As filed with the Securities and Exchange Commission on July 26, 2004
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ULTRALIFE BATTERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1387013
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
2000 Technology Parkway
Newark, New York 14513
(Address of Principal Executive Offices) (Zip Code)
Ultralife Batteries, Inc.
Amended and Restated 2004 Long-Term Incentive Plan
(Full title of the plan)
John D. Kavazanjian
President and Chief Executive Officer
Ultralife Batteries, Inc.
2000 Technology Parkway
Newark, New York 14513
(Name and address of agent for service)
315-332-7100
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered registered per share(1) offering price(1) fee
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Common Stock, par value $.10 per share 750,000 $21.38 $16,035,000 $2031.63
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(1) Estimated in accordance with Rule 457(c), as of July 22, 2004, solely for
the purpose of calculating the registration fee.
In addition, pursuant to Rule 416 under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the stock option plan described herein.
This Registration Statement on Form S-8 relates to the Ultralife Batteries, Inc.
Amended and Restated 2004 Long-Term Incentive Plan pursuant to which the
Registrant is authorized to issue up to 750,000 shares of its Common Stock
together with such additional shares as remain available for issuance under the
Company's Amended and Restated 2000 Stock Option Plan, as amended, or shares
which become available upon the lapse, expiration, termination or cancellation
of outstanding stock options under the 2000 Option Plan. Such additional shares
have been previously registered pursuant to two separate S-8 registration
statements (File No. 333-60984 and File No. 333-114271 filed with the Securities
and Exchange Commission on May 15, 2001 and April 7, 2004, respectively).
Pursuant to instruction E to Form S-8, the filing fee is being paid only with
respect to the 750,000 shares of Common Stock not previously registered.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents of the Registrant previously filed with the
Securities and Exchange Commission are incorporated herein by reference:
(a) the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2003;
(b) the Registrant's Definitive Proxy Statement on Schedule 14A
filed with the Commission on April 29, 2004;
(c) the Registrant's Quarterly Report on Form 10-Q for the
three-months ended March 27, 2004; and
(d) the description of the Registrant's Common Stock, par value
$.10 per share, contained in the Registrant's Registration
Statement on Form S-1 (Registration No. 33-54470), filed with
the Securities and Exchange Commission on December 23, 1992.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this Registration Statement (and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold) shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
The Company's Certificate of Incorporation and By-laws, each as
amended, provide for elimination of the liability of Directors to the Registrant
to the fullest extent permitted by Section 102(7)(b) of the Delaware General
Corporation Law, as the same may be amended and supplemented.
The Registrant's Certificate of Incorporation, as amended, provides,
in accordance with the Delaware General Corporation Law, that Directors are not
liable to the Registrant or its stockholders for monetary damages for breaches
of fiduciary duty as a Director, except for liability (i) for any breach of the
Director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for dividend payments or stock repurchases in
violation of the Delaware General Corporation Law, or (iv) for any transaction
from which the Director derived any improper personal benefit.
The Certificate of Incorporation and the By-laws of the Registrant
include provisions by which the Registrant will indemnify all persons whom it
shall have the power to indemnify under Section 145 of the Delaware General
Corporation Law from and against any and all of the expenses, liabilities, or
other matters referred to in or covered by said section. The indemnification
provided for in Section 145 shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
The general effect of these provisions will be to eliminate the
rights of the Registrant and its stockholders (through stockholders' derivative
suits on behalf of the Registrant) to recover monetary damages in the event of a
breach of fiduciary duty as a director (including breach of duty in the case of
negligence or grossly negligent behavior) except in the situations as described
above. These provisions will not affect the availability of injunctive relief
against directors of the Registrant (although such relief may not always be
available as a practical matter) nor will it limit directors' liability for
violations of the federal securities laws.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
4.1 Restated Certificate of Incorporation of the Registrant
(Exhibit 4.3)(1)
4.2 Amendment to Certificate of Incorporation (Exhibit 3.1)(2)
4.3 By-laws of the Registrant (Exhibit 3.2)(3)
4.4 Form of Common Stock Certificate of the Registrant (Exhibit
4.1)(3)
5.1 Opinion of Harter, Secrest & Emery LLP*
23.1 Consent of PricewaterhouseCoopers LLP*
23.2 Consent of Harter, Secrest & Emery LLP(4)
99.1 Ultralife Batteries, Inc. Amended and Restated 2000 Stock
Option Plan (Exhibit 99.1)(5)
99.2 Ultralife Batteries, Inc. Amended and Restated 2004 Long-Term
Incentive Plan*
*Exhibit filed with this Registration Statement
(1) Exhibit previously filed as part of and is incorporated by reference to the
Registrant's Registration Statement on Form S-8 (Registration No. 333-60984).
The exhibit number contained in parenthesis refers to the exhibit number in such
Registration Statement.
(2) Exhibit previously filed as part of and is incorporated by reference to the
Registrant's Form 10-Q for the quarterly period ended December 31, 2000
(Commission File No. 0-20852). The exhibit number contained in parenthesis
refers to the exhibit number in the Form 10-Q.
(3) Exhibit previously filed as part of and is incorporated by reference to the
Registrant's Registration Statement on Form S-1 (Registration No. 33-544701).
The exhibit number contained in parenthesis refers to the exhibit number in such
Registration Statement.
(4) Included in Exhibit 5.1 to this Registration Statement.
(5) Exhibit previously filed as part of and is incorporated by reference to the
Registrant's Registration Statement on Form S-8 (Registration No. 333-114271).
