As
filed with the Securities and Exchange Commission on May 27, 2008
Registration No. 333
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
S-8
REGISTRATION STATEMENT
under the
SECURITIES ACT OF 1933
MONRO MUFFLER BRAKE, INC.
(Exact name of registrant as specified in its charter)
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New York
(State or other jurisdiction of
incorporation or organization)
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16-0838627
(I.R.S. Employer Identification Number)
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200 Holleder Parkway
Rochester, New York 14615
(Address, including zip code, of registrant’s principal executive offices)
Monro Muffler Brake, Inc. 2007 Stock Incentive Plan
(Full title of the plan)
Robert G. Gross
Chief Executive Officer
Monro Muffler Brake, Inc.
200 Holleder Parkway
Rochester, New York 14615
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Marc Weingarten, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
þ
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Title of Each Class
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Amount to be
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Offering Price per
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Aggregate Offering
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Amount of
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of Securities to be Registered
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Registered
(1)
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Share
(2)
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Price
(2)
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Registration Fee
(3)
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Common Stock, par value $.01 per share
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1,001,080 shares
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$17.98
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$17,999,418
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$
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707.38
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(1)
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This amount includes (i) the 388,000 shares originally approved by the Registrant’s Board of Directors and
shareholders on August 9, 2007 and August 21, 2007, respectively and the subsequent adjustment for the
Registrant’s three-for-two stock split effective on October 1, 2007, (ii) 51,671 shares authorized and
remaining available for issuance under the Monro Muffler Brake, Inc. 2003 Non-Employee Directors’ Stock
Option Plan as of August 21, 2007 (as adjusted for the
Registrant’s three-for-two split effective October 1, 2007) and (iii) 367,409 shares authorized and remaining available for issuance
under the Monro Muffler Brake, Inc. 1998 Employee Stock Option Plan as of August 21, 2007 (as adjusted for the
Registrant’s three-for-two split effective October 1, 2007). Pursuant to Rule
416(a) under the Securities Act of 1933, as amended (the “Securities Act”), the number of shares of Common
Stock registered hereby is subject to adjustment to prevent dilution resulting from stock splits, stock
dividends, recapitalizations or similar transactions that result in an increase in the number of outstanding
shares of Common Stock.
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(2)
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Calculated in accordance with Rule 457(h) under the Securities Act based on the average of the high and low
sales prices per share of the Common Stock in NASDAQ trading on May 22, 2008.
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(3)
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In accordance with Rule 457(p) under the Securities Act, the entire amount of the filing fee is offset
and paid from $1,460.17 of the registration fee that was paid and unused in connection with the Registrant’s
Form S-8 related to the 1998 Employee Stock Option Plan filed with the Securities and Exchange Commission on
April 6, 2006 (File no. 333-133045).
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EXPLANATORY STATEMENT
On August 21, 2007, the Registrant’s shareholders approved the Monro Muffler Brake, Inc. 2007 Stock
Incentive Plan (the “2007 Plan”). Prior to adoption of the 2007 Plan, the Registrant maintained two
option plans, the 2003 Non-Employee Directors’ Stock Option Plan and the 1998 Employee Stock Option
Plan (the “Prior Plans”). The shares available for issuance upon the exercise of options granted
under each Prior Plan were registered on a Form S-8. Following adoption of the 2007 Plan, no
additional options will be granted under the Company’s Prior Plans, and shares that were issuable
upon the exercise of options which remained available for grant under the Prior Plans immediately
before such adoption will be available for issuance in connection with awards to be granted under
the 2007 Plan.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information required by Part I of Form S-8 will be sent or given
to participants in the Plan as specified by Rule 428(b)(1) of the Securities Act. These documents
and the documents incorporated by reference herein pursuant to Item 3 of Part II of this
Registration Statement, taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3.
Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange Commission (the
“Commission”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by
Monro Muffler Brake, Inc. (the “Registrant”) are hereby incorporated by reference into this
Registration Statement and made a part hereof:
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•
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Annual Report on Form 10-K of the Registrant for the fiscal year ended
March 31, 2007, filed with the Commission on June 14, 2007.
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•
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Quarterly Reports on Form 10-Q of the Registrant filed with the
Commission on July 31, 2007, November 8, 2007 and
February 5, 2008.
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•
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Notice of Annual Meeting of Shareholders and Definitive Proxy
Statement of the Registrant, dated July 16, 2007, and Definitive
Additional Materials of Registrant dated August 10, 2007, for its
Annual Meeting of Shareholders held on August 21, 2007.
