333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OPTICAL CABLE CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1237042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5290 Concourse Drive
Roanoke, Virginia 24019
(540) 265-0690
(Address, including zip code and telephone number,
of Principal Executive Offices)
OPTICAL CABLE CORPORATION
1996 STOCK INCENTIVE PLAN
(Full title of the plan)
Robert Kopstein
Chairman of the Board,
President and Chief Executive Officer
Optical Cable Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
(540) 265-0690
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to
Leslie A. Grandis, Esquire
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the registration statement.
This is page 1 of 40 pages.
Exhibit Index appears on page 11
CALCULATION OF REGISTRATION FEE
============== =============== ================ =============== ===============
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
============== ================== ================ =============== ================
Common Stock
no par value 4,000,000 (1) $9.125(2) $36,500,000 $12,586.21
============== ================== ================ =============== ================
(1) Represents the maximum number of shares of Common Stock of Optical
Cable Corporation (the "Company") that may be offered and sold hereunder.
(2) Estimated solely for purposes of calculating the registration fee.
Based on the average of the high and low prices for the Common Stock reported on
NASDAQ on July 30, 1996.
PART II.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The Company and the Optical Cable Corporation 1996 Stock Incentive Plan
(the "Plan") hereby incorporate by reference into this Registration Statement
the documents listed below which have been filed with the Securities and
Exchange Commission.
(a) The Company's prospectus, dated March 6, 1996 with respect to
1,500,000 shares of the Company's common stock, no par value per share.
(b) All reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since the end
of the fiscal year covered by the prospectus referred to in (a) above.
(c) The description of the Common Stock contained in the Company's
Registration Statement Form S-1 (File No. 33-96476), dated March 4, 1996, as
amended, and declared effective March 6, 1996 pursuant to Section 12 of the
Exchange Act.
Each document or report subsequently filed by the Company and the Plan
with the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act after the date of this Registration Statement, but prior to the
filing of a post effective amendment to this Registration Statement which
indicates that all securities offered by this Registration Statement have been
sold or which deregisters all such securities
3
then remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement. Each document or report incorporated into this
Registration Statement by reference shall be deemed to be a part of this
Registration Statement from the date of the filing of such document with the
Commission until the information contained therein is superseded or updated by
any subsequently filed document which is incorporated by reference into this
Registration Statement.
Item 6. Indemnification of Directors and Officers
Article 10 of the Virginia Stock Corporation Act allows, in general,
for indemnifications, in certain circumstances, by a corporation of any person
threatened with or made a party to any action, suit, or proceeding by reason of
the fact that he or she is, or was, a director, officer, employee, or agent of
such corporation. Indemnification is also authorized with respect to a criminal
action or proceeding where the person had no reasonable cause to believe that
his conduct was unlawful. Article 9 of the Virginia Stock Corporation Act
provides limitations on damages payable by officers and directors, except in
cases of willful misconduct or knowing violation of criminal law or any federal
or state securities law.
The Registrant's Articles of Incorporation provide for mandatory
indemnification of its directors and officers against liability incurred by them
in proceedings instituted or threatened against them by third parties, or by or
on behalf of
4
the Registrant itself, relating to the manner in which they performed their
duties unless they have been guilty of willful misconduct or a knowing violation
of the criminal law.
Item 8. Exhibits
See Index to Exhibits.
Item 9. Undertakings
The undersigned registrant hereby undertakes or acknowledges:
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) (1) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(i) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(ii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
5
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, and
each filing of the Plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
6
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
7
SIGNATURES
The Registrant.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Roanoke, Commonwealth of Virginia, on July 30,
1996.
OPTICAL CABLE CORPORATION
Registrant
By: s/Robert Kopstein
---------------------
Robert Kopstein
Chairman of the Board,
President and Chief Executive
Officer
8
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on July 30, 1996.
Chairman of the Board,
President, Chief Executive
Officer and Director
(principal executive officer)
s/Robert Kopstein
- ---------------------------
Robert Kopstein
Senior Vice President of Sales
s/Luke J. Huybrechts and Director
- ---------------------------
Luke J. Huybrechts
Vice President of Finance,
Treasurer, Secretary and
Director (principal financial
and accounting officer)
s/Kenneth W. Harber
- --------------------------
Kenneth W. Harber
s/Randall H. Frazier Director
- --------------------------
Randall H. Frazier
s/John M. Holland Director
- --------------------------
John M. Holland
9
EXHIBITS
TO
OPTICAL CABLE CORPORATION
REGISTRATION STATEMENT ON FORM S-8
10
Exhibit Index
-------------
The following exhibits are filed herewith as part of this Registration
Statement:
Exhibit Page
No. No.