The exhibit number contained in parenthesis refers to the exhibit number in such
Registration Statement.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes (subject to the
proviso contained in Item 512(a) of Regulation S-K):
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
(2) that, for the purpose of determining any liability under
the Securities Act, 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) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, controlling persons of
the Registrant pursuant to the provisions
described under Item 6 above, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Newark, State of New York, on this 26th day of
July 2004.
ULTRALIFE BATTERIES, INC.
By: /s/ John D. Kavazanjian
-------------------------------------
Name: John D. Kavazanjian
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
President and Chief July 26, 2004
Executive Officer and
Director (Principal
/s/ John D. Kavazanjian Executive Officer)
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John D. Kavazanjian
Vice President-Finance July 26, 2004
and Chief Financial
Officer (Principal Financial
Officer and Principal
/s/ Robert W. Fishback Accounting Officer)
- -----------------------------------
Robert W. Fishback
/s/ Patricia C. Barron Director July 26, 2004
- -----------------------------------
Patricia C. Barron
/s/ Anthony J. Cavanna Director July 26, 2004
- -----------------------------------
Anthony J. Cavanna
/s/ Paula H. J. Cholmondeley Director July 26, 2004
- -----------------------------------
Paula H. J. Cholmondeley
/s/ Daniel W. Christman Director July 26, 2004
- -----------------------------------
Daniel W. Christman
/s/ John D. Kavazanjian Director July 26, 2004
- -----------------------------------
John D. Kavazanjian
/s/ Carl H. Rosner Director July 26, 2004
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Carl H. Rosner
/s/ Ranjit C. Singh Director July 26, 2004
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Ranjit C. Singh
Exhibit 5.1
July 26, 2004
Ultralife Batteries, Inc.
2000 Technology Parkway
Newark, New York 14513
Re: Ultralife Batteries, Inc.
Registration Statement on Form S-8
Ladies and Gentlemen:
You have requested our opinion in connection with your Registration
Statement on Form S-8, filed under the Securities Act of 1933, as amended (the
"Registration Statement"), with the Securities and Exchange Commission (the
"Registration Statement") in respect of the proposed issuance by Ultralife
Batteries, Inc. (the "Company") of up to 750,000 additional shares of Common
Stock, par value $.10 per share (the "Common Stock"), of the Company pursuant to
the Company's Amended and Restated 2004 Long-Term Incentive Plan (the "Plan").
We have examined the following corporate records and proceedings of the
Company in connection with the preparation of this opinion: its Certificate of
Incorporation as amended and restated to date; its By-laws as currently in force
and effect; its minute books, containing minutes and records of proceedings of
its stockholders and its Board of Directors from the date of incorporation to
the date hereof; the Registration Statement and the related exhibits thereto;
applicable provisions of laws of the State of Delaware; and such other documents
and matters as we have deemed necessary.
In rendering this opinion, we have made such examination of laws as we
have deemed relevant for the purposes hereof. As to various questions of fact
material to this opinion, we have relied upon representations and/or
certificates of officers of the Company, certificates and documents issued by
public official and authorities, and information received from searches of
public records. Based upon and in reliance on the foregoing, we are of the
opinion that:
1. The Company has been duly incorporated and is validly existing under
the laws of the State of Delaware as of July 21, 2004.
2. The Company has the authority to issue an additional 750,000 shares
of Common Stock pursuant to the terms of the Plan.
3. The 750,000 shares of Common Stock to be issued by the Company will,
when issued and, where required, paid for in accordance with the
provisions of the Plan and the respective award agreements pursuant
to which awards are made under the Plan, be validly authorized and
legally issued and outstanding, fully paid and non-assessable.
We hereby consent to being named in the Registration Statement as
attorneys who will, for the Company, pass upon the validity of the issuance of
the additional 750,000 shares of Common Stock offered thereby, and we hereby
consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ Harter Secrest & Emery LLP
Harter Secrest & Emery LLP
Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated February 3, 2004, except for the first paragraph of Note 13, as to which the date is March 1, 2004, relating to the financial statements and financial statement schedule of Ultralife Batteries, Inc., which appears in Ultralife Batteries, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Rochester, New York July 26, 2004
Exhibit 99.2
ULTRALIFE BATTERIES, INC.
AMENDED AND RESTATED
2004 LONG-TERM INCENTIVE PLAN
Original Plan Effective June 10, 2004
As Amended by the Board on July 26, 2004
Section 1. Purpose.
The Plan authorizes the Committee to provide Employees, Directors and
Consultants of the Corporation and its Subsidiaries, who are in a position to
contribute to the long-term success of the Corporation, with Stock and options
to acquire Stock, in accordance with the terms specified herein. The Corporation
believes that this incentive program will cause those persons to increase their
interest in the Corporation's welfare and aid in attracting and retaining
Employees, Directors and Consultants of outstanding ability.
Section 2. Successor Plan.
This Plan shall serve as the successor to the Ultralife Batteries, Inc.