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•
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The description of the Common Stock of the Registrant contained in the
Registration Statement on Form S-1 filed with the Commission pursuant
to Section 12 of the Exchange Act, and any amendment or report filed
for the purpose of updating such description.
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•
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All documents filed by the Registrant with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Registration Statement on Form S-8 and prior to the
filing of a post-effective amendment to this Registration Statement on
Form S-8 which indicates that all securities offered pursuant to this
Registration Statement have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by
reference in this Registration Statement (excluding any information
furnished under either Item 2.02 or Item 7.01 of any Current Report on
Form 8-K).
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Any statement contained in this Registration Statement or in a document incorporated, or
deemed to be incorporated, by reference herein shall be deemed to be modified or superseded for
purposes of this Registration Statement to the extent that a statement contained herein or
incorporated herein by reference, or in any subsequently filed document that also is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
Item 4.
Description of Securities.
Not Applicable.
Item 5.
Interests of Named Experts and Counsel.
Not Applicable.
Item 6.
Indemnification of Directors and Officers.
Limitation of Directors’ Liability.
Section 402(b) of the Business Corporation Law of the State of New York (the “BCL”),
authorizes a New York corporation in its certificate of incorporation to limit or eliminate the
personal liability of its directors to the corporation and its shareholders for damages for certain
breaches of duty when acting in their capacity as directors.
Section 7 of the Company’s Restated Certificate of Incorporation limits the liability of its
directors (in their capacity as directors but not in their capacity as Company officers) to the
Company and its shareholders to the fullest extent permitted by the BCL. However, in accordance
with the BCL, the Restated Certificate of Incorporation states that it does not eliminate or limit:
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(a)
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the liability of any director if a judgment or other final adjudication adverse to such
director establishes (i) that his acts or omissions were in bad faith or involved
intentional misconduct or a
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knowing violation of law, (ii) that such director personally
gained in fact a financial profit or other advantage to which he was not legally entitled,
or (iii) that such director’s acts violated Section 719 of the BCL; or (b) the liability of
any director for any act or omission prior to the adoption of this Restated Certificate of
Incorporation.
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The Certificate of Incorporation also provides that no amendment, modification or repeal of
Section 7 shall adversely affect any right or protection of a director that exists at the time of
such amendment, modification or repeal.
Indemnification and Insurance.
Section 722 of the BCL provides that a corporation may indemnify its current and former
directors and officers under certain circumstances. The Company’s Bylaws generally provide that
the Company will indemnify to the fullest extent permitted by law any person who is or was a
director or officer of the Company against any judgments, fines, amount paid in settlement and
reasonable expenses, including attorneys’ fees, which may arise by reason of the fact that such
person is or was a director or officer of the Company, or where, at the Company’s request, such
person serves or served any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity. In accordance with Section 726 of the BCL, the Company
also maintains insurance for the benefit of its directors and officers insuring them against
certain liabilities arising out of their service in such capacities, including liabilities under
the securities law.
Section 721 of the BCL provides that no such indemnification can be made if a judgment or
other final adjudication adverse to such person establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he personally gained in fact a financial profit or other advantage
to which he was not legally entitled.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8.
Exhibits.
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Exhibit
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Number
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Description
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4
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan.
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4.1
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan, Amendment No. 1.
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4.2
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan, Amendment No. 2.
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5
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Opinion of Schulte Roth &
Zabel LLP, as to the legality of the shares of Common Stock being registered hereby.
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23.1
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Consent of PricewaterhouseCoopers LLP.
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23.2
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Consent of Schulte Roth & Zabel LLP (contained in Exhibit 5 hereto).
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24.1
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Powers of Attorney.
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Item 9.
Undertakings.
A. The undersigned Registrant hereby undertakes:
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(1)
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to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
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(i)
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to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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(ii)
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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.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective Registration Statement; and
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(iii)
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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;
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provided
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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 reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the Securities Act of
1933, each 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 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, where applicable,
each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. 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 Securities Act of 1933 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 Securities Act 1933 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 City of Rochester, State of New
York, on May 27, 2008.
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MONRO MUFFLER BRAKE, INC.
