FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2001
-------------------------------------
Commission File Number 1-1657
---------------------------------------------
CRANE CO.
- -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1952290
- -------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 First Stamford Place, Stamford, CT. 06902
- -------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(203) 363-7300
- -------------------------------------------------------------------
(Registrant's telephone number, including area code)
(Not Applicable)
- -------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---------- ----------
The number of shares outstanding of the issuer's classes of common stock, as of
April 30, 2001:
Common stock, $1.00 Par Value - 59,683,608 shares
Part I - Financial Information
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
2001 2000
Net Sales $379,283 $383,796
Operating Costs and Expenses:
Cost of sales 248,954 254,106
Selling, general and
administrative 71,502 68,374
Depreciation and amortization 21,492 13,279
------- -------
341,948 335,759
Operating Profit 37,335 48,037
Other Income (Expense):
Interest income 355 517
Interest expense (4,779) (6,150)
Miscellaneous - net (1,713) 146
------- ------
(6,137) (5,487)
Income Before Taxes 31,198 42,550
Provision for Income Taxes 10,919 14,890
------ ------
Net Income $ 20,279 $ 27,660
======== ========
Basic Net Income Per Share $.34 $.45
Average Basic Shares Outstanding 60,212 61,656
Diluted Net Income Per Share $.33 $.45
Average Diluted Shares Outstanding 60,774 61,936
Dividends Per Share $.10 $.10
See Notes to Consolidated Financial Statements
-2-
Part I - Financial Information
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
March 31, December 31,
2001 2000 2000
---- ---- ----
Assets
Current Assets
Cash and cash equivalents $ 2,557 $ 2,245 $ 10,926
Accounts receivable 229,330 218,242 209,817
Inventories:
Finished goods 84,511 90,442 87,118
Finished parts and subassemblies 50,889 56,501 53,361
Work in process 27,633 34,611 24,749
Raw materials 72,355 73,174 71,101
------- ------- -------
235,388 254,728 236,329
Other Current Assets 39,473 38,843 43,080
------- ------- -------
Total Current Assets 506,748 514,058 500,152
Property, Plant and Equipment:
Cost 588,586 588,551 589,433
Less accumulated depreciation 346,831 335,943 343,322
------- ------- -------
241,755 252,608 246,111
Other Assets 39,894 45,247 39,116
Intangibles 40,993 42,331 39,599
Cost in excess of net assets acquired 315,281 333,353 318,873
------- ------- -------
$1,144,671 $1,187,597 $1,143,851
========== ========== ==========
See Notes to Consolidated Financial Statements
-3-
Part I - Financial Information
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
March 31, December 31,
2001 2000 2000
---- ---- ----
Liabilities and Shareholders Equity
Current Liabilities
Current maturities of long-term debt $ 325 $ 351 $ 326
Loans payable 13,686 10,417 14,532
Accounts payable 94,272 93,143 92,249
Accrued liabilities 107,022 98,620 104,361
U.S. and foreign taxes on income 23,890 25,092 20,509
------- ------- -------
Total Current Liabilities 239,195 227,623 231,977
Long-Term Debt 220,245 322,097 213,790
Deferred Income Taxes 28,004 26,187 28,386
Other Liabilities 22,411 25,742 22,746
Accrued Postretirement Benefits 29,180 31,299 29,653
Accrued Pension Liability 10,702 8,341 10,536
Preferred Shares, par value $.01 - - -
5,000,000 shares authorized
Common Shareholders' Equity:
Common stock, par value $1.00 72,426 72,426 72,426
200,000,000 shares authorized,
72,426,139 shares issued
Capital surplus 101,144 98,289 101,144
Retained earnings 739,391 647,121 720,864
Accumulated other comprehensive loss (38,581) (23,561) (31,096)
Common stock held in treasury (279,446) (247,967) (256,575)
--------- --------- ---------
Total Common Shareholders' Equity 594,934 546,308 606,763
------- ------- -------
$1,144,671 $1,187,597 $1,143,851
========== ========== ==========
Common Stock Issued 72,426 72,426 72,426
Less Common Stock held in Treasury (12,775) (11,824) (12,000)
-------- -------- --------
Common Stock Outstanding 59,651 60,602 60,426
======== ======== ========
See Notes to Consolidated Financial Statements
-4-
Part I - Financial Information (Cont'd.)
Item 1. Financial Statements
Crane Co. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
2001 2000
Operating activities:
Net income $20,279 $27,660
Depreciation 9,304 9,419
Amortization 6,056 3,860
Non-cash special charges - stock based retirement costs 6,132 -
Deferred income taxes 714 260
Cash used for operating working capital (15,264) (12,066)
Other 1,938 (2,325)
------- -------
Total provided by Operating activities 29,159 26,808
Investing activities:
Capital expenditures (5,988) (5,866)
Payments for acquisitions (7,738) (8,500)
Proceeds from disposition of capital assets 167 284
------- --------
Total used for Investing activities (13,559) (14,082)
Financing activities:
Equity:
Dividends paid (6,025) (6,111)
Reacquisition of shares - open market (26,803) (41,027)
Reacquisition of shares - stock incentive programs (1,365) (192)
Stock options exercised 3,945 1,616
-------- --------
Net equity (30,248) (45,714)
Debt
Proceeds from issuance of long-term debt 7,068 38,400
Repayments of long-term debt (1) (2,193)
Net decrease in short-term debt (120) (3,960)
------ -------
Net debt 6,947 32,247
-------- --------
Total used for Financing activities (23,301) (13,467)
Effect of exchange rate on cash and cash equivalents (668) (259)
------- -------
Decrease in cash and cash equivalents (8,369) (1,000)
Cash and cash equivalents at beginning of period 10,926 3,245
------- -------
Cash and cash equivalents at end of period $ 2,557 $ 2,245
======= =======
Detail of Cash Provided by (Used for) Operating Activities
Working capital:
Accounts receivable $(23,385) $(12,363)
Inventories (969) 3,800
Other current assets (1,400) (1,104)
Accounts payable 2,787 6,716
Accrued liabilities 4,130 (16,124)
U.S. and foreign taxes on income 3,573 7,009
--------- ---------
Total $(15,264) $(12,066)
========= =========
Supplemental disclosure of cash flow information:
Interest paid $5,322 $6,610
Income taxes paid 7,499 7,548
See Notes to Consolidated Financial Statements
-5-
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements (Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and the
instructions to Form 10-Q and, therefore reflect all adjustments which are,
in the opinion of management, necessary for a fair statement of the results
for the interim period presented. Certain prior period amounts have been
reclassified to conform to the 2001 presentation.