Amended and Restated 2000 Stock Option Plan (the "Predecessor Plan"), and no
further stock options shall be made under the Predecessor Plan from and after
the effective date of the Plan. All outstanding stock options under the
Predecessor Plan immediately prior to the effective date of the Plan are hereby
incorporated into the Plan and shall accordingly be treated as outstanding stock
options under the Plan; provided, however, each such stock option shall continue
to be governed solely by the terms and conditions of the instrument evidencing
such stock option and interpreted under the terms of the Predecessor Plan, and,
except as otherwise expressly provided herein, no provision of the Plan shall
affect or otherwise modify the rights or obligations of holders of such
incorporated stock options with respect to their acquisition of Stock, or
otherwise modify the rights or the obligations of the holders of such stock
options. Any Stock reserved for issuance under the Predecessor Plan in excess of
the number of shares as to which stock options have been granted thereunder,
plus any such shares as to which stock options granted under the Predecessor
Plan may lapse, expire, terminate or be cancelled, shall be deemed available for
issuance or reissuance under Section 4(a) hereof.
Section 3. Definitions.
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan, shall have the meanings set forth in this Section 3:
(a) "Award" shall mean any Option, SAR, Stock Award or other
incentive award granted under the Plan, whether singly, in combination, or in
tandem, to a Grantee by the Committee pursuant to such terms, conditions,
restrictions and/or limitations, if any, as the Committee may establish by the
Award Agreement or otherwise.
(b) "Award Agreement" shall mean the document establishing the
terms, conditions, restrictions and limitations of an Award in addition to those
established by the Plan and by the Committee's exercise of its administrative
powers.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "CEO" shall mean the Chief Executive Officer of the Corporation.
(e) "Change in Control" shall mean the occurrence of any of the
following: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 30% or more of the voting power of the then outstanding
securities of the Corporation; (ii) during any period of two consecutive
calendar years there is a change of 25% or more in the composition of the Board
in office at the beginning of the period except for changes approved by at least
two-thirds of the Directors then in office who were Directors at the beginning
of the period; (iii) the stockholders of the Corporation approve an agreement
providing for (A) the merger or consolidation of the Corporation with another
corporation where the stockholders of such corporation, immediately after the
merger or consolidation, own shares entitling such stockholders to 50% or more
of all votes (without consideration of the rights of any class of stock to elect
Directors by separate class vote) to which all stockholders of the corporation
issuing cash or securities in the merger or consolidation would be entitled in
the election of directors or where the members of the board of directors of such
corporation, immediately after the merger or consolidation, constitute a
majority of the board of directors of the corporation issuing cash or securities
in the merger or consolidation, or (B) the sale or other disposition of all or
substantially all the assets of the Corporation, or a liquidation, dissolution
or statutory exchange of the Corporation; or (iv) any person has commenced, or
announced an intention to commence, a tender offer or exchange offer for 30% or
more of the voting power of the then-outstanding securities of the Corporation.
(f) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(g) "Committee" shall mean the Compensation and Management Committee
of the Board, or such other Board committee as may be designated by the Board to
administer the Plan; provided that the Committee shall consist of not less than
two Directors who are "Non-Employee Directors," as that term is defined and
interpreted pursuant to Rule 16b-3 under the Exchange Act. The Committee shall
be appointed by and serve at the pleasure of the Board.
(h) "Consultant" shall mean any consultant, advisor or independent
contractor retained by the Corporation or its Subsidiaries.
(i) "Control Person" shall mean any person who, as of the date of
grant of an Option, owns (within the meaning of Section 422A(b)(6) of the Code)
stock possessing more than 10% of the total combined voting power or value of
all classes of stock of the Corporation or of any Parent or Subsidiary.
(j) "Corporation" shall mean Ultralife Batteries, Inc., a Delaware
corporation.
2
(k) "Director" shall mean any member of the Board.
(l) "Disability" shall mean permanent and total disability as
defined by Section 22(e)(3) of the Code.
(m) "Employee" shall mean any person employed by the Corporation or
its Subsidiaries on a full or part-time basis, including Directors who are
otherwise employed by the Corporation or its Subsidiaries.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934 as
it may be amended from time to time, including the rules thereunder and any
successor provisions and the rules thereto.
(o) "Fair Market Value" shall mean for any day (i) if the
Corporation is a registrant under Section 12 of the Exchange Act, the closing
price of the Stock in the over-the-counter market, as reported through the
National Association of Securities Dealers Automated Quotation System or, if the
stock is listed or admitted to trading on any national securities exchange, the
last reported sale price on such exchange or, (ii) if the Corporation is not a
registrant under Section 12 of the Exchange Act, the price of the Stock will be
determined by the Board on the date of grant but will not be less than the par
value of such Stock.
(p) "Grantee" shall mean an Employee, Director or Consultant granted
an Award under the Plan.
(q) "Immediate Family Member" shall mean the transferor and his or
her spouse, children or grandchildren, whether natural, step or adopted children
or grandchildren.
(r) "ISO" shall mean an Option granted pursuant to the Plan to
purchase shares of Stock and intended to qualify as an incentive stock option
under Section 422 of the Code, as now or hereafter constituted.
(s) "NQSO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock that is not an ISO.
(t) "Non-Employee Director" shall mean a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act.
(u) "Options" shall refer collectively to NQSOs and ISOs subject to
the Plan.
(v) "Parent" shall mean any parent (as defined in Section 425 of the
Code) of the Corporation.
(w) "Plan" shall mean this 2004 Long-Term Incentive Plan as set
forth herein and as amended from time to time.
(x) "SAR" shall mean a stock appreciation right granted pursuant to
Section 8 hereof; a stock appreciation right shall entitle the Grantee to
receive a payment equal to the appreciation in a stated number of shares of
Stock from the exercise price for that stock
3
appreciation right to the Fair Market Value of the stated number of shares of
Stock on the date of exercise.