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By:
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/s/ Robert G. Gross
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Robert G. Gross
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Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Robert G. Gross
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Chairman of the Board, and Chief
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May 22, 2008
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Robert G. Gross
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Executive Officer
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(Principal Executive Officer)
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Executive Vice President and
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May 22, 2008
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/s/ Catherine D’Amico
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Chief Financial Officer (Principal
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Catherine D’Amico
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Financial and Accounting Officer)
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*
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Director
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May 22, 2008
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Richard A. Berenson
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*
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Director
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May 22, 2008
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Frederick M. Danziger
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*
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Director
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May 22, 2008
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Donald Glickman
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*
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Director
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May 22, 2008
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Peter J. Solomon
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*
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Director
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May 22, 2008
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Lionel B. Spiro
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*
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Director
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May 22, 2008
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Francis R. Strawbridge
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*
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Director
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May 22, 2008
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Elizabeth A. Wolszon
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*
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By: /s/ Robert G. Gross
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May 22, 2008
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Robert G. Gross
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Attorney-in-fact for
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each of the persons indicated
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Index to Exhibits
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Exhibit
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Number
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Description
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4
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan.
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4.1
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan, Amendment No. 1.
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4.2
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Monro Muffler Brake, Inc. 2007 Stock Incentive Plan, Amendment No. 2.
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5
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Opinion of Schulte Roth &
Zabel LLP, as to the legality of the shares of Common Stock being registered hereby.
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23.1
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Consent of PricewaterhouseCoopers LLP.
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23.2
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Consent of Schulte Roth & Zabel, LLP (contained in Exhibit 5 hereto).
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24.1
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Powers of Attorney.
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Exhibit 4
2007 STOCK INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Monro Muffler Brake, Inc., a New York corporation (the
“Company”), hereby establishes a plan to be known as the Monro Muffler Brake, Inc. 2007 Stock
Incentive Plan (the “Plan”). The Plan shall become effective as of June 29, 2007 (the “Effective
Date”), subject to the approval of the Company’s stockholders.
1.2 Purpose. The purpose of the Plan is to encourage and enable all eligible employees and
directors (subject to such requirements as may be prescribed by the Compensation Committee (the
“Committee”)) of the Company and its subsidiaries to acquire a proprietary interest in the Company
through the ownership of the Company’s common stock, par value $0.01 per share (“Common Stock”).
Such ownership will provide such employees and directors with a more direct stake in the future
welfare of the Company and encourage them to remain with the Company and its subsidiaries. It is
also expected that the Plan will encourage qualified persons to seek and accept employment or a
directorship with the Company and its subsidiaries.
ARTICLE 2
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in the form of incentive stock
options (“Incentive Stock Options”) meeting the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”), or nonqualified stock options (“Nonqualified Stock Options”)
that are not intended to qualify as incentive stock options under Section 422 of the Code
(collectively, “Options”) or shares of restricted Common Stock (“Restricted Stock”, and, together
with Options, “Awards”); provided, that Incentive Stock Options may only be granted to employees of
the Company.
2.2 Maximum Shares Available. The maximum aggregate number of shares of Common Stock
available for Awards under the Plan is 575,000, plus any shares of Common Stock available for award
under the Monro Muffler Brake, Inc. 1998 Employee Stock Option Plan and the 2003 Non-Employee
Directors’ Stock Option Plan immediately prior to the shareholder approval of the Plan, all as
subject to adjustment pursuant to Article 10 hereof. Shares of Common Stock issued pursuant to the
Plan may be either authorized but unissued shares or issued shares reacquired by the Company. In
the event that prior to the end of the period during which Awards may be granted under the Plan,
any Option expires unexercised or Award is terminated, surrendered or canceled without being
exercised in whole for any reason, the shares of Common Stock covered by such Award shall be
available for subsequent Awards under the Plan upon such terms as the Committee may determine.
2.3
Return of Prior Awards. As a condition to any subsequent Award, the Committee shall have
the right, at its discretion, to require employees or directors to return to the Company Awards
previously granted under the Plan. Subject to the provisions of the Plan, such new Award shall be
upon such terms and conditions as are specified by the Committee at the time the new award is
granted.
2.4 Substitute Awards. Awards granted in assumption of, or in substitution or exchange for,
awards previously granted by a company acquired by the Company or any subsidiary with which the
Company or any subsidiary combines shall not reduce the shares of Common Stock authorized for grant
under the Plan or authorized for grant to an employee in any fiscal year. Additionally, in the
event that a company acquired by the Company or any subsidiary or with which the Company or any
subsidiary
combines has shares available under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the
exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or
combination to determine the consideration payable to the holders of common stock of the entities
party to such acquisition or combination) may be used for Awards under the Plan and shall not
reduce the shares of Common Stock authorized for grant under the Plan; provided that Awards using
such available shares shall not be made after the date awards or grants could have been made under
the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made
to individuals who were not employees or directors prior to such acquisition or combination.