--- ---
5.1 Opinion and Consent of McGuire, Woods,
Battle & Boothe, L.L.P., Counsel to the Company
as to the validity of the Common Stock
offered hereunder 12
23.1 Consent of KPMG Peat Marwick LLP 13
24.2 Consent of McGuire, Woods, Battle & Boothe,
L.L.P. (included in Exhibit 5.1)
28.1 Optical Cable Corporation
1996 Stock Incentive Plan 14
11
July 30, 1996
Board of Directors
Optical Cable Corporation
5290 Concourse Drive
Roanoke, Virginia 24019
Gentlemen:
We have acted as your counsel in connection with the preparation of a
Registration Statement on Form S-8 to be filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Registration
Statement"), with respect to the offering of up to 4,000,000 shares of Common
Stock, no par value per share of Optical Cable Corporation (the "Company") to be
issued pursuant to the Optical Cable Corporation 1996 Stock Incentive Plan (the
"Plan").
We are familiar with the Registration Statement and have examined such
corporate documents and records, including the Plan, and such matters of law as
we have considered appropriate to enable us to render the following opinion. On
the basis of the foregoing, we are of the opinion that:
The Company is a corporation duly organized and validly existing under
the laws of the Commonwealth of Virginia and has the power to issue up to
4,000,000 shares of Company Common Stock, no par value, that are to be
registered with the Securities and Exchange Commission on a Form S-8
Registration Statement. We are further of the opinion that the Common Stock
being registered, when issued in accordance with the related resolutions of the
Board of Directors and the terms of the Plan, will be duly authorized, validly
issued, fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in the Registration Statement.
Very truly yours,
s/ McGuire, Woods, Battle &
Boothe, L.L.P.
12
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
Optical Cable Corporation:
We consent to the incorporation by reference herein of our report dated
December 8, 1995, relating to the balance sheets of Optical Cable Corporation as
of October 31, 1994 and 1995, and the related statements of income,
stockholder's equity, and cash flows for each of the years in the three-year
period ended October 31, 1995, which report appears in the October 31, 1995,
annual report on Form 10-K of Optical Cable Corporation incorporated by
reference herein.
s/ KPMG Peat Marwick LLP
---------------------------
KPMG Peat Marwick LLP
Roanoke, Virginia
July 30, 1996
13
OPTICAL CABLE CORPORATION
-------------------------
1996 STOCK INCENTIVE PLAN
-------------------------
(As adjusted by the Committee to reflect 2
for 1 stock splits on May 31, and June 21, 1996)
OPTICAL CABLE CORPORATION (the "Company") hereby adopts this Optical
Cable Corporation 1996 Stock Incentive Plan.
1. Purpose. The purpose of the Optical Cable Corporation 1996 Stock
Incentive Plan (the "Plan") is to further the long term stability and financial
success of the Company by attracting and retaining key management employees and
employees of the Company and its Subsidiaries who can contribute to the
financial success of those corporations through the use of stock incentives. It
is believed that ownership of Company Stock will stimulate the efforts of those
employees upon whose judgment, interest and efforts the Company and its
Subsidiaries is and will be largely dependent for the successful conduct of
their business. Options may also be granted to consultants (other than
non-employee directors) rendering services to the Company. It is also believed
that awards granted to employees and consultants under this Plan will also
further the identification of those individuals' interests with those of the
Company's shareholders.
The Plan has been adopted by the Board of Directors of the Company and
approved by the Company's sole shareholder.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
14
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amount of
federal, state and local income and payroll taxes that the Company is
required to withhold in connection with any exercise of an Option or Stock
Appreciation Right or the award, lapse of restrictions or payment with
respect to Restricted Stock or Incentive Stock.
(c) "Award" means the award of an Option, Stock Appreciation Right,
Restricted Stock or Incentive Stock under the Plan.
(d) "Beneficiary" means the person or persons entitled to receive a
benefit pursuant to an Award upon the death of a Participant.
(e) "Board" means the Board of Directors of the Company.
(f) "Change of Control" means:
(i) The acquisition by any unrelated person of beneficial
ownership (as that term is used for purposes of the Act) of 50% or more
of the then outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors. The
term "unrelated person" means any person other than (x) the Company and
its Subsidiaries, (y) an employee benefit plan or trust of
15
the Company or its Subsidiaries, and (z) a person who acquires
stock of the Company pursuant to an agreement with the Company
that is approved by the Board in advance of the acquisition,
unless the acquisition results in a Change of Control pursuant
to subsection (ii) below. For purposes of this subsection, a
"person" means an individual, entity or group, as that term is
used for purposes of the Act.