(y) "Securities Act" shall mean the Securities Act of 1933 as it may
be amended from time to time, including the rules thereunder and any successor
provisions and the rules thereto.
(z) "Stock" shall mean shares of the Common Stock, par value $.10
per share, of the Corporation.
(aa) "Stock Award" shall mean an award of shares of Stock or
restricted shares of Stock granted pursuant to Section 9 hereof.
(bb) "Subsidiary" shall mean any subsidiary (as defined in Section
425 of the Code) of the Corporation.
Section 4. Shares of Stock Subject to the Plan.
(a) In General. The maximum number of shares of Stock which shall be
available for the grant or issuance of Awards under the Plan (including ISOs)
during its term shall not exceed 750,000 (plus any shares of Stock which are or
become available under Section 2 hereof, which shares shall also be available
for the grant or issuance of Awards under the Plan); provided, however, that no
more than 200,000 shares of Stock may be used for Awards other than Options or
SARs. Such amounts shall be subject to adjustment as provided in Section 4(c)
hereof. Any shares of Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such shares, are
settled in cash in lieu of Stock, or are exchanged with the Committee's
permission for Awards not involving Stock, shall be available again for grant
under the Plan. Moreover, if the exercise price of any Award granted under the
Plan or the tax withholding requirements with respect to any Award granted under
the Plan are satisfied by tendering shares of Stock to the Corporation (by
either actual delivery or by attestation), only the number of shares of Stock
issued net of the shares of Stock tendered will be deemed delivered for purposes
of determining the maximum number of shares of Stock available for delivery
under the Plan. The shares of Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares, including shares purchased in
open market or private transactions. For the purpose of computing the total
number of shares of Stock granted under the Plan, where one or more types of
Awards, both of which are payable in shares of Stock, are granted in tandem with
each other, such that the exercise of one type of Award with respect to a number
of shares cancels an equal number of shares of the other, the number of shares
granted under both Awards shall be deemed to be equivalent to the number of
shares under one of the Awards.
(b) Maximum Awards Payable. Subject to Section 4(c) hereof, and
notwithstanding any provision contained in the Plan to the contrary, the maximum
Award payable (or granted, if applicable) to any one Grantee under the Plan for
a calendar year is 50,000 shares of Stock.
(c) Adjustment Upon Changes in Capitalization. In the event of any
reclassification, recapitalization, merger, consolidation, reorganization,
issuance of warrants,
4
rights or debentures, stock dividend, stock split or reverse stock split, cash
dividend, property dividend, combination or exchange of shares, repurchase of
shares or any other change in corporate structure which in the judgment of the
Committee materially affects the value of shares, then the Committee may
determine the substitutions or adjustments to the maximum number of shares
available for the grant or issuance of Awards under the Plan pursuant to Section
4(a) hereof, the maximum Award payable under Section 4(b) hereof, the number and
class of shares and the exercise price per share set forth in any Award
theretofore granted, or any other affected terms of an Award or the Plan as the
Committee, in its sole discretion and without liability to any person, deems
equitable or appropriate; provided, however, that no such adjustments shall be
made to any ISO without the Grantee's consent, if such adjustment would cause
such ISO to fail to qualify as such.
Section 5. Administration of the Plan.
(a) In General. The Committee shall have total and exclusive
responsibility to control, operate, manage and administer the Plan in accordance
with its terms. The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without a meeting, by a writing or
writings signed by all of the members of the Committee. The decisions of the
Committee and its actions with respect to the Plan shall be final, binding and
conclusive upon all persons having or claiming to have any right or interest in
or under the Plan.
(b) Authority. The Committee shall have all the authority that may
be necessary or helpful to enable it to discharge its responsibilities with
respect to the Plan. Without limiting the generality of the preceding sentence,
the Committee shall have the exclusive right to:
(i) determine eligibility for participation in the Plan;
(ii) select the Grantees and determine the type of Awards to
be made to Grantees, the number of shares of Stock subject to Awards and the
terms, conditions, restrictions and limitations of the Awards, including, but
not by way of limitation, restrictions on the transferability of Awards and
conditions with respect to continued employment or performance criteria;
(iii) interpret the Plan or any Award Agreement;
(iv) construe any ambiguous provision, correct any default,
supply any omission, and reconcile any inconsistency of the Plan or an Award
Agreement;
(v) issue administrative guidelines as an aid to administer
the Plan and make changes in such guidelines as it from time to time deems
proper;
(vi) promulgate regulations for carrying out the Plan and make
changes in such regulations as it from time to time deems proper;
(vii) to the extent permitted under the Plan, grant waivers of
Plan terms, conditions, restrictions, and limitations;
5
(viii) promulgate rules and regulations regarding treatment of
Awards of a Grantee under the Plan in the event of such Grantee's death,
disability, retirement, termination from the Corporation or breach of agreement
by the Grantee, or in the event of a Change in Control of the Corporation;
(ix) to the extent permitted under the Plan, accelerate the
vesting, exercise, or payment of an Award when such action or actions would be
in the best interest of the Corporation;
(x) subject to Section 5(d) hereof, grant Awards in
replacement of Awards previously granted under the Plan or any other executive
compensation plan of the Corporation;
(xi) determine the terms and provisions of any Award
Agreements entered into hereunder, including, a provision in an Award Agreement
that requires, upon the occurrence of a Change in Control specified in Section
3(e)(iii) hereof, the cancellation for cash of outstanding Awards or the
issuance of comparable replacement Awards granted by the successor entity in
such event;
(xii) take any and all other action it deems necessary or
advisable for the proper operation or administration of the Plan; and
(xiii) make all other determinations it deems necessary or
advisable for the administration of the Plan, including factual determinations.