ARTICLE 3
ADMINISTRATION
3.1 Committee. Awards shall be determined, and the Plan shall be administered by, the
Committee as appointed from time to time by the Board of Directors of the Company (the “Board”),
which Committee or subcommittee thereof shall consist solely of at least two individuals who are
each “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule thereto) and “outside directors” within the meaning of Section 162(m)
of the Code (or any successor section thereto).
3.2 Powers of Committee. Subject to the express provisions of the Plan, the Committee shall
have the power and authority (i) to grant Awards and to determine the purchase price of the Common
Stock covered by each Award, the term of each Award, waive any terms or conditions of any Award
(including, without limitation, accelerating or waiving any vesting conditions subject to an
Award), the number of shares of Common Stock to be covered by each Award and any performance
objectives or vesting standards applicable to each Award; (ii) to designate Options as Incentive
Stock Options or Nonqualified Stock Options; and (iii) to determine the employees or directors to
whom, and the time or times at which, Awards shall be granted.
3.3 Delegation. The Committee may delegate to one or more of its members or to any other
person or persons such ministerial duties as it may deem advisable. The Committee may also delegate
to the Chief Executive Officer of the Company the authority, subject to such terms as the Committee
shall determine, to perform any and all functions as the Committee may determine. The Committee may
also employ attorneys, consultants, accountants or other professional advisors and shall be
entitled to rely upon the advice, opinions or valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary authority to interpret the
terms of the Plan, to adopt and revise rules, regulations and policies to administer the Plan and
to make any other factual determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Company, all employees and directors
who have received awards under the Plan and all other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor the Chief Executive Officer,
or any person to whom ministerial duties have been delegated, shall be personally liable for any
action, interpretation or determination made with respect to the Plan or Awards granted thereunder,
and each member of the Committee, the Chief Executive Officer and each person to whom ministerial
duties have been delegated shall be fully indemnified and protected by the Company with respect to
any liability he or she may incur with respect to any such action, interpretation or determination,
to the extent permitted by applicable law and to the extent provided in the Company’s Certificate
of Incorporation and Bylaws, as amended from time to time, or under any agreement between such
member, the Chief Executive Officer and the Company.
ARTICLE 4
ELIGIBILITY
Awards may be granted to all employees and directors of the Company or any of its subsidiaries
(subject to such requirements as may be prescribed by the Committee), including officers of the
Company; provided, however, that no employee or director may receive a grant of an Option to
purchase more than 500,000 shares of Common Stock in the aggregate in any fiscal year of the
Company. In determining the employees and directors to whom Awards shall be granted and the number
of shares to be covered by each Award, the Committee shall take into account the nature of the
services rendered by such employees or directors, their present and potential contributions to the
success of the Company and its subsidiaries, and such other factors as the Committee in its sole
discretion shall deem relevant.
As used herein, the term “subsidiary” shall mean any present or future corporation,
partnership or joint venture in which the Company owns, directly or indirectly, 40% or more of the
economic interests. Notwithstanding the foregoing, only employees of the Company and any present or
future corporation which is or may be a “subsidiary corporation” of the Company (as such term is
defined in Section 424(f) of the Code) shall be eligible to receive Incentive Stock Options.
ARTICLE 5
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under the Plan for the purchase of shares of
Common Stock. Options shall be granted in such form and upon such terms and conditions, including
the satisfaction of corporate or individual performance objectives and other vesting standards, as
the Committee shall from time to time determine.
5.2 Designation as Nonqualified Stock Option or Incentive Stock Option. In connection with
any grant of Options, the Committee shall designate in the written agreement required pursuant to
Article 12 hereof whether the Options granted shall be Incentive Stock Options or Nonqualified
Stock Options, or in the case both are granted, the number of shares of each. All Options granted
under the Plan are intended to be nonqualified stock options, unless the applicable written
agreement expressly states that the Option is intended to be an Incentive Stock Option.
5.3 Option Price. The purchase price per share under each Option shall be the Market Price (as
hereinafter defined) of the Common Stock on the date the Option is granted. In no case, however,
shall the purchase price per share of an Option be less than the par value of the Common Stock
($0.01). In the case of an Incentive Stock Option granted to an employee owning (actually or
constructively under Section 424(d) of the Code), more than 10% of the total combined voting power
of all classes of stock of the Company or of a subsidiary (a “10% Stockholder”), the option price
shall not be less than 110% of the Market Price of the Common Stock on the date of grant.