These interim consolidated financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes to
Consolidated Financial Statements in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
2. Net Sales, gross profit and operating profit by segment are as follows:
Three Months Ended
March 31,
2001 2000
(In Thousands)
Net Sales:
Aerospace $ 99,375 $ 81,900
Engineered Materials 76,721 97,218
Merchandising 57,703 56,361
Fluid Handling 116,386 117,563
Crane Controls 29,775 31,585
Intersegment Elimination (677) (831)
-------- --------
Total $379,283 $383,796
======== ========
Gross Profit:
Aerospace $ 44,394 $ 32,904
Engineered Materials 16,897 26,028
Merchandising 19,699 19,956
Fluid Handling 28,166 29,011
Crane Controls 9,357 9,896
Intersegment Elimination 46 (4)
-------- --------
Total $118,559 $117,791
======== ========
Operating Profit (Loss):
Aerospace $24,480 $16,716
Engineered Materials 8,431 16,977
Merchandising 8,801 9,652
Fluid Handling 7,048 7,986
Crane Controls (40) 175
Corporate (11,411) (3,446)
Intersegment Elimination 26 (23)
------- -------
Total $37,335 $48,037
======= =======
-6-
Part I - Financial Information (Cont'd.)
Notes to Consolidated Financial Statements (Unaudited)
3. Inventories
Inventories are stated at the lower of cost or market, principally on the
last-in, first-out (LIFO) method of inventory valuation. Replacement cost
would be higher by $22.1 million at March 31, 2001, $22.3 million at March
31, 2000, and $21.4 million at December 31, 2000.
4. Intangibles
Intangible assets are amortized on a straight-line basis over their
estimated useful lives, which range from five to twenty years. Accumulated
amortization was $23.6 million at March 31, 2001, $20.3 million at March
31, 2000 and $22.9 million at December 31, 2000.
5. Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired is amortized on a straight-line basis
principally over 15 to 40 years. Accumulated amortization was $73.7
million at March 31, 2001, $56.7 million at March 31, 2000 and $69.4
million at December 31, 2000. In February of 2001, Ventech Controls, Inc.
and Laminated Profiles Ltd. were acquired. The cost in excess of net
assets resulting from these acquisitions will be amortized over 15 years
using the straight-line method.
6. Total comprehensive income for the three-month period ended March 31, 2001
and 2000 was as follows:
(In thousands) Three Months Ended
March 31,
2001 2000
Net Income $20,279 $27,660
Foreign currency translation adjustments (7,485) (1,727)
------- -------
Comprehensive Income $12,794 $25,933
======= =======
-7-
Part I - Financial Information (Cont'd.)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three Months Ended March 31, 2001
This 10Q may contain forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. These statements present management's
expectations, beliefs, plans and objectives regarding future financial
performance, and assumptions or judgments concerning such performance. Any
discussions contained in this 10-Q, except to the extent that they contain
historical facts, are forward-looking and accordingly involve estimates,
assumptions, judgments and uncertainties. There are a number of factors that
could cause actual results or outcomes to differ materially from those addressed
in the forward-looking statements. Such factors are detailed in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed
with the Securities and Exchange Commission.
Results from Operations
First Quarter of 2001 Compared to First Quarter of 2000
Net income for the first quarter of 2001 was $20.3 million, or $.33 per diluted
share, compared with $27.7 million, or $.45 per diluted share for the first
quarter of 2000. These results include a special non-cash charge of $6.1 million
pre-tax ($4.0 million after-tax or $.07 per diluted share outstanding) resulting
from the retirement of R. S. Evans as the Company's Chief Executive Officer and
represents stock-based retirement costs that previously were being amortized to
an anticipated retirement at age 65.
Operating profit for the first quarter of 2001 was $37.3 million on sales of
$379.3 million compared with $48.0 million on sales of $383.8 million in the
first quarter of 2000. Results for the first quarter of 2001 included severance
costs totaling $2.3 million as employment levels were reduced by 400 employees
at certain business units in response to the softening economy and the special
non-cash charge of $6.1 million mentioned above. Operating profit margins were
9.8% for the first quarter of 2001 compared with 12.5% in the first quarter of
2000. Excluding the pre-tax special charge, operating margins were 11.5%.
During the quarter, the Company recognized a $1.2 million pre-tax loss in
miscellaneous income on a euro currency option entered into in connection with
the recently completed acquisition of the Industrial Flow Group of Alfa Laval
Holding AB. Overall, the Company recognized a $1.4 million pre-tax gain on this
option, of which $2.6 million was recognized in the fourth quarter of 2000.