(c) Delegation. The Committee may allocate all or any portion of its
responsibilities and powers under the Plan to any one or more of its members,
the CEO or other senior members of management as the Committee deems appropriate
and may delegate all or any part of its responsibilities and powers to any such
person or persons, provided that any such allocation or delegation be in
writing; provided, however, that only the Committee, or other committee
consisting of two or more Non-Employee Directors may select and grant Awards to
Grantees who are subject to Section 16 of the Exchange Act. The Committee may
revoke any such allocation or delegation at any time for any reason with or
without prior notice.
(d) Repricing. Except for adjustments pursuant to Section 4(c)
hereof, the Committee shall not reprice any Options or SARs unless such action
is approved by the stockholders of the Corporation. For purposes of the Plan,
the term "reprice" shall mean: (i) the reduction, directly or indirectly, in the
per-share exercise price of an outstanding Option or SAR by amendment,
cancellation or substitution; (ii) any action that is treated as a repricing
under United States generally accepted accounting principles; (iii) canceling an
Option or SAR when its exercise price exceeds the fair market value of the
underlying Stock in exchange for another Option, SAR or other equity security
(unless the cancellation and exchange occurs in connection with a merger,
acquisition, or similar transaction); and (iv) any other action that is treated
as a repricing by the rules or regulations of any stock exchange on which the
securities of the Corporation are traded. Any amendment or repeal of this
provision shall require the affirmative vote of a majority of shares of voting
capital stock present at a stockholders meeting in person or by proxy and
entitled to vote thereon.
6
Section 6. Awards.
(a) Eligibility. Subject to Section 5 hereof, all Employees,
Directors and Consultants are eligible to participate in the Plan; provided,
however, only Employees are eligible to receive ISOs. The Committee shall
determine and designate from time to time those Employees, Directors and
Consultants who are to be granted Awards, the nature of each Award granted and
the number of shares of Stock subject to each such Award.
(b) In General. Awards may, at the Committee's sole discretion, be
paid in the form of Options pursuant to Section 7 hereof, SARs pursuant to
Section 8 hereof, Stock Awards pursuant to Section 9 hereof, or a combination
thereof. Each Award shall be subject to the terms, conditions, restrictions and
limitations of the Plan and the Award Agreement for such Award. Awards under a
particular Section of the Plan need not be uniform and Awards under two or more
Sections may be combined into a single Award Agreement. Any combination of
Awards may be granted at one time and on more than one occasion to the same
Grantee.
(c) Foreign Jurisdictions. With respect to Grantees who reside or
work outside of the United States, the Committee may, in its sole and absolute
discretion, amend the terms of the Plan or Awards with respect to such Grantees
in order to conform such terms with the provisions of local law and practice or
otherwise as deemed necessary or desirable by the Committee.
Section 7. Stock Options.
(a) In General. Awards may be granted in the form of Options.
Options granted under the Plan may be of two types: ISOs and NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs, or both, but shall clearly designate the nature of
each Option at the time of grant. Consultants and Directors shall only receive
NQSOs.
(b) Terms of Options. An Option shall be exercisable in accordance
with such terms and conditions and at such times and during such periods as may
be determined by the Committee. In addition to any such terms and conditions,
the following terms and conditions shall apply to all Options granted under the
Plan:
(i) The exercise price per share of Stock subject to an Option
shall be not less than 100% of the Fair Market Value of a share of the Stock on
the date such Option is granted, except for Options granted in assumption of or
substitution for outstanding awards previously granted by the Corporation or its
affiliates or an entity that the Corporation acquires or with which the
Corporation combines, in any case in a transaction contemplated by Section 4(c);
provided, however, that the exercise price for any ISO granted to a Control
Person shall not be less than 110% of such Fair Market Value.
(ii) The term of each Option shall be determined by the
Committee, provided that no Option shall be exercisable more than ten years from
the date such Option is granted, and provided further that no ISO granted to a
Control Person shall be exercisable more than five years from the date of Option
grant.
7
(iii) Notwithstanding any other provisions hereof, the
aggregate Fair Market Value (determined at the time the ISO is granted) of the
Stock with respect to which ISOs are exercisable for the first time by any
Employee during any calendar year under all plans of the Corporation and any
Parent or Subsidiary corporation shall not exceed $100,000.
(c) Exercise of Options. Except as provided in Section 11 hereof, no
Option granted to an Employee or Consultant shall be exercised unless at the
time of such exercise the Grantee is then an Employee or Consultant. Upon
exercise, the exercise price of an Option may be paid in cash, or, to the extent
permitted by the Committee, by tendering, by either actual delivery of shares or
by attestation, shares of Stock, a combination of the foregoing, or such other
consideration as the Committee may deem appropriate. The Committee shall
establish appropriate methods for accepting Stock, whether restricted or
unrestricted, and may impose such conditions as it deems appropriate on the use
of such Stock to exercise an Option. Options awarded under the Plan may also be
exercised by way of a broker-assisted stock option exercise program, if any,
provided such program is available at the time of the Grantee's exercise.
