performance Shares or
either or both of them.
2.28 "Performance Cycle" means the time period specified by the
Committee at the time a Performance Award is granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.29 "Performance Shares" means Shares issued or transferred to an
Eligible Employee under Section 10.
2.30 "Performance Unit" means Performance Units granted to an Eligible
Employee under Section 10.
2.31 "Plan or 97 ISP" means the Tandy Corporation 1997 Incentive Stock
Plan.
2.32 "Restricted Stock" means Shares issued or transferred to an
Eligible Employee pursuant to Section 9.
2.33 "Retirement" means termination of service as a Director under
circumstances entitling the Director to a retirement benefit under the Company's
Directors Special Compensation Plan.
2.34 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.35 "Shares" means the common stock, par value $1.00 per share, of
the Company.
2.36 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.37 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.38 "Ten-Percent Stockholder" means an Eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) select those Eligible Employees to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation Rights,
Performance Units, Performance Shares, and/or Shares of Restricted Stock to be
granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or performance criteria relating to such Performance
Units or Performance Shares, the maximum value of each Performance Unit and
Performance Share and make any amendment or modification to any Agreement
consistent with the terms of the Plan.
(c) grant, notwithstanding the provisions of Section 9.4 to the
contrary, Shares to Eligible Employees, that are the subject of Options and
Awards that in the aggregate do not exceed 500,000 upon such terms and
conditions as may be determined by the Committee in its sole and absolute
discretion.
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and Awards
granted thereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and determinations
by the Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and Grantees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
3.4 During any calendar year, (i) no Eligible Employee may be granted
Options and Awards (other than Awards described in clause (ii) below) in the
aggregate in respect of more than 500,000 Shares and (ii) the maximum dollar
amount of cash or the Fair Market Value of Shares that any Eligible Employee may
receive in any calendar year in respect of Performance Units denominated in
dollars may not exceed $1,500,000.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 5,500,000. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 12. The Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of which
the Option or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount equal
to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof expires,
is canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option or Award,
the Shares allocable to the expired, canceled or otherwise terminated portion of
the Option or Award may again be the subject of Options or Awards granted
hereunder.
5. Director Plans.
5A. Option Grants to Eligible Directors.
5A.1 Annual Grant. Subject to the provisions of Section 5C. hereof,
Director Options shall be granted to each Eligible Director on the first trading
day of September of each year the Plan is in effect and Director options under
the 93 ISP are no longer available for grant to such Directors or any one of
them, as the case maybe. Each Director Option granted shall be in respect of
8,000 Shares. The purchase price of each Director Option shall be as provided in
Section 5A.3 and such Options shall be evidenced by an Agreement containing such
other terms and conditions not inconsistent with the provisions of this Plan as
determined by the Board; provided, however, that such terms shall not vary the
timing of awards of Director Options, including provisions dealing with
forfeiture or termination of such Director Options, and further such terms may
not provide for a modification of a Director Option and the grant of new
Director Option in substitution for them which results in a Purchase Price (as
defined in Section 5A.3 hereof) that is lower than the Purchase Price of the
originally issued Director Option until authorized by the shareholders of the
Corporation.
5A.2 One Time Grant. Subject to the Provisions of Section 5C. hereof,
each newly appointed or elected Eligible Director who has not previously
received a one-time grant under the 93 ISP or hereunder, shall be granted an
option on the date the Eligible Director attends his or her first Company Board
meeting. Each Director Option granted under this section shall be in respect of
10,000 Shares. The purchase price of each Director Option shall be as provided
in Section 5A.3 and such Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the provisions of this
Plan as determined by the Board; provided, however, that such terms shall not
vary the timing of awards of Director Options, including provisions dealing with
forfeiture or termination of such Director Options.
5A.3 Purchase Price. The purchase price for Shares under each Director
Option shall be equal to 100% of the Fair Market Value of such Shares on the
trading date immediately preceding the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall become
exercisable with respect to one third (1/3) of the Shares subject thereto
effective as of each of the first, second and third annual anniversaries of the
grant date; provided, however, that the Optionee continues to serve as a
Director as of such dates. Notwithstanding the foregoing, if a Director's
service terminates by reason of his death, Disability or Retirement, all
Director Options then held by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date which is
the tenth annual anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason
of the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option to the extent, and only to the extent
that such Option or portion thereof was vested and exercisable, as of the date
the Optionee's service as a Director terminated, after which time the Option
shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates for Cause,
the Option granted to the Optionee hereunder shall immediately terminate in full
and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) of
this Section 5A.5, or within three (3) years after termination of service as a
Director as described in clause (b) of this Section 5A.5, the Option granted to
the Optionee may be exercised at any time within 12 months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full.
5B. Stock Purchase for Director Retainer Fees.
5B.1 Election to Participate.
(a) Initial Year Election. Each Eligible Director may participate
in this Section 5B by filing an election to participate with the Company
Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to the Eligible Director's retainer fees payable to him or her under the
Eligible Director compensation plan in respect of each calendar month commencing
with the first calendar month commencing after the receipt of the Initial Year
Election by the Company Secretary and ending the subsequent May 31. An Eligible
Director may, pursuant to an Initial Year Election, participate in this Section
5B only at either a 50% or 100% level and may not change his or her level of
participation except as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Eligible Director may, prior to May 1
of any year, elect to participate (or cease to participate ) or change his or
her level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to the Eligible Director's retainer
fees payable to him or her under the Eligible Director compensation plan in
respect of the year commencing on June 1 next subsequent to the receipt of the
Annual Election by the Company Secretary and shall continue for subsequent years
unless changed pursuant to this Section 5B.1 (b). An Eligible Director may,
pursuant to an Annual Election, participate in this Section 5B only at either a
50% or 100% level and may not change his or her level of participation except as
provided in this Section 5B.1(b).
5B.2 Payment in Stock.
(a) For the period commencing on the effective date of a Eligible
Director's Initial Year Election through the next subsequent May 31, (i) Shares
will be issued to each Eligible Director participating at the 100% level having
a Fair Market Value (as of the first trading day immediately preceding the date
of issuance) equal to the Eligible Director's annual retainer divided by twelve
(12), then multiplied by the number of calendar months from the effective date
of the Initial Year Election through the next subsequent May 31; and (ii) Shares
will be issued to each Eligible Director participating at the 50% level
according to the calculation in clause (i) of this Section 5B.2 (a) but reduced
by one-half. Shares will be issued as of the effective date of the Initial Year
Election.
(b) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Eligible
Director's annual retainer; and (ii) Shares will be issued to each Eligible
Director participating in this section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.
(c) The issuance of Shares to an Eligible director participating
in this Section 5B shall represent payment in advance of, and shall be in lieu
of, 50% or 100%, as applicable, of the Eligible Director's annual retainer for
the period in respect of which the Initial Year Election or the Annual Election
is in effect.
5B.3 Distribution. Shares will be distributed to the Eligible Director
as soon as practicable after issuance. No fractional Share will be issued to any
Eligible Director. Any amount not used for the acquisition of a Share will be
paid to the Eligible Director in cash.
5C. Director Option Grants under the 93 ISP and the Plan
5C.1 No Duplication. Notwithstanding any provision in this Plan to the
contrary, no Director Option shall be granted to any Eligible Director pursuant
to Section 5A of this Plan on any day if such Director is granted an option
pursuant to Section 5A of the 93 ISP on such day. In addition, no Shares shall
be issued pursuant to Section 5B of this Plan in respect of an Eligible
Director's retainer fees if Shares are or will be issued pursuant to Section 5B
of the 93 ISP in respect of such retainer fees.
6. Option Grants for Eligible Employees.
6.1 Authority of Committee. Subject to the provisions of the Plan and to
Section 4.1 above, the Committee shall have full and final authority to select
those Eligible Employees who will receive Options (each an "Employee Option"),
the terms and conditions of which shall be set forth in an Agreement; provided,
however, that no person shall receive any Incentive Stock Options unless he or
she is an employee of the Company, a Parent or a Subsidiary at the time the
Incentive Stock Option is granted.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Nonqualified Stock Option shall not be less than the Fair Market Value of a
Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent, and (ii) no modification or
surrender of an outstanding option and the grant of new options in substitution
for them which results in a purchase price (as defined in Section 6.2 hereof)
that is lower than the purchase price of the originally issued Option shall be
effective until authorized by the shareholders of the Corporation.