Order backlog at March 31, 2001 totaled $533.3 million, an increase of $121.7
million, or 30%, from March 31, 2000 and $29.7 million, or 6%, from December 31,
2000.
Net sales from domestic businesses were 71% of the quarter's total net sales in
2001 compared with 73% in the same three-month period of 2000. Operating profit
from domestic businesses was 68% (73% before the special charge) and 88% of
total operating profit for 2001 and 2000, respectively. Operating profit margins
for domestic businesses were 9.4% in 2001 (11.7% before the special charge)
compared with 14.9% in 2000. Operating profit margins for non-US businesses were
10.9% in 2001 versus 5.9% in 2000.
-8-
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three Months Ended March 31, 2001
Aerospace sales increased $17.5 million, or 21%, to $99.4 million for the first
quarter of 2001 compared with the first quarter of 2000. Operating profit
increased $7.8 million, or 46%, to $24.5 million in the first quarter of 2001
versus $16.7 million in the first quarter of 2000. Operating profit margins for
the segment were 24.6% in the first quarter of 2001 compared with 20.4% in the
first quarter of 2000 as margins at all business units improved. Despite $.5
million of severance expense, Interpoint returned to profitability during the
first quarter of 2001, versus a $1.6 million loss in the first quarter of 2000
and a $2.3 million loss in the fourth quarter of 2000, as a result of improved
manufacturing productivity and stronger shipments. Order backlog for the segment
was $308.8 million at March 31, 2001, an increase of $64.3 million, or 26%, from
March 31, 2000 and $7.2 million from year-end 2000. Results in the Aerospace
segment should remain strong through the year, reflecting current backlog and
improved operations at Interpoint.
Engineered Materials sales decreased $20.5 million, or 21%, to $76.7 million for
the first quarter of 2001 compared with the first quarter of 2000 due to weak
transportation, recreational vehicle and chemical processing markets. Operating
profit decreased $8.5 million, or 51%, to $8.4 million in the first quarter of
2001 versus $17.0 million in the first quarter of 2000. Despite the downturn in
sales, operating profit margins were a solid 11% for the segment compared with
17.5% in the first quarter of 2000. The decrease in results was primarily due to
Kemlite, which experienced a sales decline of $13.1 million, or 21%, to $50.1
million and an operating profit decline of 45% for the first quarter of 2001
compared with the record first quarter of 2000 as truck trailer and recreational
vehicle production, its principal markets, were down 53% and 23%, respectively,
from the first quarter of 2000. Results at Resistoflex were negatively affected
by lower shipments to the chemical process industry of $2.7 million, lowering
operating profit by $1.4 million compared to the same quarter in 2000. In
February 2001, Kemlite acquired the fiberglass reinforced panel business of
UK-based Laminated Profiles Ltd. as part of its strategic initiative to
penetrate the European market. Order backlog at March 31, 2001 was $18.6
million, a decrease of $9.1 million, or 33%, from March 31, 2000, but equal with
the December 31, 2000 backlog. Engineered Materials' operating results in the
second quarter are expected to again be sharply below the record prior year
results, with favorable comparisons to the prior year anticipated in the second
half of 2001.
Merchandising Systems sales increased $1.3 million, or 2%, to $57.7 million for
the first quarter of 2001 compared with the first quarter of 2000. Operating
profit decreased $.9 million, or 9%, to $8.8 million in the first quarter of
2001 versus $9.7 million in the first quarter of 2000 as strong results at NRI
were more than offset by lower results at Crane Merchandising Systems (formerly
National Vendors). Operating profit margins for the segment were 15.3% in the
first quarter of 2001 compared with 17.1% in the first quarter of 2000. Crane
Merchandising Systems' sales decreased $6.0 million to $39.6 million and
operating profit decreased $4.6 million, as a result of weakness in both the
U.S. and export markets. Crane Merchandising Systems reduced its employment
level by 8% during the quarter, incurring $.2 million in severance costs. NRI's
sales increased $7.3 million, or 68%, to $18.1 million and operating profit more
than doubled, despite unfavorable U.S. dollar-to-euro exchange rates, due to
very strong demand as a result of the conversion to the euro in January 2002.
Order backlog at March 31, 2001 was $77.7 million, an increase of $56.6 million,
or 268%, from March 31, 2000, and $8.3 million from December 31, 2000,
reflecting a sold-out condition at NRI. This segment's operating profit is
anticipated to gradually improve quarter to quarter over the remainder of the
year reflecting continued strong performance at NRI and improved operating
efficiencies at Crane Merchandising Systems.
-9-
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three Months Ended March 31, 2001
Fluid Handling sales declined $1.2 million, or 1%, to $116.4 million for the
first quarter of 2001 compared with the first quarter of 2000. Operating profit
decreased $.9 million to $7.0 million in the first quarter of 2001 versus $7.9
million in the first quarter of 2000. Severance costs of $1.1 million were
included in this year's first quarter results. Operating profit margins were
6.1% in the first quarter of 2001 compared with 6.8% in the first quarter of
2000. Operating profit at Crane's valve businesses increased by $.6 million on a
$2.3 million increase in sales as improved production efficiencies in the UK, a
strong power generation market for Pacific Valves and an improving marine market
for Westad more than offset lower shipments of valves sold in the U.S. through
distributors and $.5 million in severance expenses. Crane Pumps' operating
profit decreased $.7 million due to a $1.9 million decrease in sales and
severance costs totaling $.6 million for the quarter. Lower shipments of $2.5
million negatively impacted Crane Supply's operating profit by $.8 million. As
previously announced, on April 1, 2001, the Company acquired the Industrial Flow
Group of Alfa Laval Holding AB for approximately $37 million, with approximate
annual sales of $77.0 million. The acquisition is expected to be immediately
accretive to earnings. Order backlog at March 31, 2001 was $101.8 million, an
increase of $14.3 million, or 16%, from March 31, 2000, and $10.2 million from
December 31, 2000, due to continuing strong demand from the power generation and
improving marine markets. Fluid Handling's results should show improvement each
quarter over the prior year reflecting strong backlog for projects in the
marine, power and oil and gas markets, strict cost disciplines in valves and
pumps sold through distribution in the U.S., higher volumes in nuclear valve
services and the addition of the Industrial Flow Group.