Notwithstanding the foregoing or the provision of any Award Agreement, a Grantee
may not pay the exercise price of an Option using shares of Stock if, in the
opinion of counsel to the Corporation, (i) the Grantee is, or within the six
months preceding such exercise was, subject to reporting under Section 16(a) of
the Exchange Act, (ii) there is a substantial likelihood that the use of such
form of payment or the timing of such form of payment would subject the Grantee
to a substantial risk of liability under Section 16 of the Exchange Act, or
(iii) there is a substantial likelihood that the use of such form of payment
would result in accounting treatment to the Corporation under generally accepted
accounting principles that the Committee reasonably determines is adverse to the
Corporation.
Section 8. Stock Appreciation Rights.
(a) In General. Awards may be granted in the form of SARs. SARs
granted under the Plan may be of two types: an SAR granted in tandem with all or
a portion of a related Option under the Plan ("Tandem SARs") or granted
separately ("Freestanding SARs"). A Tandem SAR may be granted either at the time
of the grant of the related Option or at any time thereafter during the term of
the Option.
(b) Tandem SARs. A Tandem SAR shall be exercisable to the extent,
and only to the extent, that the related Option is exercisable, and the
"exercise price" of such a SAR (the base from which the value of the SAR is
measured at its exercise) shall be the exercise price under the related Option.
However, at no time shall a Tandem SAR be issued if the exercise price of its
related Option is less than the Fair Market Value of the Stock, as determined by
the Committee, on the date that the Tandem SAR is granted. If a related Option
is exercised as to some or all of the shares covered by the Award, the related
Tandem SAR, if any, shall be canceled automatically to the extent of the number
of shares covered by the Option exercise. Upon exercise of a Tandem SAR as to
some or all of the shares covered by the Award, the related Option shall be
canceled automatically to the extent of the number of shares covered by such
exercise. All Tandem SARs shall expire not later than ten years from the date of
the grant of the SAR.
8
(c) Freestanding SARs. Freestanding SARs shall be exercisable or
automatically mature in accordance with such terms and conditions and at such
times and during such periods as may be determined by the Committee. The
exercise price of a Freestanding SAR shall be defined in the Award Agreement for
that SAR and shall be not less than 100% of the Fair Market Value of a share of
Stock on the date of the grant of the Freestanding SAR. All Freestanding SARs
shall expire not later than ten years from the date of grant of the SAR.
(d) Exercise of SARs. Except as provided in Section 11 hereof, no
SAR granted to an Employee or Consultant shall be exercised unless at the time
of such exercise the Grantee is then an Employee or Consultant. The Committee
may provide that an SAR shall be deemed to be exercised at the close of business
on the scheduled expiration date of such SAR if at such time the SAR by its
terms remains exercisable and, if so exercised, would result in a payment to the
holder of such SAR. Unless otherwise provided in an Award Agreement, an SAR may
be paid in cash, shares of Stock or any combination thereof, as determined by
the Committee, in its sole and absolute discretion, at the time that the SAR is
exercised.
Section 9. Stock Awards
(a) In General. Awards may be granted in the form of Stock Awards.
Stock Awards shall be awarded in such numbers and at such times during the term
of the Plan as the Committee shall determine.
(b) Restrictions. The Committee may condition, restrict or limit the
grant of a Stock Award on the achievement of enumerated performance objectives
or, with respect to Stock Awards issued to an Employee or a Consultant, on such
Employee's or Consultant's continued employment or service to the Corporation
through a specified period of time. The restricted period specified in respect
of any Stock Award shall not be less than three years, except that the Committee
may (i) provide for the restricted period to terminate at any time after one
year upon the attainment of performance-based objectives, and (ii) grant Stock
Awards of up to 30,000 shares of Stock without regard to this limitation.
Furthermore, the Committee may not terminate the restrictions applicable to
outstanding Stock Awards except in connection with a Change in Control. The
Committee may grant an unrestricted Stock Award only if the Committee determines
that such Stock Award is made in lieu of all or a portion of salary or cash
bonus of comparable value.
(c) Rights as Stockholders. During the period in which any shares of
Stock received pursuant to a Stock Award are subject to any restrictions, the
Committee may, in its sole and absolute discretion, deny the Grantee to whom
such shares have been awarded all or any of the rights of a stockholder with
respect to such shares, including, but not by way of limitation, limiting the
right to vote such shares or the right to receive dividends on such shares.
Section 10. Payment of Awards.
(a) In General. Absent a Plan or Award Agreement provision to the
contrary, payment of Awards may, at the discretion of the Committee, be made in
cash, Stock, a combination of cash and Stock, or any other form of property as
the Committee shall determine. In addition, payment of Awards may include such
terms, conditions, restrictions
9
and/or limitations, if any, as the Committee deems appropriate, including, in
the case of Awards paid in the form of Stock, restrictions on transfer and
forfeiture provisions; provided, however, such terms, conditions, restrictions
and/or limitations are not inconsistent with the Plan.
(b) Withholding. The Corporation shall be entitled to deduct from
any payment under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment or may require the Grantee to pay to the
Corporation such tax prior to and as a condition of the making of such payment.
In accordance with any applicable administrative guidelines it establishes, the
Committee may allow a Grantee to pay the amount of taxes required by law to be
withheld from an Award by withholding from any payment of shares of Stock due as
a result of such Award, or by permitting the Grantee to deliver to the
Corporation, shares of Stock having a Fair Market Value equal to the minimum
amount of such required withholding taxes. Notwithstanding the foregoing or the
provision of any Award Agreement, a Grantee may not pay the amount of taxes
required by law to be withheld using shares of Stock if, in the opinion of
counsel to the Corporation, (i) the Grantee is, or within the six months
preceding such exercise was, subject to reporting under Section 16(a) of the
Exchange Act, (ii) there is a substantial likelihood that the use of such form
of payment or the timing of such form of payment would subject the Grantee to a
substantial risk of liability under Section 16 of the Exchange Act, or (iii)
there is a substantial likelihood that the use of such form of payment would
result in accounting treatment to the Corporation under generally accepted
accounting principles that the Committee reasonably determines is adverse to the
Corporation.