7. Terms and Conditions Applicable to All Options.
7.1 Transferability. Unless otherwise provided by the Committee, no
Option granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by
a written notice delivered in person or by mail to the Secretary of the Company
at the Company's principal executive office, specifying the number of Shares to
be purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase price
for any Shares purchased pursuant to the exercise of an Option shall be paid in
full upon such exercise by any one or a combination of the following: (i) cash
or (ii) transferring Shares to the Company upon such terms and conditions as
determined by the Committee. Notwithstanding the foregoing, the Committee shall
have discretion to determine at the time of grant of each Employee Option or at
any later date (up to and including the date of exercise) the form of payment
acceptable in respect of the exercise of such Employee Option. The written
notice pursuant to this Section 7.2 may also provide instructions from the
Optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's broker or dealer, that has been approved by the Company, designated
as such on the written notice, in payment for any Shares purchased pursuant to
the exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer that has been approved by the Company. Any Shares
transferred to the Company as payment of the purchase price under an Option
shall be valued at their Fair Market Value on the day preceding the date of
exercise of such Option. If requested by the Committee, the Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee or his designated broker or
dealer that has been approved by the Company and (iii) the Optionee's name or
the name of his designated broker or dealer that has been approved by the
Company shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
portion of the Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(x) (A) in the case of a Nonqualified Stock Option, the greater of (1) the Fair
Market Value, on the date preceding the date of surrender, of the Shares subject
to the Option or portion thereof surrendered or (2) the Adjusted Fair Market
Value of the Shares subject to the Option or portion thereof surrendered or (B)
in the case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Option or portion thereof surrendered. In the event an Optionee's employment
with, or service as a Director of, the Company terminates following a Change in
Control, each Option held by the Optionee that was exercisable as of the date of
termination of the Optionee's employment or service shall remain exercisable for
a period ending not before the earlier of (A) the first annual anniversary of
the termination of the Optionee's employment or service or (B) the expiration of
the stated term of the Option.
8. Stock Appreciation Rights. The Committee may, in its discretion,
either alone or in connection with the grant of an Option, grant to Eligible
Employees, Stock Appreciation Rights in accordance with the Plan and the terms
and conditions of which shall be set forth in an Agreement. If granted in
connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine) and shall, except as provided in this Section 8, be subject to
the same terms and conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either at the
time of grant, or at any time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. Subject to Section 8.6, a Stock Appreciation Right
granted in connection with an Option shall be exercisable at such time or times
and only to the extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right
or the surrender of such Option, the Stock Appreciation Right shall be canceled
to the extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Employees Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability, vesting and duration as the Committee shall
determine, but in no event shall they have a term of greater than ten (10)
years. Upon exercise of a Stock Appreciation Right unrelated to an Option, the
Grantee shall be entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date preceding the date of
exercise of such Stock Appreciation Right over the Fair Market Value of a Share
on the date the Stock Appreciation Right was granted (the "Base Price") , by (B)
the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any manner
the amount payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation Right at the
time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by
a Grantee only by a written notice delivered in person or by mail to the
Corporate Secretary or the President of the Company at the Company's principal
executive office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the Corporate
Secretary or President of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Grantee.
8.5 Form of Payment. Payment of the amount determined under Sections
8.2(b) or 8.3 may be made in the discretion of the Committee, solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
8.6 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Stock Appreciation Rights or accept
the surrender of outstanding Awards of Stock Appreciation Rights (to the extent
not exercised) and grant new Awards in substitution for them. Notwithstanding
the foregoing, (i) no modification of an Award shall adversely alter or impair
any rights or obligations under the Agreement without the Grantee's consent, and
(ii) no modification or surrender of an outstanding Award of Stock Appreciation
Rights and the grant of new Awards in substitution for them, which results (in
the case of Stock Appreciation Right related to Option) in a purchase price that
is lower than the purchase price specified in the related Incentive Stock Option
Agreement, and (in the case of Stock Appreciation Rights unrelated to Options)
results in a lower Base Price of a Share than that which existed on the date the
Stock Appreciation Right unrelated to Options was granted shall be effective
until authorized by the shareholders of the Corporation.
8.7 Effect of Change in Control. Notwithstanding anything contained in
this Plan to the contrary, unless an Agreement evidencing a Stock Appreciation
Right provides otherwise, in the event of a Change in Control, all Stock
Appreciation Rights shall become immediately and fully exercisable.
Notwithstanding Sections 8.3 and 8.5, an Agreement evidencing a Stock
Appreciation Right may provide that upon the exercise of a Stock Appreciation
Right unrelated to an Option or any portion thereof during the sixty (60) day
period following a Change in Control, the amount payable shall be in cash and
shall be an amount equal to the excess, if any, of (A) the greater of (x) the
Fair Market Value, on the date preceding the date of exercise, of the Shares
subject to Stock Appreciation Right or portion thereof exercised and (y) the
Adjusted Fair Market Value, on the date preceding the date of exercise, of the
Shares over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised. In the event a Grantee's employment with the
Company terminates following a Change in Control, each Stock Appreciation Right
held by the Grantee that was exercisable as of the date of termination of the
Grantee's employment shall remain exercisable for a period ending not before the
earlier of the first annual anniversary of (A) the termination of the Grantee's
employment or (B) the expiration of the stated term of the Stock Appreciation
Right.
9. Restricted Stock.
9.1 Grant. The Committee may grant to Eligible Employees and Directors,
Awards of Restricted Stock, and may issue Shares of Restricted Stock in payment
in respect of vested Performance Units (as hereinafter provided in Section
10.2), which shall be evidenced by an Agreement between the Company and the
Grantee. Each Agreement shall contain such restrictions, terms and conditions as
the Committee may, in its discretion, determine in accordance with this Section
9, and such Agreements may require that an appropriate legend be placed on Share
certificates. Awards of Restricted Stock shall be subject to the terms and
provisions set forth below in this Section 9.
9.2 Rights of Grantee. Shares of Restricted Stock granted pursuant to an
Award hereunder may either be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted or credited in a separate book
account in the Grantee's name maintained for that purpose provided that the
Grantee has executed an Agreement evidencing the Award, and, in the discretion
of the Committee, appropriate blank stock powers, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Shares. If a Grantee shall fail to execute the Agreement evidencing a
Restricted Stock Award, and, in the discretion of the Committee, appropriate
blank stock powers, an escrow agreement and any other documents which the
Committee may require within the time period prescribed by the Committee at the
time the Award is granted, the Award shall be null and void. At the discretion
of the Committee, Shares issued in connection with a Restricted Stock Award
shall be deposited together with the stock powers with an escrow agent (which
may be the Company) designated by the Committee. The Committee shall have the
full and final authority to determine, upon delivery of the Shares to the escrow
agent, or the establishment of a book account in the name of the Grantee, as the
case may be, whether or not the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.
9.3 Transferability. Unless otherwise provided by the Committee, until
any restrictions upon the Shares of Restricted Stock awarded to a Grantee shall
have lapsed in the manner set forth in Section 9.4, such Shares shall not be
sold, transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee.
9.4 Lapse of Restrictions.
(a) Generally. During the period of three (3) years commencing on
the date of grant of the Shares of Restricted Stock, or such longer period as
may be set by the Committee, restrictions upon the shares shall not lapse.
Within these limits the Committee may, in its sole discretion, provide for the
lapse of such restrictions in installments and may also accelerate such
restrictions (for any period not less that one (1) year) in whole or in part
based upon performance factors as the Committee may determine, in its sole
discretion.
(b) Effect of Change in Control or a Sale or Disposition of a
Subsidiary or Division. Notwithstanding anything contained in the Plan, unless
the Agreement evidencing the Award provides to the contrary, in the event of a
Change in Control, all restrictions upon any Shares of Restricted Stock shall
lapse immediately and all such Shares shall become fully vested in the Grantee.