Controls sales decreased $1.8 million, or 6%, to $29.8 million for the first
quarter of 2001 compared with the first quarter of 2000. This segment operated
at a break-even level in the first quarter of 2001 versus a $.2 million
operating profit in the first quarter of 2000 as severance costs totaling $.3
million negatively impacted results. Improvements at Dynalco and Ferguson were
more than offset by lower transportation sales at Barksdale. Order backlog at
March 31, 2001 was $26.2 million, a decrease of $4.4 million, or 14%, from March
31, 2000, but an increase of $3.9 million versus the December 31, 2000 level.
Controls' operating results are expected to return to profitability for the
remainder of the year, reversing losses in the prior year period, driven by
improved performance at Ferguson and Azonix.
Liquidity and Capital Resources
For the three period ended March 31, 2001, the Company generated $29.2 million
of cash from operating activities, versus $26.8 million in 2000. Net debt
totaled 28.0% of capital at March 31, 2001 compared with 37.7% at March 31,
2000. The current ratio at March 31, 2001 was 2.1 with working capital totaling
$267.6 million compared with 2.3 and $286.4 at March 31, 2000. The Company had
unused credit lines of $472.0 million available at March 31, 2001. During the
first three months of 2001, the Company paid $26.8 million for the repurchase of
1.0 million shares of Crane common stock at an average price of $26.57 per share
and $6.0 million for the payment of dividends. Debt increased by $6.9 million.
Average diluted shares outstanding decreased by 1.2 million from the first
quarter of 2000 due to the Company's share repurchases.
The Company's cash flows and earnings are subject to fluctuations from changes
in interest rates and foreign currency exchange rates. The Company manages its
exposures to these market risks through internally established policies and
procedures and, when deemed appropriate, through the use of interest rate swap
agreements and forward exchange contracts. Of the $220.2 million in long-term
debt outstanding at March 31, 2001, 90.2% was at fixed rates of interest ranging
from 6.75% to 8.50%. At March 31, 2001, no interest rate swap agreements were
outstanding and the amounts outstanding for forward exchange contracts were not
material. The Company does not enter into derivatives or other financial
instruments for trading or speculative purposes.
-10-
Part I - Financial Information (Cont'd)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Three Months Ended March 31, 2001
New Accounting Pronouncements
In 1998, the Financial Accounting Standards Board (FASB) issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133),
which establishes accounting and reporting standards for derivative instruments
and hedging activities. FAS 133 requires an entity to recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. In June 2000, the FASB issued Statement
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" (FAS 138), an amendment of FAS 133. The Company historically has
made limited use of derivative instruments and financial hedges to reduce its
exposure to exchange rate risk on foreign source income and purchases. FAS 133,
as amended under FAS 138, is effective for fiscal years beginning after December
15, 2000. The impact of this accounting pronouncement on the first quarter's
results was immaterial.
Part II - Other Information
Item 1. Legal Proceedings
There have been no material developments in any of the legal
proceedings described in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.
Item 4. Submission of Matters to a vote of Security Holders
---------------------------------------------------
A) The Annual Meeting of shareholders was held on April 23, 2001.
B) The following three Directors were re-elected to serve for three
years until the Annual Meeting of 2004.
Mr. Richard S. Forte
Vote for - 53,187,546
Vote withheld - 1,555,479
Mr. William E. Lipner
Vote for - 44,073,649
Vote withheld - 10,669,376
Mr. James L. L. Tullis
Vote for - 53,205,373
Vote withheld - 1,537,652
C) The shareholders approved the selection of Deloitte & Touche LLP
as independent auditors for the Company for 2001.
Vote for - 54,253,134
Vote against - 272,251
Abstained - 217,640
D) The shareholders approved the Crane 2001 Stock Incentive Plan.
Vote for - 46,925,686
Vote against - 7,260,892
Abstained - 556,447
-11-
Part II - Other Information (cont'd)
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
3. (ii) By-Laws
Crane Co. By-Laws (as amended through April 23, 2001) (filed
herewith as Exhibit 3(ii)).
10. Material Contracts - Compensatory Plans
(a) Employment Agreement with R. S. Evans (filed herewith as
Exhibit 10(a)).
(b) The Crane Co. 2001 Stock Incentive Plan (filed herewith as
Exhibit 10(b)).
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CRANE CO.
---------------------
REGISTRANT
Date May 15,2001 By /s/ M. L. Raithel
----------- --------------------------------
M. L. Raithel
Vice President and Chief
Financial Officer
Date May 15,2001 By /s/ T. M. Noonan
----------- -------------------------------
T. M. Noonan
Vice President, Controller
and Chief Tax Officer
-13-
Exhibit 3. (ii)
CRANE CO.
BY-LAWS
(as amended through April 23, 2001)
ARTICLE I
Definitions, Offices
Section 1. Definitions. When used herein, "Board" shall mean the Board of
Directors of the Corporation, "Chairman" shall mean the Chairman of the Board
and "Corporation" shall mean this Corporation.