Section 11. Effect of Termination of Relationship with the Corporation.
(a) Committee Rules. The Committee shall have the authority to
promulgate rules and regulations to determine the treatment of a Grantee's
Awards under the Plan in the event of such Grantee's death, Disability, and
termination. In addition, notwithstanding the provisions of this Section 11, the
terms of an Award Agreement or the rules and regulations promulgated by the
Committee and in effect from time to time, the Committee shall have the right to
extend the period for exercise of any Option or SAR, provided such extension
does not exceed the term of such Option or SAR.
(b) Death. Unless otherwise decided by the Committee and provided in
an Award Agreement, upon a Grantee's death prior to the complete exercise of the
Options or SARs granted to him or her under the Plan, any remaining Options or
SARs may be exercised in whole or in part within one year after the date of the
Grantee's death and then only:
(i) by the beneficiary designated by the Grantee in a writing
submitted to the Corporation prior to the Grantee's death, or in the absence of
same, by the Grantee's estate or by or on behalf of such person or persons to
whom the Grantee's rights pass under his or her will or the laws of descent and
distribution,
(ii) to the extent that the Grantee would have been entitled
to exercise the Option or SAR at the date of his or her death and subject to all
of the conditions on exercise imposed by the Plan and the Award Agreement, and
10
(iii) prior to the expiration of the term of the Option or
SAR.
(c) Disability. Unless otherwise decided by the Committee and
provided in an Award Agreement, upon a Grantee's Disability prior to the
complete exercise of the Options or SARs granted to him or her under the Plan,
any remaining Options or SARs may be exercised in whole or in part within one
year after the date of the Grantee's Disability and then only:
(i) by the Grantee or his or her legal representative,
(ii) to the extent that the Grantee would have been entitled
to exercise the Option or SAR on the date of his or her Disability, subject to
all of the conditions on exercise imposed by the Plan and the Award Agreement,
and
(iii) prior to the expiration of the term of the Option or
SAR.
(d) Other Termination. Unless otherwise decided by the Committee and
provided in an Award Agreement, the termination of a Grantee's employment,
consulting relationship or term of directorship with the Corporation for a
reason other than the Grantee's death or Disability and prior to the complete
exercise of the Options or SARs granted to him or her under the Plan, any
remaining Options or SARs may be exercised in whole or in part within three
months after the date of the Grantee's termination and then only:
(i) by the Grantee or his or her legal representative,
(ii) to the extent that the Grantee would have been entitled
to exercise the Option or SAR on the date of his or her termination, subject to
all of the conditions on exercise imposed by the Plan and the Award Agreement,
and
(iii) prior to the expiration of the term of the Option or
SAR.
(e) Treatment of Intra-Corporation Transfers. In the case of an
Employee or Consultant, the transfer between the Corporation and any Subsidiary
shall not be deemed to be a termination of employment or consulting
relationship, and a change from the status of an Employee to a Consultant or
from a Consultant to an Employee shall not be deemed to be a termination of
employment or consulting relationship.
Section 12. General Provisions.
(a) Award Agreement. Each Award grant shall be evidenced by a
written Award Agreement containing such terms and conditions, not inconsistent
with the Plan, as the Committee shall approve. The terms and provisions of Award
Agreements may vary among Grantees and among different Awards granted to the
same Grantee. Any Stock Award granted under the Plan may be evidenced in such
manner as the Committee deems appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates, with
such restrictive legends and/or stop transfer instructions as the Committee
deems appropriate.
(b) No Right to Further Awards or Continued Service. The grant of an
Award in any year shall not give the Grantee any right to similar grants in
future years or any right to
11
continue such Grantee's employment or consultant relationship with the
Corporation or its Subsidiaries. All Grantees shall remain subject to discharge
to the same extent as if the Plan were not in effect.
(c) No Right, Title, or Interest in Corporation Assets. No Grantee
shall have any rights as a stockholder as a result of participation in the Plan
until the date of issuance of a stock certificate in his or her name, and, in
the case of restricted shares of Stock, such rights are granted to the Grantee
under the Plan. To the extent any person acquires a right to receive payments
from the Corporation under the Plan, such rights shall be no greater than the
rights of an unsecured creditor of the Corporation and the Grantee shall not
have any rights in or against any specific assets of the Corporation. All of the
Awards granted under the Plan shall be unfunded and the Corporation shall not be
required to establish any fund or make any other segregation of assets to assure
the payment of any Award.
(d) Nonassignability.
(i) Except as otherwise determined by the Committee or as
otherwise provided in Section 12(d)(ii) hereof, no Award or other right under
the Plan shall be subject to anticipation, sale, assignment, pledge,
encumbrance, or charge except by will or the laws of descent and distribution,
and an Award shall be exercisable during the Grantee's lifetime only by the
Grantee.