In the event of the sale or other disposition of substantially all of the stock
or assets of a Subsidiary or a Division, the Committee shall have the discretion
to determine whether all restrictions upon any Shares of Restricted Stock (held
by a Grantee employed by such Division or Subsidiary) shall lapse immediately
and that all such Shares shall become fully vested in the Grantee.
(c) Employment, Disability, Retirement or Death. Restrictions
upon Shares of Restricted Stock awarded hereunder shall lapse at such time or
times and on such terms and conditions as the Committee may determine in
connection with the initial employment, Disability, retirement, or death of the
Grantee.
9.5 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 Treatment of Dividends. At the time the Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which deferred dividends were paid, and any
dividends deferred (together with any interest accrued thereon) in respect of
any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
9.7 Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.
10. Performance Awards.
10.1 (a) Performance Objectives. Performance objectives for Performance
Awards shall be expressed in terms of (i) earnings per Share, (ii) pre-tax
profits, (iii) net earnings or net worth, (iv) return on equity or assets, (v)
price of Shares, or (vi) any combination of the foregoing, for the Company,
Subsidiary or Division thereof, as may be applicable. Performance objectives may
be in respect of the performance of the Company and its Subsidiaries (which may
be on a consolidated basis), a Subsidiary or a Division. Performance objectives
may be absolute or relative and may be expressed in terms of a progression
within a specified range. The performance objectives with respect to a
Performance Cycle shall be established in writing by the Committee by the
earlier of (i) the date on which a quarter of the Performance Cycle has elapsed
or (ii) the date which is ninety (90) days after the commencement of the
Performance Cycle, and in any event while the performance relating to the
performance objectives remains substantially uncertain.
(b) Determination of Performance. Prior to the vesting, payment,
settlement or lapsing of any restrictions with respect to any Performance Award
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable performance objectives have been
satisfied.
10.2 Performance Units. The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Employees, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified performance objectives within the
Performance Cycle, represent the right to receive payment as provided in Section
10.2(b) of (i) in the case of Share-denominated Performance Units, the Fair
Market Value of a Share on the date the Performance Unit was granted, the date
the Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the level of performance objective
attainment; provided, however, that the Committee may at the time a Performance
Unit is granted, specify a maximum amount payable in respect of a vested
Performance Unit. Each Agreement shall specify the number of the Performance
Units to which it relates, the performance objectives which must be satisfied in
order for the Performance Units to vest and the Performance Cycle within which
such objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 10.1 (b) and
10.4, Grantee shall become vested with respect to the Performance Units to the
extent that the performance objectives set forth in the Agreement are satisfied
for the Performance Cycle.
(b) Payment of Awards. Subject to Section 10.1 (b), payment to
Grantees in respect of vested Performance Units shall be made within sixty (60)
days after the last day of the Performance Cycle to which such Award relates
unless the Agreement evidencing the Award provides for the deferral of payment,
in which event the terms and conditions of the deferral shall be set forth in
the Agreement. Subject to Section 10.4, such payments may be made entirely in
Shares valued at their Fair Market Value as of the last day of the applicable
Performance Cycle or such other date specified by the Committee, entirely in
cash, or in such combination of Shares and cash as the Committee in its
discretion, shall determine at any time prior to such payment; provided,
however, that if the Committee in its discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee must
determine the extent to which such payment will be in Shares of Restricted Stock
and the terms of such Restricted Stock at the time the Award is granted.
10.3 Performance Shares. The Committee, in its discretion, may grant
Awards of Performance Shares to Eligible Employees, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Each Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time an
Award of Performance Shares is made, either the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee or whether a separate book account in the name of the Grantee should be
maintained and credited with the Performance Shares represented by such Award;
provided, however, that no Performance Shares shall be issued or credited to any
such book account until the Grantee has executed an Agreement evidencing the
Award, and, in the discretion of the Committee, the appropriate blank stock
powers, an escrow agreement and any other documents which the Committee may
require as a condition to the issuance of such Performance Shares. If a Grantee
shall fail to execute the Agreement evidencing an Award of Performance Shares,
and, in the discretion of the Committee, the appropriate blank stock powers, an
escrow agreement and any other documents which the Committee may require within
the time period prescribed by the Committee at the time the Award is granted,
the Award shall be null and void. At the discretion of the Committee, Shares
issued in connection with an Award of Performance Shares shall be deposited
together with the stock powers with an escrow agent (which may be the Company)
designated by the Committee. Except as restricted by the terms of the Agreement,
upon delivery of the Shares to the escrow agent, or the establishment of a book
account in the name of Grantee, as the case may be, the Grantee shall have, in
the discretion of the Committee, all of the rights of a stockholder with respect
to such Shares, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares.
(b) Transferability. Unless otherwise provided by the Committee
until any restrictions upon the Performance Shares awarded to a Grantee shall
have lapsed in the manner set forth in Sections 10.3(c) or 10.4, such
Performance Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated, nor shall they be delivered to
the Grantee. The Committee may also impose such other restrictions and
conditions on the Performance Shares, if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Section 10.4, restrictions
upon Performance Shares awarded hereunder shall lapse and such Performance
Shares shall become vested at such time or times and on such terms, conditions
and satisfaction of performance objectives as the Committee may, in its
discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance
Shares is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on actual Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.
10.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event of a Change in Control:
(a) With respect to the Performance Units, the Grantee shall (i)
become vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and as set forth in
the Agreement and (ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in Control, a cash payment
within ten (10) days after such Change in Control in an amount as determined by
the Committee at the time of the Award of such Performance Unit and as set forth
in the Agreement.
(b) With respect to the Performance Shares, all restrictions
shall lapse immediately on all or a portion of the Performance Shares as
determined by the Committee at the time of the Award of such Performance Shares
and as set forth in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance
Units shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable performance objectives.
10.5 Transferability. Unless otherwise provided by the Committee no
Performance Awards shall be transferable by the Grantee otherwise than by will
or the laws of descent and distribution.
10.6 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding Performance Awards or accept the surrender of
outstanding Performance Awards and grant new Performance Awards in substitution
for them. Notwithstanding the foregoing, (i) no modification of a Performance
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent, and (ii) no modification or surrender
of an outstanding Performance Award and grant of new Performance Awards in
substitution for them can have the effect of increasing the value to be granted
to an Eligible Employee for comparable performance unless and until authorized
by the shareholders of the Corporation.
11. Effect of a Termination of Employment. The Agreement evidencing the
grant of each Employee Option and each Award shall set forth the terms and
conditions applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), as the Committee may, in its
discretion, determine at the time the Employee Option or Award is granted or
thereafter.
12. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the number and class
of Shares or other stock or securities which are subject to Director Options
issuable under Section 5; and (iii) the number and class of Shares or other
stock or securities which are subject to outstanding Options or Awards granted
under the Plan, and the purchase price therefor, if applicable; and (iv) the
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted to any Eligible Employee.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, a Grantee of an
Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. Effect of Certain Transactions. Subject to Sections 7.4, 8.7, 9.4(b)
and 10.4, in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or Awards,
as the case may be, upon exercise of any Option or payment or transfer in
respect of any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
14. Termination and Amendment of the Plan. The Plan shall terminate on
the day preceding the tenth annual anniversary of the date of its adoption by
the Board and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Awards therefore granted under
the Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan;
(b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations.
(c) The provisions of Section 5 shall not be amended more often
than once every six (6) months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award
other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary
to terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
17. Regulations and Other Approvals; Governing Law.
17.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflict of laws
principles.
17.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
17.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and Section 162 (m) of the Code, and the Committee shall
interpret and administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule and Section
162(m) of the Code shall be inoperative and shall not affect the validity of the
Plan.
17.4 The Board may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any government authority, or to
obtain for Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations promulgated
thereunder.