(ii) Any tender or exchange offer, merger or other business
combination, sale of assets or any combination of the foregoing
transactions, and the Company is not the surviving corporation.
(iii) A liquidation of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee appointed to administer the Plan as
provided in Section 16.
(i) "Company" means Optical Cable Corporation.
(j) "Company Stock" means common stock of the Company. In the event of
a change in the capital structure of the Company (as provided in Section
15), the shares resulting from such a change shall be deemed to be Company
Stock within the meaning of the Plan.
(k) "Consultant" means a person, other than a non- employee director,
rendering services to the Company or a Subsidiary.
16
(l) "Corporate Change" means a consolidation, merger, dissolution or
liquidation of the Company or a Subsidiary, or a sale or distribution of
assets or stock (other than in the ordinary course of business) of the
Company or a Subsidiary; provided that, unless the Committee determines
otherwise, a Corporate Change shall only be considered to have occurred with
respect to Participants whose business unit is affected by the Corporate
Change.
(m) "Date of Grant" means the date as of which an Award is made by the
Committee.
(n) "Disability" or "Disabled" means, as to an Incentive Stock Option,
a Disability within the meaning of Section 22(e)(3) of the Code. As to all
other Incentive Awards, the Committee shall determine whether a Disability
exists and such determination shall be conclusive.
(o) "Fair Market Value" means (i) if the Company Stock is traded on an
exchange, the mean of the highest and lowest registered sales prices of the
Company Stock on the exchange on which the Company Stock generally has the
greatest trading volume, or (ii) if the Company Stock is traded in the
over-the-counter market, the mean between the closing bid and asked prices
as reported by NASDAQ. Fair Market Value shall be determined as of the
applicable date specified in the Plan or, if there if are no trades on such
date, the value shall be determined as of the last preceding day on which
the Company Stock is traded.
17
(p) "Incentive Stock" means Company Stock awarded when performance
goals are achieved pursuant to an incentive plan established by the
Committee as provided in Section 9.
(q) "Incentive Stock Option" means an Option intended to meet the
requirements of, and qualify for favorable Federal income tax treatment
under, Code section 422.
(r) "Insider" means a person subject to Section 16(b) of the Act.
(s) "Nonstatutory Stock Option" means an Option that does not meet the
requirements of Code section 422, or that is otherwise not intended to be an
Incentive Stock Option and is so designated.
(t) "Option" means a right to purchase Company Stock granted under the
Plan, at a price determined in accordance with the Plan.
(u) "Parent" means, with respect to any corporation, a parent of that
corporation within the meaning of Code section 424(e).
(v) "Participant" means any employee or Consultant who receives an
Award under the Plan.
(w) "Replacement Feature" means a feature of an Option, as described in
the Participant's stock option agreement, that provides for the automatic
grant of a Replacement Option in accordance with the provisions of Section
10(b).
18
(x) "Replacement Option" means an Option granted to a Participant equal
to the number of shares of already owned Company Stock that are delivered by
the Participant to exercise an Option, as described in Section 10(b).
(y) "Restricted Stock" means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 8.
(z) "Rule 16b-3" means Rule 16b-3 of the Act. A reference in the Plan
to Rule 16b-3 shall include a reference to any corresponding subsequent rule
or any amendments to Rule 16b-3 enacted after the effective date of the
Plan.
(aa) "Stock Appreciation Right" means a right granted under the Plan to
receive from the Company amounts in cash or shares of Company Stock upon the
surrender of an Option.
(bb) "Subsidiary" means an entity of which the Company owns 50% or more
of the total combined voting power of all classes of stock.
(cc) "10% Shareholder" means a person who owns, directly or indirectly,
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary of the Company.
Indirect ownership of stock shall be determined in accordance with Code
section 424(d).
19
3. General. The following types of Awards may be granted under the
Plan: Options, Stock Appreciation Rights, Restricted Stock and Incentive Stock.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options.
4. Stock. Subject to Section 15 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 4,000,000 shares of Company Stock*,
which shall be authorized, but unissued, shares. Shares allocable to Options
granted under the Plan that expire or otherwise terminate unexercised and shares
that are forfeited pursuant to restrictions on Restricted Stock or Incentive
Stock awarded under the Plan may again be subjected to an Award under this Plan.
For purposes of determining the number of shares that are available for Awards
under the Plan, such number shall, if permissible under Rule 16b-3, include the
number of shares surrendered by a Participant or retained by the Company (a) in
connection with the exercise of an option or (b) in payment of Applicable
Withholding Taxes.