The “Market Price” of the Common Stock on any day shall be determined as follows: (i) if the
Common Stock is listed on a national securities exchange or quoted through the NASDAQ National
Market System, the Market Price on any day shall be the closing price, or if no such sale is made
on such day, the average of the closing bid and asked price reported on the Consolidated Trading
listing for such day; (ii) if the Common Stock is quoted on the NASDAQ inter dealer quotation
system, the Market Price on any day shall be the average of the representative bid and asked prices
at the close of business for such day; or (iii) if the Common Stock is not listed on a national
stock exchange or quoted on NASDAQ, the Market Price on any day shall be the average of the closing
bid and asked prices reported by the National Quotation Bureau, Inc. for such day; provided, that
if there is no trading of the Common Stock, the “Market Price” shall be measured on the first day
that there is trading of the Common Stock.
5.4 Incentive Stock Options. In the case of Incentive Stock Options, the aggregate Market
Price (determined at the time the Incentive Stock Option is granted) of the Common Stock with
respect to
which Incentive Stock Options are exercisable for the first time by any optionee during any
calendar year (under all plans of the Company and any subsidiary) shall not exceed $100,000. Any
employee who disposes of shares acquired upon the exercise of an Incentive Stock Option either
(i) within two years after the date of grant of such Incentive Stock Option or (ii) within one year
after the transfer of such shares to the employee, shall notify the Company of such disposition and
of the amount realized upon such disposition. If an Option is intended to be an Incentive Stock
Option, and if for any reason such Option (or portion thereof) shall not qualify as an Incentive
Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall
be regarded as a Nonqualified Stock Option granted under the Plan; provided that such Option (or
portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock
Options. In no event shall any member of the Committee, the Company or any of its subsidiaries (or
their respective employees, officers or directors) have any liability to any employee (or any other
person) due to the failure of an Option to qualify for any reason as an Incentive Stock Option.
5.5 Limitation on Time of Grant. No grant of an Incentive Stock Option shall be made under
the Plan more than ten (10) years after the date the Plan is approved by stockholders of the
Company.
5.6 Exercise and Payment. Except as otherwise provided in the Plan or in a written agreement,
an Option may be exercised for all, or from time to time any part, of the shares of Common Stock
for which it is then exercisable. The exercise date of an Option shall be the later of the date a
notice of exercise is received by the Company and, if applicable, the date payment is received by
the Company pursuant to clauses (i), (ii), (iii) or (iv) in the following sentence. The purchase
price for the shares of Common Stock as to which an Option is exercised shall be paid to the
Company in full at the time of exercise at the election of the optionee (i) in cash or its
equivalent (e.g., by check), (ii) in Shares having a Market Price equal to the aggregate option
price for the shares of Common Stock being purchased and satisfying such other requirements as may
be imposed by the Committee; provided, that such shares of Common Stock have been held by the
optionee for no less than six months (or such other period as established from time to time by the
Committee or generally accepted accounting principles), (iii) partly in cash and partly in such
Shares, (iv) subject to the terms and conditions established by the Committee, through the delivery
of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the
aggregate option price for the shares being purchased or (v) such other method approved by the
Committee.
5.7 Term. The term of each Option granted under the Plan shall be determined by the
Committee; provided, however, that, notwithstanding any other provision of the Plan, in no event
shall an Incentive Stock Option be exercisable after ten (10) years from the date it is granted, or
in the case of an Incentive Stock Option granted to a 10% Stockholder, five (5) years from the date
it is granted.
5.8 Rights as a Stockholder. A recipient of Options shall have no rights as a stockholder
with respect to any shares issuable or transferable upon exercise thereof until the date a stock
certificate is issued to such recipient representing such shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
5.9 General Restrictions. Each Option granted under the Plan shall be subject to the
requirement that, at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of the shares issuable or transferable upon exercise of an Option
upon any securities exchange or under any state or Federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in connection with,
the granting of an Option or the issue, transfer, or purchase of shares thereunder, such Option may
not be exercised in whole or in part unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not acceptable to the Board.
ARTICLE 6
RESTRICTED STOCK
6.1 Grant of Restricted Stock. Awards of Restricted Stock may be issued hereunder to
employees or directors either alone or in addition to Options granted under the Plan (a “Restricted
Stock Award”). A Restricted Stock Award shall be subject to vesting restrictions imposed by the
Committee covering a period of time specified by the Committee. The Committee has absolute
discretion to determine whether any consideration (other than services) is to be received by the
Company or any subsidiary as a condition precedent to the issuance of Restricted Stock.
6.2 Rights as a Stockholder. Unless otherwise provided in the written agreement, beginning on
the date of grant of the Restricted Stock Award, the employee or director shall become a
stockholder of the Company with respect to all shares of Common Stock subject to the written
agreement and shall have all of the rights of a stockholder, including the right to vote such
shares and the right to receive distributions made with respect to such shares. Except as otherwise
provided in a written agreement, any shares or any other property (other than cash) distributed as
a dividend or otherwise with respect to any Restricted Stock Award as to which the restrictions
have not yet lapsed shall be subject to the same restrictions as such Restricted Stock Award.