Section 2. Principal Office. The principal office of the Corporation shall be
located in the City of Stamford, State of Connecticut.
Section 3. Other Offices. The Corporation may have and maintain such other
business office or offices, either within or without the State of Connecticut,
as the Board of Directors may from time to time determine.
Section 4. Registered Office. The registered office of the corporation shall
be at such address as from time to time the Board of Directors may determine.
ARTICLE II
Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders of the
corporation shall be held at the hour of ten o'clock a.m. on the fourth Monday
of April in each year unless the Board shall fix a different date and time, for
the election of Directors and for the transaction of such other business as may
properly come before the meeting. If the day fixed for the annual meeting shall
be a legal holiday, such meeting shall be held on the next succeeding business
day. If the election of Directors shall not be held on the day designated herein
for the annual meeting, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the stockholders as
soon thereafter as such meeting can conveniently be convened and held.
Section 2. Special Meetings. Special meetings of the stockholders for any
purpose may be called at any time only by a majority of the entire Board or by
the Chairman of the Board.
A call for a special meeting of stockholders shall be in writing, filed
with the Secretary, and shall specify the time and place of holding such meeting
and the purpose or purposes for which it is called.
Section 3. Stockholder Action. Any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
Section 4. Place of Meetings. The annual meeting of stockholders and all
special meetings of stockholders for the election of directors shall be held
either at the principal office of the Corporation or at such other place
suitable for the holding of a stockholders' meeting as shall be designated in
the notice thereof. Special meetings of stockholders for a purpose or purposes
other than the election of directors may be held at such place, either within or
without the State of Connecticut, as shall be specified or fixed in the call for
such meeting and the notice thereof as the place for the holding of a special
meeting for any purpose or purposes.
Section 5. Notice of Meetings. Except as otherwise provided by statute,
written or printed notice stating the place, day and hour of the meeting and, in
case of a special meeting, stating the purpose or purposes for which the meeting
is called, shall be delivered not less than 10 nor more than 60 days before the
date of the meeting, either personally or by mail, by or at the direction of the
Secretary, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail in a sealed envelope addressed to the stockholder at his last known
post office address as it appears on the stock record books of the Corporation,
with postage thereon prepaid.
Attendance of a person at a meeting of stockholders, in person or by
proxy, constitutes a waiver of notice of the meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
Exhibit 3. (ii)
Section 6. Record Dates. The Board may fix in advance a date, not more
than 60 nor fewer than 10 days prior to the date of any meeting of stockholders,
nor more than 60 days prior to the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such
case such stockholders and only such stockholders as shall the stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 7. Voting Lists. The officer or agent having charge of the
transfer book for shares of the Corporation shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and place
of the meeting during the whole time thereof and may be inspected by any
stockholder present. The original share or stock ledger or transfer book or a
duplicate thereof, shall be the only evidence as to who are the stockholders
entitled to examine such list or share ledger or transfer book or to vote at any
meeting of stockholders.
Section 8. Quorum. At any meeting of stockholders the holders of a
majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes unless a greater
or lesser quorum shall be provided by law or by the Certificate of Incorporation
and in such case the representation of the number so required shall constitute a
quorum. The stockholders present in person or by proxy at a meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
withdrawal of enough stockholders to leave less than a quorum.
Whether or not a quorum is present the meeting may be adjourned from time
to time by a vote of the holders of a majority of the shares present. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting if held at the time
specified in the notice thereof.
Section 9. Voting and Proxies. Each holder of Common Stock shall be
entitled to one vote per share held of record upon each matter on which
stockholders generally are entitled to vote.
At all meetings of stockholders, a stockholder entitled to vote may vote
in person or by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. Unless otherwise provided by
law, all questions touching the validity or sufficiency of the proxies shall be
decided by the Secretary.
Directors shall be elected by a plurality of the votes cast at an
election.
All other action (unless a greater plurality is required by law or by the
Certificate of Incorporation or by these By-laws) shall be authorized by a
majority of the votes cast by the holders of shares entitled to vote thereon,
present in person or represented by proxy, and where a separate vote by class is
required, by a majority of the votes cast by stockholders of such class, present
in person or represented by proxy.
Section 10. Voting of Shares by Certain Holders.
(a) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the By-laws of such
corporation may prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
(b) Shares standing in the name of a deceased person may be voted by
his administrator or his executor either in person or by proxy.
Exhibit 3. (ii)
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed, and a certified copy of such order is filed with the Secretary of the
Corporation before or at the time of the meeting.
(d) A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
(e) Shares of the Corporation belonging to it shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of the
Corporation held by it in a fiduciary capacity may be voted and shall be counted
in determining the number of outstanding shares at any given time.
Section 11. Inspectors. At each meeting of stockholders, the chairman of
the meeting may appoint one or more inspectors of voting whose duty it shall be
to receive and count the ballots and make a written report showing the results
of the balloting.
Section 12. Nomination of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors; provided, however, that the following procedures shall not apply to
the nomination of persons for election as directors by vote of any class or
series of preferred stock of the Corporation. Nominations of persons for
election to the Board of Directors of the Corporation at an annual meeting of
stockholders may be made at such meeting by or at the direction of the Board of
Directors, by any committee or persons appointed by the Board of Directors or by
any common stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 12. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, in the case of an annual meeting of stockholders, not less than 90
nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within 30 days before
or after such anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the 15th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs; and in the case of a special meeting of stockholders
called for the purpose of electing directors, not later than the close of
business on the 15th day following the day on which notice of the date of the
special meeting was mailed or public disclosure of the date of the special
meeting was made, whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class, series and number of shares of
capital stock of the Corporation which are beneficially owned by the person and
(iv) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant to the
Rules and Regulations of the Securities and Exchange Commission under Section 14
of the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of the stockholder
and (ii) the class, series and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder. Such notice shall
be accompanied by the executed consent of each nominee to serve as a director if
so elected. The Corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the Corporation to determine
the eligibility of such proposed nominee to serve as a director of the
Corporation.