17.5 Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
17.6 Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
18. Pooling Transactions. Notwithstanding anything contained in the Plan
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a pooling transaction under the Code, the Committee
shall take such actions, if any, as are specifically recommended by an
independent accounting firm retained by the Company to the extent reasonable
necessary in order to assure that the pooling transaction will qualify as such,
including but not limited to (i) deferring the vesting, exercise, payment,
settlement or lapsing of restrictions with respect to any Option or Award, (ii)
providing that the payment or settlement in respect of any Option or Award be
made in the form of cash, Shares or securities of a successor or acquirer of the
Company, or a combination of the foregoing, and (iii) providing for the
extension of the term of any Option or Award to the extent necessary to
accommodate the foregoing, but not beyond the maximum term permitted for any
Option or Award.
19. Miscellaneous.
19.1 Multiple Agreements. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Employee during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.
19.2 Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Director, Optionee or Grantee, an
amount equal to the federal, state and local income taxes and other amounts as
may be required by law to be withheld (the "Withholding Taxes") with respect to
the receipt of any retainer fee, Option or Award. If a Director, Optionee or
Grantee is to experience a taxable event in connection with the receipt of
Shares pursuant to a payment in stock, Option exercise or payment of an Award (a
"Taxable Event"), the Director, Optionee or Grantee shall pay the Withholding
Taxes to the Company prior to the issuance, or release from escrow, of such
Shares. In satisfaction of the obligation to pay Withholding Taxes to the
Company, the Director, Optionee or Grantee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
or Company Secretary, as applicable, to have withheld a portion of the Shares
then issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes. The
Committee may, by the adoption of rules or otherwise, (i) modify the provisions
of this Section 19.2 (other than as regards Director Options) or impose such
other restrictions or limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under Section 16(b) of the
Exchange Act, and (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
(c) The Committee shall have the authority, at the time of grant
of an Employee Option or Award under the Plan or at any time thereafter, to
award tax bonuses to designated Optionees or Grantees, to be paid upon their
exercise of Employee Options or payment in respect of Awards granted hereunder.
The amount of any such payments shall be determined by the Committee. The
Committee shall have full authority in its absolute discretion to determine the
amount of any such tax bonus and the terms and conditions affecting the vesting
and payment thereof.
20. Effective Date. The effective date of the Plan shall be May 31,
1997, after the date of its adoption by the Board, and the approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Delaware within 12
months of such adoption.
<PAGE>
EXHIBIT 10x
TANDY CORPORATION
UNFUNDED DEFERRED COMPENSATION PLAN
FOR DIRECTORS
(AS AMENDED AND RESTATED JUNE 1, 1999)
1. PURPOSES OF THE PLAN
The purposes of the unfunded Deferred Compensation Plan (the "Plan") are
to enable Tandy Corporation (the "Company") to attract and retain the best
qualified members of the Board of Directors of the Company (a "Director") by
providing them with a Plan to defer the payment of all or a specified portion of
the fees payable to the Director for services rendered on behalf of the Company.
2. ELECTION TO DEFER
a) A Director may elect on or before December 31 of any year, to defer
payment of all or a specified part of either all his/her retainer fees or
meeting fees or both (whether paid in cash or in Common Stock of the Company or
dividends attributable thereto), for services and meetings during the succeeding
calendar year following such election. Any person who shall become a Director
during any calendar year, and who was not a Director of the Company on the
preceding December 31, may elect, not later than the 30th day after his or her
term begins, to defer payment of all or a specified part of such fees for the
succeeding calendar year. Any such elections shall be made by written notice
delivered to the Corporate Secretary of the Company. All elections shall only be
effective for the succeeding calendar year. Notwithstanding the above, for the
calendar year 1998, any such election must be made prior to February 28, 1998
for director retainer fees and prior to July 1, 1998 for meeting fees.
b) In addition to a) above, any Director with a cash account shall be
entitled to make a one-time election only to transfer out of his or her cash
account and have his or her stock account credited with such amount of cash and
accrued interest as a Director may elect from his or her cash account. This
election shall be effective as of July 1, 1999. Upon this election, the elected
amount credited to a Director's stock account shall be converted to that amount
of Company Common Stock based upon the closing price of Company Common Stock on
June 30, 1999. Such one-time election must be made no later than July 1, 1999.
c) With respect to cash dividends payable on Company Common Stock,
each participating Director holding a stock account or Pension Plan Stock
Account, upon his or her election may (i) be directly paid in cash, (ii) have
his or her cash account credited as of the payment date for dividends on Company
Common Stock in an amount equal to dividends attributable to the number of
shares of Company Common Stock credited to each Director's stock account or
Pension Plan Stock Account as of the record date set by the Board of Directors
of the Company or (iii) defer cash dividends into his or her stock account or
Pension Plan Stock Account. Cash dividends deferred and credited to a Director's
stock account or Pension Plan Stock Account shall be converted to that amount of
Company Common Stock based on the closing price of Company Common Stock on such
record date for dividends.
d) Amounts deferred under this Plan will be distributed based on one of
the two following elections made by each participating Director:
(1) consecutive substantially equal annual installments up to a
maximum of ten beginning on January 15 of a specified year; or
(2) a lump sum payment on a specified date not in excess of ten years from
the date Director ceases to be a Director.
3. DIRECTORS' ACCOUNTS
a) Cash Account
All deferred cash fees shall be recorded on the books of the
Company and a memorandum cash account of the fees deferred by each participating
Director and interest thereon and cash dividends payable on Company Common
Stock, if any, will be maintained.
<PAGE>
b) Stock Account
All deferred retainer fees payable in Common Stock of the Company
("Company Common Stock") and the Additional Items (as defined below) shall be
recorded on the books of the Company and a memorandum stock account of the fees
in Company Common Stock deferred by each participating Director will be
maintained. The Director's stock account shall be credited with the number of
shares of Company Common Stock otherwise payable to each participating Director
under the terms and in the amounts and on the dates set forth in each of the
Company's Incentive Stock Plans, as the case may be, providing for the
compensation of Directors, if they so elect, in Company Common Stock. All
deferred meeting fees payable in Company Common Stock shall also be recorded on
the books of the Company in the participating Director's stock account under the
terms, in the amounts and on the dates as set by the Board of Directors for the
payment of meeting fees. Meeting fees elected to be deferred by a Director in
Company Common Stock on and after June 1, 1998 shall be converted to that amount
of Company Common Stock equal to the closing price of Company Common Stock as of
the date of the applicable director or committee meeting and if not a trading
day then the first trading day prior to the meeting. Cash dividends payable on
Company Common Stock or a Director's one time election amount as provided in
Sections 1 b) and 1 c) above (collectively the "Additional Items") shall be
recorded in a Director's stock account in an amount and in the manner as
provided in the Plan.
If a Director's stock account is credited with shares of Company Common
Stock by reason of a deferral of either retainer fees or meeting fees or both on
or after January 1, 1998, or a deferral of the Additional Items and payment of
all of the Company Common Stock (earned by virtue of retainer fees, meeting fees
or both or the Additional Items) are deferred (a) until after December 31st of
the third calendar year which follows the calendar year during which such
deferrals are initially made or (b) until after the earlier of (i) December 31st
of such third calendar year or (ii) the day the Director ceases to be a
Director, the Director's stock account shall be credited with an additional
number of shares of Company Common Stock (including fractions thereof) equal to
twenty-five percent of the shares of Company Common Stock initially credited.
c) Pension Plan Stock Account
Effective December 31, 1997, the Special Compensation Plan for
Directors (the "Pension Plan") was terminated and in terminating the Pension
Plan, the Company calculated the single sum present value of each Pension Plan
participant's benefit and converted that amount to Company Common Stock based on
the average of the closing prices of Company Common Stock for 1997. The amount
of the Company Common Stock shall be recorded on the books of the Company and a
memorandum account reflecting such amounts for each Director formerly
participating in the Pension Plan will be maintained (the "Pension Plan Stock
Account").