6.3 Issuance of Shares. Any Restricted Stock Award granted under the Plan may be evidenced in
such manner as the Committee may deem appropriate, including book-entry registration or issuance of
a stock certificate or certificates, which certificate or certificates shall be held by the
Company. Such certificate or certificates shall be registered in the name of the employee or
director and shall bear an appropriate legend referring to the restrictions applicable to such
Restricted Stock.
6.4 Performance-Based Awards. Notwithstanding anything to the contrary herein, certain
Restricted Stock Awards granted under this Article 6 may be granted in a manner which is deductible
by the Company under Section 162(m) of the Code (“Performance-Based Awards”). A Performance-Based
Award shall vest based on the attainment of written performance goals approved by the Committee for
a performance period established by the Committee (i) while the outcome for that performance period
is substantially uncertain and (ii) no more than 90 days after the commencement of the performance
period to which the performance goals relates or, if less, the number of days which is equal to 25%
of the relevant performance period. The performance goals, which must be objective, shall be based
upon one or more of the following criteria: (i) consolidated earnings before or after taxes
(including earnings before interest, taxes, depreciation and amortization); (ii) net income;
(iii) operating income; (iv) earnings per share; (v) book value per share; (vi) return on
shareholders’ equity; (vii) expense management; (viii) return on investment; (ix) improvements in
capital structure; (x) profitability of an identifiable business unit or product; (xi) maintenance
or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales;
(xv) costs; (xvi) cash flow; (xvii) working capital and (xviii) return on assets. The foregoing
criteria may relate to the Company, one or more of its subsidiaries or one or more of its divisions
or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be
relative to one or more peer group companies or indices, or any combination thereof, all as the
Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code,
the performance goals may be calculated without regard to extraordinary items. The maximum amount
of a Performance-Based Award during a calendar year to any employee or director shall be
500,000 shares of Common Stock. The Committee shall determine whether, with respect to a
performance period, the applicable performance goals have been met with respect to a given Award
and, if they have, the Committee shall so certify and ascertain the amount of the applicable
Performance-Based Award. No Performance-Based Awards will vest for such performance period until
such certification is made by the Committee.
6.5 Effect of Termination of Employment or Service. Except as expressly determined by the
Committee in its sole discretion, the unvested portion of a Restricted Stock Award shall terminate
upon the termination of employment or service with the Company or a subsidiary for any reason.
Notwithstanding the foregoing, in the event of the death of a recipient of a Restricted Stock Award
while an employee or
director of the Company or any subsidiary, the unvested portion of the Restricted Stock Award
shall become fully vested.
ARTICLE 7
NONTRANSFERABILITY OF AWARDS
Except as otherwise permitted by the Committee, no Award may be transferred, assigned, pledged
or hypothecated (whether by operation of law or otherwise), except as provided by will or the
applicable laws of descent and distribution, and no Award shall be subject to execution, attachment
or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition
of an Award not specifically permitted herein shall be null and void and without effect. An Option
may only be exercised during his or her lifetime by the recipient, or following his or her death
pursuant to Section 8.3 hereof.
ARTICLE 8
EFFECT OF TERMINATION OF EMPLOYMENT OR
SERVICE ON OPTIONS
8.1 General Rule. Except as expressly determined by the Committee in its sole discretion or
as set forth in this Article 8, (x) the unvested portion of an Option shall terminate upon the
termination of employment or service with the Company or a subsidiary for any reason and (y) the
vested portion of an Option shall not be exercisable after thirty (30) days following the
recipient’s termination of employment or service with the Company or a subsidiary.
Options shall not be affected by any change of employment so long as the recipient continues
to be employed by either the Company or a subsidiary. An Option shall be forfeited upon an
employee’s termination of employment or a director’s termination of service if the employee or
director was terminated for one (or more) of the following reasons: (i) the conviction, or plea of
guilty or nolo contendere to the commission of a felony; (ii) the commission of any fraud,
misappropriation or misconduct which causes demonstrable injury to the Company or a subsidiary;
(iii) an act of dishonesty resulting or intended to result, directly or indirectly, in gain or
personal enrichment at the expense of the Company or a subsidiary; or (iv) any breach of the
employee’s or director’s fiduciary duties to the Company. It shall be within the sole discretion of
the Committee to determine whether the termination was for one of the foregoing reasons, and the
decision of the Committee shall be final and conclusive.