5. Eligibility.
-----------
(a) Any employee of or Consultant rendering services to the Company
or a Subsidiary who, in the judgment of the Committee, has contributed or can be
expected to contribute to the profits or growth of the Company and directors of
the Company who are employees and are not members of the Committee are eligible
to receive Awards under the Plan. The Committee shall
- --------
* As adjusted for two-for-one stock splits on May 31, 1996 and June 21, 1996.
20
have the power and complete discretion, as provided in Section 16, to select
eligible employees or Consultants to receive Awards and to determine for each
employee or Consultant the terms, conditions and nature of the Award and the
number of shares to be allocated as part of the Award. The Committee is
expressly authorized to make an Award to a Participant conditioned upon the
surrender for cancellation of an existing Award.
(b) The grant of an Award shall not obligate the Company or any
Subsidiary to pay an employee any particular amount of remuneration, to continue
the employment of the employee after the grant or to make further grants to the
employee at any time thereafter.
(c) Consultants shall only be eligible to receive the Award of a
Nonstatutory Stock Option under the Plan.
6. Stock Options.
--------------
(a) Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares for which
Options are granted, the Option price per share, whether the Options are
Incentive Stock Options or Nonstatutory Stock Options, and the conditions to
which the grant and exercise of the Options are subject. This notice, when duly
accepted in writing by the Participant, shall become a stock option agreement
between the Company and the Participant.
(b) The Committee shall establish the exercise price of Options. The
exercise price of a Nonstatutory Stock Option shall be not less than 85% of the
Fair Market Value of the
21
shares of Company Stock covered by the Option on the Date of Grant. The exercise
price of an Incentive Stock Option shall be not less than 100% of the Fair
Market Value of such shares on the Date of Grant; provided that if the
Participant is a 10% Shareholder, the exercise price of an Incentive Stock
Option shall be not less than 110% of the Fair Market Value of such shares on
the Date of Grant.
(c) An employee may not receive awards of Options under the
Plan with respect to more than 400,000 shares of Company Stock** during any
calendar year.
(d) Options may be exercised in whole or in part at such times
as may be specified by the Committee in the Participant's stock option
agreement. The Committee may impose such vesting conditions and other
requirements as the Committee deems appropriate, and the Committee may include
such provisions regarding a Change of Control or Corporate Change as the
Committee deems appropriate.
(e) The Committee shall establish the term of each Option in
the Participant's stock option agreement. The term of an Incentive Stock Option
shall not be longer than ten years from the Date of Grant, except that an
Incentive Stock Option granted to a 10% Shareholder may not have a term in
excess of five years. No Option may be exercised after the expiration of its
term or, except as set forth in the Participant's stock option agreement,
- --------
** As adjusted for two-for-one stock splits on May 31, 1996 and June 21,
1996.
22
after the termination of the Participant's employment. The Committee shall set
forth in the Participant's stock option agreement when, and under what
circumstances, an Option may be exercised after termination of the Participant's
employment or period of service.
(f) An Incentive Stock Option, by its terms, shall be exercisable in
any calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable by the Participant for the first time
during the calendar year does not exceed $100,000 (the "Limitation Amount").
Incentive Stock Options granted after 1986 under the Plan and all other plans of
the Company and any parent or Subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been exceeded. The
Board may impose such conditions as it deems appropriate on an Incentive Stock
Option to ensure that the foregoing requirement is met. If Incentive Stock
Options that first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock Options to the
extent permitted by law.
(g) If a Participant dies and if the Participant's stock option
agreement provides that part or all of the Option may be exercised after the
Participant's death, then such portion may be exercised by the personal
representative of the
23
Participant's estate during the time period specified in the stock option
agreement.
(h) The Committee may, in its discretion, grant Options
containing a Replacement Feature as described in Section 10(b) and may amend
previously granted Nonstatutory Stock Options to provide such a Replacement
Feature.
7. Stock Appreciation Rights.
-------------------------
(a) Whenever the Committee deems it appropriate, Stock
Appreciation Rights may be granted in connection with all or any part of an
Option. At the discretion of the Committee, Stock Appreciation Rights may also
be granted either concurrently with the grant or at any time thereafter during
the term of the Option. The following provisions apply to all Stock Appreciation
Rights that are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the
employee, upon exercise of all or any part of the Stock
Appreciation Rights, to surrender to the Company unexercised
that portion of the underlying Option relating to the same
number of shares of Company Stock as is covered by the Stock
Appreciation Rights (or the portion of the Stock Appreciation
Rights so exercised) and to receive in exchange from the
Company an amount in cash or shares of Company Stock (as
provided in the Stock Appreciation Right) equal to the excess
of (x) the Fair Market Value on the date of exercise of the
Company Stock covered by the surrendered portion of the
24
underlying Option over (y) the exercise price of the Company
Stock covered by the surrendered portion of the underlying
Option. The Committee may limit the amount that the employee
will be entitled to receive upon exercise of the Stock
Appreciation Right.