4. PAYMENT FROM DIRECTORS' ACCOUNTS
a) Payment of amounts credited to a Director's cash account shall be
made in cash. Payment of amounts credited to a Director's stock account or
Pension Plan Stock Account shall be made in Company Common Stock. Fractional
Company Common Stock interests, if any, shall be payable in cash. With respect
to cash dividends payable on Company Common Stock, each participating Director
holding a stock account or Pension Plan Stock Account, upon his or her election
may (i) be directly paid in cash, (ii) have his or her cash account credited as
of the payment date for dividends on Company Common Stock in an amount equal to
dividends attributable to the number of shares of Company Common Stock credited
to each Director's stock account or Pension Plan Stock Account as of the record
date set by the Board of Directors of the Company or (iii) defer cash dividends
into his or her stock account or Pension Plan Stock Account. Cash dividends
deferred and credited to a director's stock account or Pension Plan Stock
Account shall be converted to that amount of Company Common Stock based on the
closing price of Company Common Stock on the payment date for dividends.
b) The aggregate amount credited to the account of any Director, at the
election of the Director, shall be paid to the Director, either (i) in a lump
sum on the date specified by the Director, (ii) in substantially equal annual
installments not exceeding ten, (iii) in a lump sum, upon a Change in Control or
threatened Change in Control (as hereafter defined), on a date specified by the
Board of Directors prior to any Change in Control, or (iv) if no election is
made, on 60 days following the date a Director ceases to be a director. If a
Director elects to receive installments, the first installment shall be paid (x)
in advance on January 15 of the following calendar year in which the Director
ceases to be a Director of the Company and subsequent installments (not
exceeding nine) shall be paid promptly on January 15 of each of the succeeding
calendar years, or (y) on the date specified by the Director.
c) Any Director with a Pension Plan Stock Account shall be entitled to
make an election as to the method of payment of Company Common Stock from his or
her Pension Plan Stock Account. Such election must be made prior to April 1,
1998. In such election, each Director shall elect the method of payment (either
single payment or 10 or less annual installments) and the date such payment will
be made or begin to be made. If any Director does not elect a method of payment
or a date of such payment, then the amount of such Director's Pension Plan Stock
Account shall be distributed to him or her, in a single sum, 60 days following
the day the individual ceases to be a Director.
For purposes of the Plan a "Change in Control" shall have the same meaning as
set forth in the Tandy Corporation 1993 Incentive Stock Plan as amended.
5. INTEREST
On the last day of each calendar quarter interest shall be credited to
each Director's cash account calculated on the unpaid balance in such cash
account as calculated from time to time during the quarter. The rate of interest
to be credited will be 1% per annum less than the announced prime rate of the
Chase-Chemical Bank N.A. as the same shall exist from time to time during the
quarter.
6. PAYMENT IN EVENT OF DEATH
If a Director should die before all deferred amounts credited to the
Director's cash account, stock account or Pension Plan Stock Account have been
distributed, the balance of any deferred fees, dividends if any, and interest
then in the Director's account shall be paid promptly to the Director's
designated beneficiary in the manner designated by the Director or if no method
is selected within 60 days after the Director's death. If such Director did not
designate a beneficiary or in the event that the beneficiary or beneficiaries
designated by such Director shall have predeceased the Director, the balance in
the Director's account shall be paid promptly to the Director's estate.
7. TERMINATION OF ELECTION
A Director may terminate his election to defer payment of one or more of
his or her retainer fees, meeting fees or cash dividends payable on Company
Common Stock by written notice delivered to the Corporate Secretary of the
Company. Such termination shall become effective as of the end of the calendar
year in which notice of termination is given with respect to the retainer fees,
meeting fees or dividends payable during subsequent calendar years. Amounts
credited to the account of a Director prior to the effective date of termination
shall not be affected thereby and shall be paid only in accordance with Sections
4 and 6 above.
8. RIGHTS UNSECURED
The right of any Director to receive payment of deferred amounts under
the provisions of the Plan shall be an unsecured claim against the general
assets of the Company. The maintenance of individual Director accounts is for
bookkeeping purposes only. The Company is not obligated to acquire or set aside
any particular assets for the discharge of its obligations, nor shall any
Director have any property rights in any particular assets held by the Company,
whether or not held for the purpose of funding the Company's obligations
hereunder.
9. NONASSIGNABILITY
During the Director's lifetime, the right to any deferred fees,
dividends if any, and interest thereon may not be transferred, assigned,
hypothecated or pledged. Any such attempt to transfer, assign, hypothecate or
pledge the account shall be void.
10. INTERPRETATION AND AMENDMENT
The Plan shall be administered by the Corporate Governance Committee of
the Company. The decision of such Committee with respect to any questions
arising as to the interpretation of this Plan, including the severability of any
and all of the provisions thereof, shall be final, conclusive and binding. The
Company reserves the right to modify this Plan from time to time or to repeal
the Plan entirely, provided, however, that no modification of this Plan shall
operate to annul an election already in effect for the current calendar year or
any preceding calendar year.
11. EFFECTIVE DATE
The effective date of this Plan will be December 15, 1995 when it was
adopted.
EXHIBIT 10y
TANDY CORPORATION
1999 INCENTIVE STOCK PLAN
(includes Directors)
1. Purpose.
The purpose of this Plan is to strengthen Tandy Corporation (the "Company") by
providing an incentive to a broad base of its Eligible Employees (as hereinafter
defined) and directors thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to these Eligible Employees of the
Company and its subsidiaries and to Eligible Directors an added long-term
incentive for high levels of performance and unusual efforts through the grant
of Nonqualified Stock Options and Stock Appreciation Rights (as each term is
hereinafter defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the ninety (90) day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Stock Appreciation
Right and setting forth the terms and conditions thereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.5 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.6 A "Change in Control" shall mean the occurrence during the term of
the Plan and during the term of any Option issued under the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (ii) the Company
or its Subsidiaries, or (iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(b) The individuals who, as of February 24, 1999, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved by
a vote of at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless
(A) the stockholders of the Company, immediately before
such merger, consolidation or
reorganization, own, directly or indirectly immediately following such merger,
consolidation or reorganization, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, consolidation or
reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the
execution of the agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation,
(C) no Person other than the Company, any Subsidiary, any
employee benefit plan (or
any trust forming a part thereof) maintained by the Company, the Surviving
Corporation, or any Subsidiary, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership of fifteen
percent (15%) or more of the then outstanding Voting Securities has Beneficial
Ownership of fifteen percent (15%) or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities, and
(D) a transaction described in clauses (A) through (C)
shall herein be referred to as
a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Committee" means a committee of the Board consisting of at least
two (2) members, all of whom are Disinterested Directors appointed by the Board
to administer the Plan and to perform the functions set forth herein.
2.9 "Company" means Tandy Corporation, a Delaware Corporation.
2.10 "Director Option" means an Option granted pursuant to Section 5.
2.11 "Disability" means the suffering from a physical or mental
condition which, in the opinion of the Committee based upon appropriate medical
advice and examination and in accordance with rules applied uniformly to all
employees of the Company, totally and permanently prevents the Grantee or
Optionee, as the case may be, from performing the customary duties of his or her
regular job with the Company.
2.12 "Disinterested Director" means a director of the Company who is
both a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act, and an "Outside Director" within the meaning of Section 162(m) of
the Code.
2.13 "Division" means any of the operating units, entities or divisions
of the Company or affiliated with the Company .
2.14 "Eligible Employee" means any officer, key employee, any full time
employee or a consultant or an advisor of the Company or a Subsidiary designated
by the Committee as eligible to receive Options or Stock Appreciation Rights
subject to the conditions set forth herein.
2.15 "Eligible Director" means a director of the Company who is not an
employee at the time of grant of the Company or any Subsidiary.
2.16 "Employee Option" means an Option granted pursuant to Section 6.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.18 "Fair Market Value" on any date means the average of the high and
low sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith.
2.19 "Grantee" means a person to whom a Stock Appreciation Right has
been granted under the Plan.
2.20 "93 ISP" means the Tandy Corporation 1993 Incentive Stock Plan.
2.21 "97 ISP" means the Tandy Corporation 1997 Incentive Stock Plan.
2.22 "Nonqualified Stock Option" means an Option which is not an
incentive stock option under Section 422 of the Code.
2.23 "Option" means an Employee Option, a Director Option, or either or
both of them.
2.24 "Optionee" means a person to whom an Option has been granted under
the Plan.
2.25 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.26 "Plan or 99 ISP" means the Tandy Corporation 1999 Incentive Stock
Plan.