(ii) The Committee shall have the discretionary authority to
grant NQSOs or amend outstanding NQSOs to provide that they be transferable,
subject to such terms and conditions as the Committee shall establish. In
addition to any such terms and conditions, the following terms and conditions
shall apply to all transfers of NQSOs:
(A) Except as otherwise permitted by the Committee, in
its sole and absolute discretion, only Directors and corporate officers of the
Corporation shall be permitted to transfer their NQSOs, and such individuals
must be a Director or a corporate officer on the date of transfer.
(B) Transfers shall only be permitted to: (1) the
transferor's Immediate Family Members; (2) a trust or trusts for the exclusive
benefit of the transferor's Immediate Family Members; or (3) a family
partnership or family limited partnership in which each partner is, at the time
of transfer and all time subsequent thereto, either an Immediate Family Member
or a trust for the exclusive benefit of one or more Immediate Family Members.
(C) All transfers shall be made for no consideration.
(D) Once a NQSO is transferred, any subsequent transfer
of such transferred NQSO shall, notwithstanding Section 12(d)(i) hereof to the
contrary, be permitted; provided, however, such subsequent transfer complies
with all of the terms and conditions of this Section 12(d)(ii), with the
exception of Section 12(d)(ii)(A) hereof.
(E) In order for a transfer to be effective, the
Committee's designated transfer agent must be used to effectuate the transfer.
The costs of such transfer agent shall be borne solely by the transferor.
12
(F) In order for a transfer in accordance with Section
12(d)(ii) to be effective, the transferor must agree in writing prior to the
transfer on a form provided by the Corporation to pay any and all payroll and
withholding taxes due upon exercise of the transferred NQSO. In addition, prior
to the exercise of the transferred NQSO by the transferee, arrangements must be
made by the Grantee with the Corporation for the payment of any and all payroll
and withholding taxes.
(G) Upon transfer, a NQSO continues to be governed by
and subject to the terms and conditions of the Plan. A transferee of a NQSO is
entitled to the same rights as the Grantee to whom such NQSO was originally
granted, as if no transfer had taken place. Accordingly, the rights of the
transferee are subject to the terms and conditions of the original grant of the
NQSO, including provisions relating to expiration date, exercisability, exercise
price and forfeiture.
(H) The Corporation shall be under no obligation to
provide a transferee with any notice regarding the transferred NQSO held by the
transferee upon forfeiture or any other circumstance.
(e) Regulatory Approvals and Listings. Notwithstanding any other
provision of the Plan or Award Agreements made pursuant thereto, the Corporation
shall not be required to issue or deliver any certificate or certificates for
shares of Stock under the Plan prior to fulfillment of all of the following
conditions:
(i) The listing, or approval for listing upon notice of
issuance, of such shares on any securities exchange on which the Stock may then
be traded;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or other qualification which the
Board shall, in its absolute discretion and upon the advice of counsel, deem
necessary or advisable;
(iii) The obtaining of any other consent approval or permit
from any state or federal government agency which the Board shall, in its
absolute discretion and upon the advice of counsel, determine to be necessary or
advisable; and
(iv) The execution by the Grantee (or the Grantee's legal
representative) of such written representation that the Committee may in its
sole discretion deem necessary or advisable to the effect that the shares then
being purchased are being purchased for investment with no present intention of
reselling or otherwise disposing of such shares in any manner which may result
in a violation of the Securities Act and the placement upon certificates for
such shares of an appropriate legend in connection therewith.
(f) In the case of a grant of an Option to any Employee or
Consultant of a Subsidiary, the Corporation may, if the Committee so directs,
issue or transfer the shares covered by the Option to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares to the Employee or
Consultant in accordance with the terms of the Plan and the Award Agreement
relating to such Option.
13
(g) Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New York, except as superseded by
applicable federal law, without giving effect to its conflicts of law
provisions.
(h) No Guarantee of Tax Consequences. No person connected with the
Plan in any capacity, including, but not limited to, the Corporation and its
directors, officers, agents and employees, makes any representation, commitment,
or guarantee that any tax treatment, including, but not limited to, federal,
state and local income, estate and gift tax treatment, will be applicable with
respect to the tax treatment of any Award, or that such tax treatment will apply
to or be available to a Grantee on account of participation in the Plan.
(i) Amendment or Termination. The Board may, at any time and for any
reason, with or without prior notice, suspend, discontinue or terminate the
Plan; provided, however, that no such action shall adversely affect the rights
of Grantees to Awards previously granted hereunder. In addition, the Board may,
at any time and for any reason, with or without prior notice, amend the Plan in
any manner, but may not without stockholder approval, adopt any amendment which
would: (i) increase the number of shares available under the Plan; (ii) expand
the types of Awards available under the Plan; (iii) expand the class of persons
eligible to participate in the Plan; (iv) extend the term of the Plan; (v) be a
material amendment to the Plan, including, but not limited to, a change in the
method of determining the exercise price of Options issued under the Plan; (vi)
allow for repricing of Options or SARs issued under the Plan; (vii) terminate
restrictions applicable to Awards (except in connection with a Grantee's death,
Disability or termination of employment or in connection with a Change in
Control); or (viii) require the vote of the stockholders if such approval is
necessary or desirable in order to comply with tax, securities, or other
applicable laws or regulations, including, but not limited to, the listing
requirements of the stock exchanges on which the securities of Corporation are
listed.
(j) Duration of Plan. The Plan was approved by the Board on April
27, 2004, and became effective on June 10, 2004, upon the approval by the
stockholders of the Corporation at the 2004 Annual Meeting of the Stockholders.
Awards may not be granted under the Plan after June 9, 2014, but Awards
theretofore granted may extend beyond that date.
* * * * *