(ii) Upon the exercise of a Stock Appreciation Right and
surrender of the related portion of the underlying Option, the
Option, to the extent surrendered, shall not thereafter be
exercisable.
(iii) Subject to any further conditions upon exercise
imposed by the Committee, a Stock Appreciation Right issued in
tandem with an Option shall be exercisable only to the extent
that the related Option is exercisable, except that in no
event shall a Stock Appreciation Right held by an Insider be
exercisable for cash within the first six months after it is
awarded even though the related Option is or becomes
exercisable, and shall expire no later than the date on which
the related Option expires.
(iv) A Stock Appreciation Right may only be exercised at
a time when the Fair Market Value of the Company Stock covered
by the Stock Appreciation Right exceeds the exercise price of
the Company Stock covered by the underlying Option.
25
(b) The manner in which the Company's obligation arising upon
the exercise of a Stock Appreciation Right shall be paid shall be determined by
the Committee and shall be set forth in the employee's Option or the related
Stock Appreciation Rights agreement. The Committee may provide for payment in
Company Stock or cash, or a fixed combination of Company Stock or cash, or the
Committee may reserve the right to determine the manner of payment at the time
the Stock Appreciation Right is exercised. Shares of Company Stock issued upon
the exercise of a Stock Appreciation Right shall be valued at their Fair Market
Value on the date of exercise.
(c) An Insider may only exercise a Stock Appreciation Right
for cash (i) during a Window Period, and (ii) six months after it is granted.
8. Restricted Stock Awards.
-------------------------
(a) Whenever the Committee deems it appropriate to grant a
Restricted Stock Award, notice shall be given to the Participant stating the
number of shares of Restricted Stock for which the Award is granted and the
terms and conditions to which the Award is subject. This notice, when accepted
in writing by the Participant, shall become an Award agreement between the
Company and the Participant. Certificates representing the shares shall be
issued in the name of the Participant, subject to the restrictions imposed by
the Plan and the Committee. A Restricted Stock Award may be made by the
Committee in its discretion without cash consideration.
26
(b) The Committee may place such restrictions on the
transferability and vesting of Restricted Stock as the Committee deems
appropriate, including restrictions relating to continued employment and
financial performance goals. Without limiting the foregoing, the Committee may
provide performance acceleration parameters under which all, or a portion, of
the Restricted Stock will vest on the Company's achievement of established
performance objectives. Restricted Stock may not be sold, assigned, transferred,
disposed of, pledged, hypothecated or otherwise encumbered until the
restrictions on such shares shall have lapsed or shall have been removed
pursuant to subsection (c) below.
(c) The Committee may provide in a Restricted Stock Award, or
subsequently, that the restrictions will lapse if a Change of Control or
Corporate Change occurs. The Committee may at any time, in its sole discretion,
accelerate the time at which any or all restrictions will lapse or may remove
restrictions on Restricted Stock as it deems appropriate.
(d) A Participant shall hold shares of Restricted Stock
subject to the restrictions set forth in the Award agreement and in the Plan. In
other respects, the Participant shall have all the rights of a shareholder with
respect to the shares of Restricted Stock, including, but not limited to, the
right to vote such shares and the right to receive all cash dividends and other
distributions paid thereon. Certificates representing Restricted Stock shall
bear a legend referring to
27
the restrictions set forth in the Plan and the Participant's Award agreement. If
stock dividends are declared on Restricted Stock, such stock dividends or other
distributions shall be subject to the same restrictions as the underlying shares
of Restricted Stock.
9. Incentive Stock Awards.
----------------------
(a) Incentive Stock may be issued pursuant to the Plan in
connection with incentive programs established from time to time by the
Committee. The Committee shall establish such performance criteria as it deems
appropriate as a prerequisite for the issuance of Incentive Stock. A Participant
who is eligible to receive Incentive Stock will have no rights as a shareholder
before receipt of the Incentive Stock certificates. Incentive Stock may be
issued without cash consideration. A Participant's interest in an incentive
program or the contingent right to receive Incentive Stock may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(b) The Committee may provide in the incentive program, or
subsequently, that Incentive Stock will be issued if a Change of Control or
Corporate Change occurs, even though the performance goals set by the Committee
have not been met.