2.27 "Retirement" means a Director must have attained sixty (60) years
of age and served as a Director for sixty (60) consecutive months preceding his
or her resignation or retirement as a Director.
2.28 "Shares" means the common stock, par value $1.00 per share, of
the Company.
2.29. "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.30 "Subsidiary" means any corporation a portion of whose voting stock
is owned directly or indirectly by the Company.
2.31 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
3. Administration.
3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiation for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Nonqualified Stock Options to be
granted to each Eligible Employee and to prescribe the terms and conditions
(which need not be identical) of each Employee Option, including the purchase
price per Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan;
(b) select those Eligible Employees to whom Stock Appreciation
Rights shall be granted under the Plan, the terms and conditions of each Stock
Appreciation Right, the maximum value of each Stock Appreciation Right and make
any amendment or modification to any Agreement consistent with the terms of the
Plan; and
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and Stock
Appreciation Rights granted thereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the exercise of this power
shall be final, binding and conclusive upon the Company, its Subsidiaries, the
Optionees and Grantees and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
3.4 During any calendar year no Eligible Employee may be granted Options
and Stock Appreciation Rights in the aggregate in respect of more than 1,000,000
Shares.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of Options
and Stock Appreciation Rights granted under the Plan is 9,500,000. Upon a Change
in Capitalization the maximum number of Shares shall be adjusted in number and
kind pursuant to Section 10. The Company shall reserve for the purposes of the
Plan, out of its authorized but unissued Shares or out of Shares held in the
Company's treasury, or partly out of each, such number of Shares as shall be
determined by the Board.
4.2 Upon the granting of an Option or a Stock Appreciation Right, the
number of Shares available under Section 4.1 for the granting of further Options
and Stock Appreciation Rights shall be reduced in connection with the granting
of an Option or a Stock Appreciation Right by the number of Shares in respect of
which the Option or Stock Appreciation Right is granted or denominated.
4.3 Whenever any outstanding Option or Stock Appreciation Right or
portion thereof expires, is canceled or is otherwise terminated for any reason
without having been exercised or payment having been made in respect of the
entire Option or Stock Appreciation Right, the Shares allocable to the expired,
canceled or otherwise terminated portion of the Option or Stock Appreciation
Right may again be the subject of Options or Stock Appreciation Rights granted
hereunder.
5. Director Plans.
5A. Option Grants to Eligible Directors.
5A.1 Annual Grant. Subject to the provisions of Section 5C. hereof,
Director Options shall be granted to each Eligible Director on the first trading
day of September of each year the Plan is in effect and Director options under
the 93 ISP and 97 ISP are no longer available for grant to such Directors or any
one of them, as the case may be. Each Director Option granted shall be in
respect of 16,000 Shares or such lesser amount as the Board may from time to
time determine. The purchase price of each Director Option shall be as provided
in Section 5A.3 and such Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the provisions of this
Plan as determined by the Board; provided, however, that such terms shall not
vary the timing of grants of Director Options, including provisions dealing with
forfeiture or termination of such Director Options, and further such terms may
not provide for a modification of a Director Option and the grant of new
Director Option in substitution for them which results in a Purchase Price (as
defined in Section 5A.3 hereof) that is lower than the Purchase Price of the
originally issued Director Option until authorized by the stockholders of the
Corporation.
5A.2 One Time Grant. Subject to the provisions of Section 5C. hereof,
each newly appointed or elected Eligible Director who has not previously
received a one-time grant under the 93 ISP and 97 ISP or hereunder, shall be
granted an option on the date the Eligible Director attends his or her first
Company Board meeting. Each Director Option granted under this Section shall be
in respect of 20,000 Shares or such lesser amount as the Board may from time to
time determine. The purchase price of each Director Option shall be as provided
in Section 5A.3 and such Options shall be evidenced by an Agreement containing
such other terms and conditions not inconsistent with the provisions of this
Plan as determined by the Board; provided, however, that such terms shall not
vary the timing of grants of Director Options, including provisions dealing with
forfeiture or termination of such Director Options.
5A.3 Purchase Price. The purchase price for Shares under each Director
Option shall be equal to 100% of the Fair Market Value of such Shares on the
date the Director Option is granted.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall become
exercisable with respect to one third (1/3) of the Shares subject thereto
effective as of each of the first, second and third annual anniversaries of the
grant date; provided, however, that the Optionee continues to serve as a
Director as of such dates. Notwithstanding the foregoing, if a Director's
service terminates by reason of his death, Disability or Retirement, all
Director Options then held by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date which is
the tenth annual anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may, for
a period of three (3) months after such termination, exercise his or her Option
to the extent, and only to the extent, that such Option or portion thereof was
vested and exercisable as of the date the Optionee's service as a Director
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason
of the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option to the extent, and only to the extent
that such Option or portion thereof was vested and exercisable as of the date
the Optionee's service as a Director terminated, after which time the Option
shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates for Cause,
the Option granted to the Optionee hereunder shall immediately terminate in full
and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) of
this Section 5A.5, or within three (3) years after termination of service as a
Director as described in clause (b) of this Section 5A.5, the Option granted to
the Optionee may be exercised at any time within 12 months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full.
5A.6 No Duplication. Notwithstanding any provision of the Plan to the
contrary, no Director Option shall be granted to any Eligible Director pursuant
to this Section 5A of the Plan on any day if such Director is granted an option
pursuant to Section 5A of the 93 ISP or 97 ISP on such day.
5B. Stock Purchase for Director Retainer Fees.
5B.1 Election to Participate.
(a) Initial Year Election. Each Eligible Director may participate
in this Section 5B by filing an election to participate with the Company
Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to the Eligible Director's retainer fees payable to him or her under the
Eligible Director compensation plan in respect of each calendar month commencing
with the first calendar month commencing after the receipt of the Initial Year
Election by the Company Secretary and ending the subsequent May 31. An Eligible
Director may, pursuant to an Initial Year Election, participate in this Section
5B only at either a 50% or 100% level and may not change his or her level of
participation except as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Eligible Director may, prior to May 1
of any year, elect to participate (or cease to participate ) or change his or
her level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to the Eligible Director's retainer
fees payable to him or her under the Eligible Director compensation plan in
respect of the year commencing on June 1 next subsequent to the receipt of the
Annual Election by the Company Secretary and shall continue for subsequent years
unless changed pursuant to this Section 5B.1 (b). An Eligible Director may,
pursuant to an Annual Election, participate in this Section 5B only at either a
50% or 100% level and may not change his or her level of participation except as
provided in this Section 5B.1(b).
5B.2 Payment in Stock.
(a) For the period commencing on the effective date of an
Eligible Director's Initial Year Election through the next subsequent May 31,
(i) Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Eligible Director's annual retainer
divided by twelve (12), then multiplied by the number of calendar months from
the effective date of the Initial Year Election through the next subsequent May
31; and (ii) Shares will be issued to each Eligible Director participating at
the 50% level according to the calculation in clause (i) of this Section 5B.2
(a) but reduced by one-half. Shares will be issued as of the effective date of
the Initial Year Election.
(b) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the first
trading day immediately preceding the date of issuance) equal to the Eligible
Director's annual retainer; and (ii) Shares will be issued to each Eligible
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(b) but reduced by one-half.
Shares will be issued as of June 1.
(c) The issuance of Shares to an Eligible Director participating
in this Section 5B shall represent payment in advance of, and shall be in lieu
of, 50% or 100%, as applicable, of the Eligible Director's annual retainer for
the period in respect of which the Initial Year Election or the Annual Election
is in effect.
5B.3 Distribution. Shares will be distributed to the Eligible Director
as soon as practicable after issuance. No fractional Share will be issued to any
Eligible Director. Any amount not used for the acquisition of a Share will be
paid to the Eligible Director in cash.
5B.4 No Duplication. Notwithstanding any provision in this Plan to the
contrary, no Shares shall be issued pursuant to this Section 5B of the Plan in
respect of an Eligible Director's retainer fees if Shares are or will be issued
pursuant to Section 5B of the 93 ISP or 97ISP in respect of such retainer fees.