8.2 Disability or Retirement. Except as expressly provided otherwise in the written agreement
relating to any Option granted under the Plan, in the event of the Disability or Retirement of a
recipient of Options, the Options which are held by such recipient on the date of such Disability
or Retirement, to the extent exercisable on the date of Disability or Retirement, shall be
exercisable for one (1) year following such Disability or Retirement.
“Disability” shall mean any termination of employment or service with the Company or a
subsidiary because of a “Disability” as such term is defined in Section 22(e) of the Code.
“Retirement” shall mean a termination of employment or service with the Company or a subsidiary
either: (i) on a voluntary basis by a recipient who, if a non-employee director, is at least
sixty-five (65) years of age, or if an employee, is at least fifty-five (55) years of age and has
at least ten (10) years of service with the Company or a subsidiary; or (ii) otherwise with the
written consent of the Committee in its sole discretion. The decision of the Committee with respect
to a determination regarding Disability or Retirement shall be final and conclusive.
8.3 Death. In the event of the death of a recipient of Options while an employee or director
of the Company or any subsidiary, Options which are held by such employee or director at the date
of death, whether or not otherwise exercisable on the date of death, shall be exercisable by the
beneficiary designated by the employee or director for such purpose (the “Designated Beneficiary”)
or if no Designated
Beneficiary shall be appointed or if the Designated Beneficiary shall predecease the employee
or director, by the employee’s or director’s personal representatives, heirs or legatees, at any
time within one (1) year from the date of death, at which time such Options shall terminate.
In the event of the death of a recipient of Options following a termination of employment or
service due to Retirement or Disability, if such death occurs before the Options are exercised, the
Options which are held by such recipient on the date of termination of employment or service, to
the extent exercisable on such date shall be exercisable by such recipient’s Designated
Beneficiary, or if no Designated Beneficiary shall be appointed or if the Designated Beneficiary
shall predecease such recipient, by such recipient’s personal representatives, heirs or legatees,
to the same extent such Options were exercisable by the recipient following such termination of
employment.
ARTICLE 9
LEAVE OF ABSENCE, CHANGE IN CONTROL
9.1 Leave of Absence. In the case of an employee on an approved leave of absence, the Awards
of such employee shall not be affected unless such leave is longer than three (3) months. The date
of
exercisability of any Options of an employee which are unexercisable or the date of vesting of
Restricted Stock of an employee at the beginning of an approved leave of absence lasting longer
than three (3) months shall be postponed for a period equal to the length of such leave of absence.
Notwithstanding the foregoing, the Committee may, in its sole discretion, waive in writing any such
postponement of the date of exercisability of any Options or the vesting of Restricted Stock due to
a leave of absence.
9.2 Change in Control. Notwithstanding any provisions of the Plan to the contrary, if there
should be a Change in Control (i) the Company shall give each recipient of Options or Restricted
Stock written notice of such Change in Control as promptly as practicable prior to the effective
date thereof, and (ii) all of the Options held by employees or directors not currently exercisable
shall become exercisable immediately prior to the effective date of such Change in Control and all
restrictions with respect to Restricted Stock shall lapse; provided, however, that, unless
otherwise provided in a written agreement between the Company and an employee or director, (x) all
or a portion of such Options shall not be exercisable to the extent that the accelerated
exercisability would cause the employee or director to be subject to taxes under Section 4999 of
the Code and (y) the restrictions on all or a portion of such Restricted Stock shall not lapse if
such lapse of restrictions would cause the employee or director to be subject to taxes under
Section 4999 of the Code. In addition, if there should be a Change in Control, the Committee may,
in its sole discretion, provide for (i) the termination of an Option upon the consummation of the
Change of Control, but only if the optionee has been permitted to exercise the Option in full for a
period of not less than 10 days prior to the Change in Control, (ii) the payment of any amount (in
cash or, in the discretion of the Committee, in the form of consideration paid to shareholders of
the Company in connection with such Change in Control) in exchange for the cancellation of an Award
which, in the case of an Option, may equal the excess, if any, of the Market Price of the shares of
Common Stock subject to such Options over the aggregate option price of such Options, and/or
(iii) issuance of substitute Awards that will substantially preserve the otherwise applicable terms
of any affected Awards previously granted hereunder. “Change in Control” shall mean any of the
following: (i) any person who is not an “affiliate” (as defined in Rule 12b-2 of the Act) of the
Company as of the Effective Date becomes the beneficial owner, directly or indirectly, of 50% or
more of the combined voting power of the then outstanding securities of the Company except pursuant
to a public offering of securities of the Company; or (ii) the sale of the Company substantially as
an entirety (whether by sale of stock, sale of assets, merger, consolidation, or otherwise) to a
person who is not an affiliate of the Company as of the Effective Date.