10. Method of Exercise of Options.
-----------------------------
(a) Options may be exercised by giving written notice of the
exercise to the Company, stating the number of shares the Participant has
elected to purchase under the Option. Such notice shall be effective only if
accompanied by the exercise
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price in full in cash; provided that, if the terms of an Option so permit, the
Participant may (i) deliver Company Stock that the Participant has owned for at
least six months (valued at Fair Market Value on the date of exercise), or cause
shares of Company Stock (valued at their Fair Market Value on the date of
exercise) to be withheld in satisfaction of all or any part of the exercise
price, (ii) deliver a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company, from
the sale or loan proceeds with respect to the sale of Company Stock or a loan
secured by Company Stock, the amount necessary to pay the exercise price and, if
required by the Committee, Applicable Withholding Taxes, or (iii) deliver an
interest bearing promissory note, payable to the Company, in payment of all or
part of the exercise price, together with such collateral and subject to such
terms as may be required by the Committee at the time of exercise. The interest
rate under any such promissory note shall be equal to the minimum interest rate
required at the time to avoid imputed interest to the Participant under the
Code.
(b) If a Participant exercises an Option that has a
Replacement Feature by delivering already owned shares of Company Stock, the
Participant shall automatically be granted a Replacement Option. The Replacement
Option shall be subject to the following provisions:
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(i) The Replacement Option shall cover the number of
shares of Company Stock delivered by the Participant to
exercise the Option;
(ii) The Replacement Option will not have a Replacement
Feature;
(iii) The exercise price of shares of Company Stock
covered by a Replacement Option shall be not less than 100% of
the Fair Market Value of such shares on the date the
Participant delivers shares of Company Stock to exercise the
Option; and
(iv) The Replacement Option shall be subject to the same
restrictions on exercisability as those imposed on the
underlying Option and such other restrictions as the Committee
deems appropriate.
(c) Notwithstanding anything herein to the contrary, Awards
shall always be granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3.
11. Applicable Withholding Taxes. Each Participant shall agree, as
a condition of receiving an Award, to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, all Applicable Withholding
Taxes with respect to the Award. Until the Applicable Withholding Taxes have
been paid or arrangements satisfactory to the Company have been made, no stock
certificates (or, in the case of Restricted Stock, no stock certificates free of
a restrictive legend) shall be issued to the Participant. As an alternative to
making a cash
30
payment to the Company to satisfy Applicable Withholding Tax obligations, the
Committee may establish procedures permitting the Participant to elect to (a)
deliver shares of already owned Company Stock or (b) have the Company retain
that number of shares of Company Stock that would satisfy all or a specified
portion of the Applicable Withholding Taxes. Any such election shall be made
only in accordance with procedures established by the Committee and, in the case
of an Insider, in accordance with Rule 16b-3.
12. Nontransferability of Awards.
----------------------------
(a) In general Awards, by their terms, shall not be
transferable by the Participant except by will or by the laws of descent and
distribution or except as described below. Options shall be exercisable, during
the Participant's lifetime, only by the Participant or by his guardian or legal
representative.
(b) Notwithstanding the provisions of (a) and subject to
federal and state securities laws, the Committee may grant Nonstatutory Stock
Options that permit, or amend Nonstatutory Stock Options to permit, a
Participant to transfer the Options to one or more immediate family members, to
a trust for the benefit of immediate family members or to a partnership whose
only partners are immediate family members. Consideration may not be paid for
the transfer of Options. The transferee of an Option shall be subject to all
conditions applicable to the Option prior to its transfer. The agreement
granting the Option shall set forth the transfer conditions and restrictions.
The Committee
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may impose on any transferable Option and on stock issued upon the exercise of
an Option such limitations and conditions as the Committee deems appropriate.
Except to the extent otherwise permitted by Rule 16b-3, Options that are
intended to be exempt from Section 16(b) of the Act pursuant to Rule 16b-3 may
not be transferable except by will or by the laws of descent and distribution.
13. Effective Date of the Plan. This Plan shall be effective on the date of
its adoption and approval by the Company's sole shareholder (the "Effective
Date"). Until all applicable federal and state securities laws have been
complied with and the shares of Company Stock have been listed on the stock
exchange or exchanges where traded, no Options shall be exercisable and no Award
shall be made that would result in the issuance of shares of Company Stock.
14. Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on the tenth
anniversary of the Effective Date. No Awards shall be made under the Plan after
its termination. The Board may terminate the Plan or may amend the Plan in such
respects as it shall deem advisable; provided, that, if and to the extent
required by Rule 16b-3, no change shall be made that increases the total number
of shares of Company Stock reserved for issuance pursuant to Awards granted
under the Plan (except pursuant to Section 15), expands the class of persons
eligible to receive Awards, or materially increases the benefits accruing to
32
Participants under the Plan, unless such change is authorized by the
shareholders of the Company. Notwithstanding the foregoing, the Board may
unilaterally amend the Plan and Awards as it deems appropriate to ensure
compliance with Rule 16b-3 and to cause Incentive Stock Options to meet the
requirements of the Code and regulations thereunder. Except as provided in the
preceding sentence, a termination or amendment of the Plan shall not, without
the consent of the Participant, adversely affect a Participant's rights under an
Award previously granted to him.
15. Change in Capital Structure.
---------------------------
(a) In the event of a stock dividend, stock split or
combination of shares, spin-off, reclassification, recapitaliza tion, merger or
other change in the Company's capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the Company to be issued under the
Plan (under outstanding Awards and Awards to be granted in the future), the
exercise price of Options, and other relevant provisions shall be appropriately
adjusted by the Committee, whose determination shall be binding on all persons.
If the adjustment would produce fractional shares with respect to any Award, the
Committee may adjust appropriately the number of shares covered by the Award so
as to eliminate the fractional shares.
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(b) In the event the Company distributes to its shareholders a
dividend, or sells or causes to be sold to a person other than the Company or a
Subsidiary shares of stock in any corporation (a "Spinoff Company") which,
immediately before the distribution or sale, was a majority owned Subsidiary of
the Company, the Committee shall have the power, in its sole discretion, to make
such adjustments as the Committee deems appropriate. The Committee may make
adjustments in the number and kind of shares or other securities to be issued
under the Plan (under outstanding Awards and Awards to be granted in the
future), the exercise price of Options, and other relevant provisions, and,
without limiting the foregoing, may substitute securities of a Spinoff Company
for securities of the Company. The Committee shall make such adjustments as it
determines to be appropriate, considering the economic effect of the
distribution or sale on the interests of the Company's shareholders and the
Participants in the businesses operated by the Spinoff Company. The Committee's
determination shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any Award, the Committee may adjust
appropriately the number of shares covered by the Award so as to eliminate the
fractional shares.
(c) If a Change of Control or Corporate Change occurs, the
Committee may take such actions with respect to outstanding Awards as the
Committee deems appropriate. These actions may include, but shall not be limited
to, accelerating the vesting
34
and payment of Awards, releasing restrictions on Awards, and accelerating the
expiration dates of Options. The effectiveness of such acceleration or release
of restrictions shall be conditioned upon the consummation of the applicable
Change of Control or Corporate Change.
(d) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any Participant,
and the Committee's determination shall be conclusive and binding on all persons
for all purposes. The Committee shall make its determinations consistent with
Rule 16b-3 and the applicable provisions of the Code.
16. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by a Committee consisting
of two or more outside directors of the Company, who shall be appointed by the
Board. The Board may designate the Compensation Committee of the Board, or a
subcommittee of the Compensation Committee, to be the Committee for purposes of
the Plan. If and to the extent required by Rule 16b-3, all members of the
Committee shall be "disinterested persons" as that term is defined in Rule
16b-3, and the Committee shall be comprised solely of two or more "outside
directors" as that term is defined for purposes of Code section 162(m). If any
member of the Committee fails to qualify an "outside director" or (to the extent
required by Rule 16b-3) a "disinterested person," such person shall immediately
cease to be a member of the Committee and shall not take part in future
Committee deliberations. The
35
Committee from time to time may appoint members of the Committee and may fill
vacancies, however caused, in the Committee.
(b) The Committee shall have the authority to impose such
limitations or conditions upon an Award as the Committee deems appropriate to
achieve the objectives of the Award and the Plan. Without limiting the foregoing
and in addition to the powers set forth elsewhere in the Plan, the Committee
shall have the power and complete discretion to determine (i) which eligible
employees shall receive an Award and the nature of the Award, (ii) the number of
shares of Company Stock to be covered by each Award, (iii) whether Options shall
be Incentive Stock Options or Nonstatutory Stock Options, (iv) whether to
include a Replacement Feature in an Option and the conditions of any Replacement
Feature, (v) the Fair Market Value of Company Stock, (vi) the time or times when
an Award shall be granted, (vii) whether an Award shall become vested over a
period of time, according to a performance-based vesting schedule or otherwise,
and when it shall be fully vested, (viii) the terms and conditions under which
restrictions imposed upon an Award shall lapse, (ix) whether a Change of Control
or Corporate Change exists, (x) the terms of incentive programs, performance
criteria and other factors relevant to the issuance of Incentive Stock or the
lapse of restrictions on Restricted Stock or Options, (xi) when Options may be
exercised, (xii) whether to approve a Participant's election with respect to
Applicable Withholding Taxes, (xiii) conditions relating to the length of time
before disposition of
36
Company Stock received in connection with an Award is permitted, (xiv) notice
provisions relating to the sale of Company Stock acquired under the Plan, and
(xv) any additional requirements relating to Awards that the Committee deems
appropriate. Notwithstanding the foregoing, no "tandem stock options" (where two
stock options are issued together and the exercise of one option affects the
right to exercise the other option) may be issued in connection with Incentive
Stock Options.