6. Option Grants for Eligible Employees.
6.1 Authority of Committee. Subject to the provisions of the Plan and to
Section 4.1 above, the Committee shall have full and final authority to select
those Eligible Employees who will receive Options (each an "Employee Option"),
the terms and conditions of which shall be set forth in an Agreement.
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Nonqualified Stock Option
shall not be less than the Fair Market Value of a Share on the date the
Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that a Nonqualified Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted. The Committee may, subsequent to the granting of any
Employee Option, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent, and (ii) no modification or
surrender of an outstanding option and the grant of new options in substitution
for them which results in a purchase price (as defined in Section 6.2 hereof)
that is lower than the purchase price of the originally issued Option shall be
effective until authorized by the stockholders of the Corporation.
7. Terms and Conditions Applicable to All Options.
7.1 Transferability. Unless otherwise provided by the Committee, no
Option granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by
a written notice delivered in person to a designated facsimile number or by mail
to the Secretary of the Company at the Company's principal executive office, or
to such other person designated by the Secretary, specifying the number of
Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise by any one or a combination of the
following: (i) cash or (ii) transferring Shares to the Company upon such terms
and conditions as determined by the Committee. Notwithstanding the foregoing,
the Committee shall have discretion to determine at the time of grant of each
Employee Option or at any later date (up to and including the date of exercise)
the form of payment acceptable in respect of the exercise of such Employee
Option. The written notice pursuant to this Section 7.2 may also provide
instructions from the Optionee to the Company that upon receipt of the purchase
price in cash from the Optionee's broker or dealer, that has been approved by
the Company, designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall issue such
Shares directly to the designated broker or dealer that has been approved by the
Company. Any Shares transferred to the Company as payment of the purchase price
under an Option shall be valued at their Fair Market Value on the day preceding
the date of exercise of such Option. If requested by the Committee, the Optionee
shall deliver the Agreement evidencing the Option to the Secretary of the
Company, or to such other person designated by the Secretary, who shall endorse
thereon a notation of such exercise and return such Agreement to the Optionee.
No fractional Shares (or cash in lieu thereof) shall be issued upon exercise of
an Option and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee or his designated broker or
dealer that has been approved by the Company and (iii) the Optionee's name or
the name of his designated broker or dealer that has been approved by the
Company shall have been entered as a stockholder of record on the books of the
Company. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in Control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
portion of the Option to the extent not yet exercised and the Optionee will be
entitled to receive a cash payment in an amount equal to the excess, if any, of
(A) the greater of (1) the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Shares subject to the Option or
portion thereof surrendered over (B) the aggregate purchase price for such
Shares under the Option or portion thereof surrendered. In the event an
Optionee's employment with, or service as a Director of, the Company terminates
following a Change in Control, each Option held by the Optionee that was
exercisable as of the date of termination of the Optionee's employment or
service shall remain exercisable for a period ending not before the earlier of
(A) the first annual anniversary of the termination of the Optionee's employment
or service or (B) the expiration of the stated term of the Option.
8. Stock Appreciation Rights. The Committee may, in its discretion, either alone
or in connection with the grant of an Option, grant to Eligible Employees, Stock
Appreciation Rights in accordance with the Plan and the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either at the
time of grant, or at any time thereafter during the term of the Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection
with an Option shall be exercisable at such time or times and only to the extent
that the related Option is exercisable, and will not be transferable except to
the extent the related Option may be transferable. A Stock Appreciation Right
granted in connection with a Nonqualified Stock Option shall be exercisable only
if the Fair Market Value of a Share on the date of exercise exceeds the purchase
price specified in the related Nonqualified Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) Treatment of Related Options and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Option, the Option shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock Appreciation Right
or the surrender of such Option, the Stock Appreciation Right shall be canceled
to the extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The Committee may
grant to Eligible Employees Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability, vesting and duration as the Committee shall
determine, but in no event shall they have a term of greater than ten (10)
years. Upon exercise of a Stock Appreciation Right unrelated to an Option, the
Grantee shall be entitled to receive an amount determined by multiplying (A) the
excess of the Fair Market Value of a Share on the date preceding the date of
exercise of such Stock Appreciation Right over the Fair Market Value of a Share
on the date the Stock Appreciation Right was granted (the "Base Price") , by (B)
the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any manner
the amount payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation Right at the
time it is granted.
8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by
a Grantee only by a written notice delivered in person to a designated facsimile
number or by mail to the Secretary of the Company, or to such other person
designated by the Secretary, at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Corporate Secretary of
the Company, or to such other person designated by the Secretary, who shall
endorse thereon a notation of such exercise and return such Agreement to the
Grantee.
8.5 Form of Payment. Payment of the amount determined under Sections
8.2(b) or 8.3 may be made in the discretion of the Committee, solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash.
8.6 Modification or Substitution. Subject to the terms of the Plan, the
Committee may modify outstanding grants of Stock Appreciation Rights or accept
the surrender of outstanding grants of Stock Appreciation Rights (to the extent
not exercised) and grant new Stock Appreciation Rights in substitution for them.
Notwithstanding the foregoing, (i) no modification of a Stock Appreciation Right
shall adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent, and (ii) no modification or surrender of an
outstanding Stock Appreciation Right and the grant of new Stock Appreciation
Rights in substitution for them, which results (in the case of Stock
Appreciation Right related to an Option) in a purchase price that is lower than
the purchase price specified in the related Nonqualified Stock Option Agreement,
and (in the case of Stock Appreciation Rights unrelated to Options) results in a
lower Base Price of a Share than that which existed on the date the Stock
Appreciation Right unrelated to Options was granted shall be effective until
authorized by the stockholders of the Corporation.
8.7 Effect of Change in Control. Notwithstanding anything contained in
this Plan to the contrary, unless an Agreement evidencing a Stock Appreciation
Right provides otherwise, in the event of a Change in Control, all Stock
Appreciation Rights shall become immediately and fully exercisable.
Notwithstanding Sections 8.3 and 8.5, an Agreement evidencing a Stock
Appreciation Right may provide that upon the exercise of a Stock Appreciation
Right unrelated to an Option or any portion thereof during the sixty (60) day
period following a Change in Control, the amount payable shall be in cash and
shall be an amount equal to the excess, if any, of (A) the greater of (i) the
Fair Market Value, on the date preceding the date of exercise, of the Shares
subject to Stock Appreciation Right or portion thereof exercised and (ii) the
Adjusted Fair Market Value, on the date preceding the date of exercise, of the
Shares over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised. In the event a Grantee's employment with the
Company terminates following a Change in Control, each Stock Appreciation Right
held by the Grantee that was exercisable as of the date of termination of the
Grantee's employment shall remain exercisable for a period ending not before the
earlier of the first annual anniversary of the termination of the Grantee's
employment or the expiration of the stated term of the Stock Appreciation Right.
9. Effect of a Termination of Employment. The Agreement evidencing the grant of
each Employee Option and each Stock Appreciation Right shall set forth the terms
and conditions applicable to such Employee Option or Stock Appreciation Right
upon a termination or change in the status of the employment of the Optionee or
Grantee by the Company, a Subsidiary or a Division (including a termination or
change by reason of the sale of a Subsidiary or a Division), as the Committee
may, in its discretion, determine at the time the Employee Option or Stock
Appreciation Rights is granted or thereafter.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to the (i)
maximum number and class of Shares or other stock or securities with respect to
which Options or Stock Appreciation Rights may be granted under the Plan, (ii)
the number and class of Shares or other stock or securities which are subject to
Director Options issuable under Section 5; and (iii) the number and class of
Shares or other stock or securities which are subject to outstanding Options or
Stock Appreciation Rights granted under the Plan, and the purchase price
therefor, if applicable; and (iv) the maximum number and class of Shares or
other stock or securities with respect to which Options or Stock Appreciation
Rights may be granted to any Eligible Employee.
(b) Any stock adjustment in the Shares or other stock or
securities subject to outstanding Director Options (including any adjustments in
the purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(c) If, by reason of a Change in Capitalization, a Grantee of a
Stock Appreciation Right shall be entitled to, or an Optionee shall be entitled
to exercise an Option with respect to, new, additional or different shares of
stock or securities, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Stock Appreciation Right or Option,
as the case may be, prior to such Change in Capitalization.