No person shall be eligible for election as a director of the
Corporation by the holders of Common Stock of the Corporation unless nominated
in accordance with the procedures set forth in this Section 12. The officer of
the Corporation presiding at an annual meeting of stockholders shall, if the
facts warrant, determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he should so determine,
he shall so declare to the meeting, and the defective nomination shall be
disregarded.
Exhibit 3. (ii)
Section 13. Advance Notification of Stockholder Proposed Business to be
Transacted at Annual Meetings. To be properly brought before an annual meeting
of stockholders, business must be either (a) specified in the notice of meeting
(or any supplement or amendment thereto) given by or at the direction of the
Board of Directors, (b) otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 90 nor more than 120 days prior to the anniversary
date of the immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a date that is
not within 30 days before or after such anniversary date, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the 15th day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made. Such stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the meeting (i)
a brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (ii) the name and
record address of the stockholder proposing such business, (iii) the class,
series and number of shares of capital stock of the Corporation which are
beneficially owned by the stockholder and (iv) any material interest of the
stockholder in such business.
No business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 13, provided, however,
that nothing in this Section 13 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the meeting. The officer of
the Corporation presiding at the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 13, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
The provisions of this Section 13 shall not apply to any stockholder
proposal included in the Corporation's proxy statement pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended.
ARTICLE III
Directors
Section 1. Number. The business and affairs of the Corporation shall
be managed under the direction of the Board which shall consist of not less than
three nor more than fifteen persons. The exact number of directors within the
minimum and maximum limitations specified in the preceding sentence shall be
fixed from time to time by the board pursuant to a resolution adopted by a
majority of the entire Board.
Section 2. Election and Terms. The directors shall be divided into
three classes, as nearly equal in number as reasonably possible, with the term
of office of the first class to expire at the 1986 annual meeting of
stockholders, the term of office of the second class to expire at the 1987
annual meeting of stockholders and the term of office of the third class to
expire at the 1988 annual meeting of stockholders. At each annual meeting of
stockholders, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election.
Section 3. Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be filled only by a
majority vote of the directors then in office, and directors so chosen shall
hold office for a term expiring at the annual meeting of stockholders at which
the term of the class to which they have been elected expires. No decrease in
the number of directors constituting the Board shall shorten the term of any
incumbent director.
Exhibit 3. (ii)
Section 4. Removal. Any director, or the entire Board, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least two-thirds of the voting power of the shares of the
Corporation then entitled to vote at an election of directors, voting together
as a single class.
Section 5. Regular Meetings. The regular annual meeting of the Board
shall be held at such time and place as the Board may by resolution determine
from time to time without other notice than as set forth in such resolution.
The regular monthly meetings of the Board shall be held at such time
and place as the Board may by resolution determine from time to time.
The Board may by resolution change the times and places, either
within or without the State of Connecticut, for the holding of such regular
monthly meetings, and such times and places for the holding of other regular
meetings without notice other than such resolution.
Section 6. Special Meetings. Special meetings of the Board may be
held at any time on the call of the Chairman or at the request in writing of a
majority of the directors. Special meetings of the Board may be held at such
place, either within or without the State of Connecticut, as shall be specified
or fixed in the call for such meeting or notice thereof.
Section 7. Notice of Special Meetings. Notice of each special meeting
shall be deposited in the United States mail by or at the direction of the
Secretary to each director addressed to him at his residence or usual place of
business at least seventy-two (72) hours before the day on which the meeting is
to be held, or shall be sent to him by telegram, be delivered personally, or be
given orally at least twenty-four (24) hours before the day on which the meeting
is to be held. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope so addressed, with
postage thereon prepaid. If notice be given by telegraph, such notice shall be
deemed to be delivered when the same is delivered to the telegraph company. If
the Secretary shall fail or refuse to give any such notice, then notice may be
given by the officer or any one of the directors making the call.
Notice may be waived in writing by any director, either before or
after the meeting. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given if all directors shall be
present thereat, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting, and any and all business may be
transacted thereat.
Section 8. Quorum. A majority of the members of the Board then in
office, or of a committee thereof, shall constitute a quorum for the transaction
of business, except that the presence of the Chairman of the Board shall be
necessary to constitute a quorum of the Executive Committee of the Board, and
the vote of a majority of the members present at a meeting at which a quorum is
present shall be the act of the Board or of the Committee thereof, except for
the amendment of the By-laws which shall require the vote of not less than a
majority of the members of the Board then in office.
Section 9. Action without a Meeting. Action required or permitted to
be taken pursuant to authorization voted at a meeting of the Board, or a
committee thereof, may be taken without a meeting if, before or after the
action, all members of the Board or of the Committee consent thereto in writing.
The written consents shall be filed with the minutes of the proceedings of the
Board or Committee. The consent shall have the same effect as a vote of the
Board or Committee thereof for all purposes.