(c) The Committee shall have the power to amend the terms of
previously granted Awards so long as the terms as amended are consistent with
the terms of the Plan and, where applicable, consistent with the qualification
of an Option as an Incentive Stock Option. The consent of the Participant must
be obtained with respect to any amendment that would adversely affect the
Participant's rights under the Award, except that such consent shall not be
required if such amendment is for the purpose of complying with Rule 16b-3 or
any requirement of the Code applicable to the Award.
(d) The Committee may adopt rules and regulations for carrying
out the Plan. The Committee shall have the express discretionary authority to
construe and interpret the Plan and the Award agreements, to resolve any
ambiguities, to define any terms, and to make any other determinations required
by the Plan or an Award agreement. The interpretation and construction of any
provisions of the Plan or an Award agreement by the Committee shall be final and
conclusive. The Committee may consult with
37
counsel, who may be counsel to the Company, and shall not incur any liability
for any action taken in good faith in reliance upon the advice of counsel.
(e) A majority of the members of the Committee shall
constitute a quorum, and all actions of the Committee shall be taken by a
majority of the members present. Any action may be taken by a written instrument
signed by all of the members, and any action so taken shall be fully effective
as if it had been taken at a meeting.
17. Issuance of Company Stock. The Company shall not be required to issue or
deliver any certificate for shares of Company Stock before (i) the admission of
such shares to listing on any stock exchange on which the Company Stock may then
be listed, (ii) receipt of any required registration or other qualification of
such shares under any state or federal law or regulation that the Company's
counsel shall determine is necessary or advisable, and (iii) the Company shall
have been advised by counsel that all applicable legal requirements have been
complied with. The Company may place on a certificate representing Company Stock
any legend required to reflect restrictions pursuant to the Plan, and any legend
deemed necessary by the Company's counsel to comply with federal or state
securities laws. The Company may require a customary written indication of a
Participant's investment intent. Until a Participant has been issued a
certificate for the shares of
38
Company Stock acquired, the Participant shall possess no shareholder rights with
respect to the shares.
18. Rights Under the Plan. Title to and beneficial ownership of all benefits
described in the Plan shall at all times remain with the Company. Participation
in the Plan and the right to receive payments under the Plan shall not give a
Participant any proprietary interest in the Company or any Subsidiary or any of
their assets. No trust fund shall be created in connection with the Plan, and
there shall be no required funding of amounts that may become payable under the
Plan. A Participant shall, for all purposes, be a general creditor of the
Company. The interest of a Participant in the Plan cannot be assigned,
anticipated, sold, encumbered or pledged and shall not be subject to the claims
of his creditors.
19. Beneficiary. A Participant may designate, on a form provided by the
Committee, one or more beneficiaries to receive any payments under Awards of
Restricted Stock or Incentive Stock after the Participant's death. If a
Participant makes no valid designation, or if the designated beneficiary fails
to survive the Participant or otherwise fails to receive the benefits, the
Participant's beneficiary shall be the first of the following persons who
survives the Participant: (a) the Participant's surviving spouse, (b) the
Participant's surviving descendants, per stirpes, or (c) the personal
representative of the Participant's estate.
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20. Notice. All notices and other communications required or permitted to be
given under this Plan shall be in writing and shall be deemed to have been duly
given if delivered personally or mailed first class, postage prepaid, as follows
(a) if to the Company - at its principal business address to the attention of
the Secretary; (b) if to any Participant - at the last address of the
Participant known to the sender at the time the notice or other communication is
sent.
21. Interpretation. The terms of this Plan and Awards granted pursuant to
the Plan are subject to all present and future regulations and rulings of the
Secretary of the Treasury or his delegate relating to the qualification of
Incentive Stock Options under the Code or compliance with Code section 162(m),
to the extent applicable, and they are subject to all present and future rulings
of the Securities Exchange Commission with respect to Rule 16b-3. If any
provision of the Plan or an Award conflicts with any such regulation or ruling,
to the extent applicable, the Committee shall cause the Plan to be amended, and
shall modify the Award, so as to comply, or if for any reason amendments cannot
be made, that provision of the Plan and/or the Award shall be void and of no
effect.
40