11. Effect of Certain Transactions. Subject to Sections 7.4 and 8.7 in the event
of (i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the Options and
Stock Appreciation Rights issued hereunder shall continue in effect in
accordance with their respective terms and each Optionee and Grantee shall be
entitled to receive in respect of each Share subject to any outstanding Options
or Stock Appreciation Rights, as the case may be, upon exercise of any Option or
payment or transfer in respect of any Stock Appreciation Right, the same number
and kind of stock, securities, cash, property, or other consideration that each
holder of a Share was entitled to receive in the Transaction in respect of a
Share.
12. Termination and Amendment of the Plan. The Plan shall terminate on the day
preceding the tenth annual anniversary of the date of its adoption by the Board
and no Option or Stock Appreciation Right may be granted thereafter. The Board
may sooner terminate the Plan and the Board may at any time and from time to
time amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options or Stock Appreciation Rights
therefor granted under the Plan, except with the consent of the Optionee or
Grantee, nor shall any amendment, modification, suspension or termination
deprive any Optionee or Grantee of any Shares which he or she may have acquired
through or as a result of the Plan.
13. Non-Exclusivity of the Plan. The adoption of the Plan by the Board shall not
be construed as amending, modifying or rescinding any previously approved
incentive arrangements or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
14. Limitation of Liability. As illustrative of the limitations of liability
of the Company, but not intended to be exhaustive thereof, nothing in the Plan
shall be construed to:
(i) give any person any right to be granted an Option or Stock
Appreciation Right other than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary
or any Division to terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
15. Regulations and Other Approvals; Governing Law.
15.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflict of laws
principles.
15.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Stock Appreciation Rights granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
15.3 The Plan is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Committee shall interpret and administer the provisions
of the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
15.4 The Board may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any government authority.
15.5 Each Option and Stock Appreciation Right is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an Option or
Stock Appreciation Right or the issuance of Shares, no Options or Stock
Appreciation Rights shall be granted or payment made or Shares issued, in whole
or in part, unless such listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as acceptable to
the Committee.
15.6 Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Stock Appreciation Right granted under the Plan,
as a condition precedent to receipt of such Shares, to represent and warrant to
the Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder. The certificates
evidencing any of such Shares shall be appropriately legended to reflect their
status as restricted securities as aforesaid.
16. Pooling Transactions. Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which is also
intended to constitute a pooling transaction under the Code, the Committee shall
take such actions, if any, as are specifically recommended by an independent
accounting firm retained by the Company to the extent reasonably necessary in
order to assure that the pooling transaction will qualify as such, including but
not limited to (i) deferring the vesting, exercise, payment, settlement or
lapsing of restrictions with respect to any Option or Stock Appreciation Right,
(ii) providing that the payment or settlement in respect of any Option or Stock
Appreciation Right be made in the form of cash, Shares or securities of a
successor or acquirer of the Company, or a combination of the foregoing, and
(iii) providing for the extension of the term of any Option or Stock
Appreciation Right to the extent necessary to accommodate the foregoing, but not
beyond the maximum term permitted for any Option or Stock Appreciation Right.
17. Miscellaneous.
17.1 Multiple Agreements. The terms of each Option or Stock Appreciation
Right may differ from other Options or Stock Appreciation Rights granted under
the Plan at the same time, or at some other time. The Committee may also grant
more than one Option or Stock Appreciation Right to a given Eligible Employee
during the term of the Plan, either in addition to, or in substitution for, one
or more Options or Stock Appreciation Rights previously granted to that Eligible
Employee.
17.2 Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Director, Optionee or Grantee, an
amount equal to the federal, state and local income taxes and other amounts as
may be required by law to be withheld (the "Withholding Taxes") with respect to
the receipt of any retainer fee, Option or Stock Appreciation Right. If a
Director, Optionee or Grantee is to experience a taxable event in connection
with the receipt of Shares pursuant to a payment in stock, Option exercise or
payment of a Stock Appreciation Right (a "Taxable Event"), the Director,
Optionee or Grantee shall pay the Withholding Taxes to the Company prior to the
issuance, or release from escrow, of such Shares. In satisfaction of the
obligation to pay Withholding Taxes to the Company, the Director, Optionee or
Grantee may make a written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee or Company Secretary or his or
her designee, as applicable, to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes. The
Committee may, by the adoption of rules or otherwise, (i) modify the provisions
of this Section 17.2 (other than as regards Director Options) or impose such
other restrictions or limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under Section 16(b) of the
Exchange Act, and (ii) permit Tax Elections to be made at such other times and
subject to such other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
(b) The Committee shall have the authority, at the time of grant
of an Employee Option or Stock Appreciation Right under the Plan or at any time
thereafter, to award tax bonuses to designated Optionees or Grantees, to be paid
upon their exercise of Employee Options or payment in respect of Stock
Appreciation Rights granted hereunder. The amount of any such payments shall be
determined by the Committee. The Committee shall have full authority in its
absolute discretion to determine the amount of any such tax bonus and the terms
and conditions affecting the vesting and payment thereof.
18. Effective Date. The effective date of the Plan shall be February 24,
1999 the date of its adoption by the Board.
<TABLE>
EXHIBIT 11
TANDY CORPORATION
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
(In millions, except per share amounts) 1999 1998 1999 1998
- --------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Net income (loss) $ 61.6 $ (20.1) $ 117.5 $ 17.0
Plus provision (benefit) for income taxes 39.4 (12.6) 75.1 10.6
-------- -------- -------- --------
Income (loss) before income taxes 101.0 (32.7) 192.6 27.6
-------- -------- -------- --------
Fixed charges:
Interest expense and amortization of debt discount 9.6 11.8 17.9 22.1
Amortization of issuance expense 0.2 0.2 0.4 0.4
Appropriate portion (33 1/3%) of rentals 16.9 18.7 33.7 37.2
-------- -------- -------- --------
Total fixed charges 26.7 30.7 52.0 59.7
-------- -------- -------- --------
Earnings (loss) before income taxes and fixed
charges $ 127.7 $ (2.0) $ 244.6 $ 87.3
======== ======== ======== ========
Ratio of earnings to fixed charges 4.78 N/A(1) 4.70 1.46
======== ======== ======== ========
Ratio of Earnings to Fixed Charges and Preferred
Dividends:
Total fixed charges, as above $ 26.7 $ 30.7 $ 52.0 $ 59.7
Preferred dividends 1.4 1.4 2.8 2.9
-------- -------- -------- --------
Total fixed charges and preferred dividends $ 28.1 $ 32.1 $ 54.8 $ 62.6
======== ======== ======== ========
Earnings (loss) before income taxes and fixed
charges $ 127.7 $ (2.0) $ 244.6 $ 87.3
======== ======== ======== ========
Ratio of earnings to fixed charges and preferred
dividends 4.54 N/A(1) 4.46 1.39
======== ======== ======== ========
(1) Pre-tax earnings were not sufficient to cover fixed charges during the three months ended June 30, 1998.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income contained in
Tandy Corporation's 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000096289
<NAME> TANDY CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 43,700
<SECURITIES> 20,000
<RECEIVABLES> 224,400
<ALLOWANCES> 19,800
<INVENTORY> 855,900
<CURRENT-ASSETS> 1,200,600
<PP&E> 999,300
<DEPRECIATION> 566,000
<TOTAL-ASSETS> 1,926,600
<CURRENT-LIABILITIES> 741,100
<BONDS> 260,400
0
74,800
<COMMON> 235,800
<OTHER-SE> 550,300
<TOTAL-LIABILITY-AND-EQUITY> 1,926,600
<SALES> 1,776,900
<TOTAL-REVENUES> 1,776,900
<CGS> 858,200
<TOTAL-COSTS> 858,200
<OTHER-EXPENSES> (5,100)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,800
<INCOME-PRETAX> 192,600
<INCOME-TAX> 75,100
<INCOME-CONTINUING> 114,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,700
<EPS-BASIC> .59
<EPS-DILUTED> .56
</TABLE>