Exhibit 3. (ii)
Section 10. The Chairman of the Board. A Chairman of the Board shall
be elected by the Board from among its members for a prescribed term and may, or
may not be, at the discretion of the Board, an employee or an officer of the
Corporation. The Chairman of the Board shall perform such duties as shall be
prescribed by the Board and, when present, shall preside at all meetings of the
stockholders and the Board. In the absence or disability of the Chairman of the
Board, the Board shall designate a member of the Board to serve as Chairman of
the Board and such designated Board Member shall have the powers to perform the
duties of the office; provided, however, that if the Chairman of the Board shall
so designate or shall be absent from a meeting of stockholders, the President
shall preside at such meeting of stockholders.
Section 11. Organization. At all meetings of the Board the Chairman,
or in his absence a member of the Board to be selected by the members present,
shall preside as chairman of the meeting. The Secretary or an Assistant
Secretary of the Corporation shall act as Secretary of all meetings of the
Board, except that in their absence the Chairman of the meeting may designate
any other person to act as secretary.
At meetings of the Board business shall be transacted in such order
as from time to time the Board may determine.
Section 12. Compensation. In the discretion of the Board, directors
may be paid a fixed fee for attendance at meetings and allowed reimbursement for
expenses incurred in such attendance or otherwise in performance of duties as
directors. In addition each director may be paid a fixed annual fee, in an
amount to be determined by the Board, payable in convenient installments.
Directors shall also be entitled to receive compensation for services rendered
to the Corporation as officers, committee members, employees, or in any other
capacity than as directors.
Section 13. Presence at Meeting. A member of the Board or of a
Committee designated by the Board may participate in a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in this
manner constitutes presence in person at the meeting.
Section 14. Executive Committee. The Board, by resolution adopted by
a majority of the entire board, may designate two or more directors to
constitute an Executive Committee, which committee, to the extent provided in
such resolution or in these By-laws, shall have and exercise all of the
authority of the Board in the management of the Corporation provided the
Executive Committee shall not have the authority of the Board in reference to
amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation involving the Corporation, recommending to the stockholders the
sale, lease, or exchange of all or substantially all of the property and assets
of the Corporation, recommending to the stockholders a dissolution of the
Corporation or a revocation thereof, filling vacancies on the Board or on any
committee of the Board (including the Executive Committee), amending, altering
or repealing any By-laws of the Corporation, electing or removing officers of
the Corporation, fixing the compensation of any member of the Executive
Committee or amending, altering or repealing any resolution of the Board which
by its terms provides that it shall not be amended, altered or repealed by the
Executive Committee.
Section 15. Committees of the Board. The Board may designate one or
more other committees, each consisting of one or more directors of the
Corporation as members and one or more directors as alternate members, with such
power and authority as prescribed by the By-laws or as provided in a resolution
adopted by a majority of the Board. Each Committee, and each member thereof,
shall serve at the pleasure of the Board.
Exhibit 3. (ii)
ARTICLE IV
Officers
Section 1. Officers' Number. The officers of the Corporation shall be a
President, one or more Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents, a Secretary, a Treasurer, a Controller, and such other
subordinate corporate or divisional officers as may be elected or appointed in
accordance with the provisions of Section 3 of this Article IV. The Board may
designate a variation in the title of any officer. Any two or more offices may
be held by the same person except the offices of President and Secretary. In its
discretion the Board may leave unfilled, for any such period as it may fix by
resolution, any corporate office, except those of President, Secretary and
Treasurer.
Section 2. Election, Term of Office, and Qualifications. The officers of
the Corporation shall be elected annually by the Board at the first meeting of
the Board held after the annual meeting of stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as the same can conveniently be held. Each officer, except such
officers as may be elected or appointed in accordance with the provisions of
Section 3 of this Article IV, shall hold his office until his successor shall
have been duly elected and shall have qualified or until his death, resignation
or removal.
Section 3. Subordinate Officers.
(a) Subordinate Corporate Officers. The Board may annually appoint
one or more Assistant Vice Presidents, Assistant Secretaries, Assistant
Treasurers, Assistant Controllers, Auditors or Assistant Auditors, and such
other subordinate corporate officers and agents as the Board may determine, to
hold office as subordinate corporate officers for such period and with such
authority and to perform such duties as may be prescribed by these By-laws or as
the Board may from time to time determine. The Board may, by resolution, empower
the President to appoint any such subordinate corporate officers or agents to
hold office for such period and to perform such duties as may be prescribed in
said resolution.
(b) Divisional Officers. The Board or the President may from time to
time appoint employees of the Corporation as divisional officers who shall have
such operating and divisional responsibilities as may be designated by the
President. Such divisional officers shall not be corporate officers and shall
serve at the discretion of, under the direction of, and subject to removal by,
the President.
Section 4. Resignations. Any officer may resign at any time by giving
written notice to the Board or to the Chairman of the Board or Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Removal. Any of the officers designated in Section 1 of this
Article IV may be removed by the Board, whenever in its judgment the best
interests of the Corporation will be served thereby, by the vote of a majority
of the total number of directors then in office. Any subordinate corporate
officer appointed in accordance with Section 3 of this Article IV may be removed
by the Board for like reason by a majority vote of the directors present at any
meeting, a quorum being present, or by any superior officer upon whom such power
of removal has been conferred by resolution of the Board. Any divisional officer
appointed in accordance with Section 3 of this Article IV may be removed by the
President at any time and at his sole discretion or by any superior officer upon
whom the power of removal has been conferred by the President. The removal of
any officer, subordinate officer or agent shall be without prejudice to the
contract rights, if any, of the person so removed.
Section 6. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled for the
unexpired portion of the term in the same manner in which an officer may be
chosen to fill said office pursuant to Section 2 or 3 of this Article IV, as the
case may be.