ARTICLE 10
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common Stock after the Effective Date
by reason of any share dividend or split, reorganization, recapitalization, merger, consolidation,
spin-off, combination or transaction or exchange of shares or other corporate exchange, or any
distribution to shareholders of shares other than regular cash dividends or any transaction similar
to the foregoing, the Committee in its sole discretion and without liability to any person shall
make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or
kind of shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant
to outstanding Awards, (ii) the option price and/or (iii) any other affected terms of such Awards.
ARTICLE 11
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided that any amendment that
would (i) materially increase the aggregate number of shares which may be issued under the Plan,
(ii) materially increase the benefits accruing to employees under the Plan, or (iii) materially
modify the requirements as to eligibility for participation in the Plan, shall be subject to the
approval of the Company’s stockholders, except that any such increase or modification that may
result from adjustments authorized by Article 10 hereof shall not require such stockholder
approval. If the Plan is terminated, the terms of the Plan shall, notwithstanding such termination,
continue to apply to awards granted prior to such termination. No suspension, termination,
modification or amendment of the Plan may, without the consent of the employee or director to whom
an Award shall theretofore have been granted, adversely affect the rights of such employee or
director under such Award.
ARTICLE 12
WRITTEN AGREEMENT
Each Award shall be evidenced by a written agreement containing such restrictions, terms and
conditions, if any, as the Committee may require. In the event of any conflict between a written
agreement and the Plan, the terms of the Plan shall govern.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Tax Withholding. The Company shall have the right to require employees or their
Designated Beneficiaries, personal representatives, heirs or legatees to remit to the Company an
amount sufficient to satisfy Federal, state and local withholding tax requirements, or to deduct
from all payments under the Plan amounts sufficient to satisfy all withholding tax requirements.
The Committee may, in its sole discretion, permit an employee to satisfy his or her minimum
statutory tax withholding obligation either by: (i) surrendering shares of Common Stock owned by
the employee; or (ii) having the Company withhold from shares of Common Stock otherwise deliverable
to the employee. Shares of Common Stock surrendered or withheld shall be valued at their Market
Price as of the date on which income is required to be recognized for income tax purposes.
13.2 Investment Intent. The Board or the Committee may, in connection with the granting of
any Award, require the individual to whom the Award is to be granted to enter into an agreement
with the Company stating that as a condition precedent to each grant or the exercise of an Option,
in whole or in part, such individual shall if then required by the Company represent to the Company
in writing that such exercise is for investment only and not with a view to distribution, and also
setting forth such other terms and conditions as the Board or the Committee may prescribe.
13.3 Successor. The obligations of the Company under the Plan shall be binding upon any
successor Company or organization resulting from the merger, consolidation or other reorganization
of the Company, or upon any successor Company or organization succeeding to all or substantially
all of the assets and business of the Company.
13.4 General Creditor Status. Employees and directors shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary relationship between the
Company and any employee, director or Designated Beneficiary, personal representative, heir or
legatee of such employee or director. To the extent that any person acquires a right to receive
payments from the Company under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company. All payments to be made under the Plan shall be paid
from the general funds of the Company and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as expressly set forth
in the Plan.
13.5 No Right to Employment/Service or Awards. Nothing in the Plan or in any written agreement
entered into pursuant to Article 12 hereof, nor the grant of any award, shall confer upon any
employee or director any right to continue in the employ or service of the Company or a subsidiary
or to be entitled to any remuneration or benefits not set forth in the Plan or such written
agreement or interfere with or limit the right of the Company or a subsidiary to modify the terms
of or terminate such employee’s employment or director’s service at any time. No employee or
director or other person shall have any claim to be granted an Award, and there is no obligation
for uniformity of treatment of employees and/or directors, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each employee and/or director (whether or not
such employees or directors are similarly situated).
13.6 Notices. Notices required or permitted to be made under the Plan shall be sufficiently
made if personally delivered to the employee or director or sent by regular mail addressed: (i) to
the employee or director at the employee’s or director’s address as set forth in the books and
records of the Company or its subsidiaries; or (ii) to the Company or the Committee at the
principal office of the Company clearly marked “Attention: Compensation Option Committee”.
13.7 Severability. In the event that any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.
13.8 Governing Law. The Plan, and all agreements thereunder, shall be construed in accordance
with and governed by the laws of the State of New York, without regard to conflicts of laws
principles thereof.