Section 7. Bonds. If the Board shall so require, any officer or agent of
the Corporation shall give bond to the Corporation in such amount and with such
surety as the Board may deem sufficient, conditioned upon the faithful
performance of their respective duties and offices.
Exhibit 3. (ii)
Section 8. The President. The Board shall elect a President who shall be
the Chief Executive Officer of the Corporation. He shall have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board are carried into effect, subject, however, to the right
of the Board to delegate any specific powers, except such as may be by law
exclusively conferred upon the President, to any officer or officers of the
Corporation. All papers, documents, deeds, and other instruments required to be
executed by the Corporation shall be signed and executed for the Corporation by
the President when directed by, and in the manner prescribed by, the Board. He
shall have the general powers and duties of supervision and management which are
usually vested in the Chief Executive Officer of a corporation.
Section 9. Executive Vice Presidents; Senior Vice Presidents and
Vice Presidents.
(a) Executive Vice Presidents and Senior Vice Presidents shall have
supervision over all such matters, other officers of the Company, including Vice
Presidents, and in the case of Executive Vice Presidents, Senior Vice
Presidents, and other employees as may be designated or assigned to them by the
President, and shall perform such duties as the Board of Directors may designate
or as may be assigned to them by the President. Whenever the term "Vice
President" is used in any other Article of these By-laws, it shall be deemed to
include Executive Vice Presidents and Senior Vice Presidents.
(b) The Vice Presidents shall perform such duties as the Board may
designate or may be assigned to them by the President.
Section 10. Treasurer. The Treasurer shall:
(a) Subject to the supervision and direction of the Vice President -
Finance, have the custody of all moneys, notes, bonds, securities and other
evidences of indebtedness belonging to the Corporation, and shall keep full and
accurate accounts of all moneys and securities received and of all moneys paid
by him on account of the Corporation. He shall daily deposit all moneys, checks
and drafts received to the credit and in the name of the Corporation, in such
banks or other depositories as shall from time to time be authorized, approved
or directed by the President, the Vice President - Finance, or the Board, and
shall, on behalf of the Corporation, endorse for deposit or collection, checks,
notes, drafts and other obligations, provided, however, that checks of the
United States Government or of any state or municipal government, which may be
received by any division of the Corporation, may be endorsed for deposit by the
local manager of the division receiving the check, and provided further,
however, that checks, warrants, drafts, notes and other negotiable instruments,
which may be received by any division of the Corporation, may be endorsed by the
local manager in the name of the Corporation for collection or deposit by or in
the local bank authorized to carry the local accounts.
(b) Furnish to the Board, to the President and to such other
officers as the Board may designate, at such times as may be required, an
account of all his transactions as Treasurer.
(c) Perform such other duties pertaining to the business of the
Corporation as shall be directed or required by the President, the Vice
President - Finance, or the Board and, subject to the control of the Vice
President - Finance, the Board and these By-laws, perform all acts incident to
the office of the Treasurer.
(d) Give such bond of the faithful discharge of his duties as the Board may
require.
The books and papers of the Treasurer shall at all times be open to the
inspection of the President and each member of the Board.
Section 11. Secretary. The Secretary shall:
(a) Attend all meetings of the stockholders and of the Board, and
keep the minutes of such meetings in one or more books provided for that
purpose.
(b) See that all notices are duly given in accordance with the
provisions of these By-laws, or as required by law.
(c) Be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation or a facsimile thereof is
affixed to or impressed on all certificates for shares prior to the issue
thereof, and all documents, the execution of which on behalf of the Corporation
under its seal, is duly authorized.
Exhibit 3. (ii)
(d) Sign with the President or a Vice President certificates for
shares of the Corporation, the issue of which shall have been authorized by
resolution of the Board.
(e) See that the reports, statements, certificates and all other
documents and records required by law are properly made, kept and filed.
(f) In general, perform all other duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or the Board.
Section 12. Controller. The Controller shall:
(a) Maintain adequate records of all assets, liabilities, and
transactions of this Corporation; see that adequate audits thereof are currently
and regularly made; and in conjunction with other officers and department heads
initiate and enforce measures and procedures whereby the business of the
Corporation shall be conducted with the maximum safety, efficiency, and economy.
His duties and powers shall extend to all subsidiary corporations and to all
affiliated corporations.
(b) Prepare and furnish such reports and financial statements
covering results of operations of the Corporation as shall be required of him by
the President or the Board. Prepare and furnish such reports and statements
showing the financial condition of the Corporation as shall be required of him
by the President or the Board, and have the primary responsibility for the
preparation of financial reports to the stockholders.
(c) Perform such other duties pertaining to the business of the
Corporation as shall be directed or required by the President or the Board and,
subject to the control of the President, the Board and these By-laws, perform
all acts incident to the office of the Controller. The books, records and papers
of the Controller shall at all times be open to the inspection of the President
and each member of the Board.
Section 13. Assistant Treasurers. If one or more Assistant Treasurers
shall be elected or appointed pursuant to the provisions of Section 3 of this
Article IV, then in the absence or disability of the Treasurer, the Assistant
Treasurers shall perform all the duties of the Treasurer, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer, except that they shall have no power to sign in the name of the
Corporation contracts as described in Section 1 of Article VII, unless
specifically authorized by the Board. Any such Assistant Treasurer shall perform
such other duties as from time to time may be assigned to him by the Board or
any superior officer.
Section 14. Assistant Secretaries. If one or more Assistant Secretaries
shall be elected or appointed pursuant to the provisions of Section 3 of this
Article IV, then in the absence or disability of the Secretary, the Assistant
Secretaries shall perform the duties of the Secretary, and when so acting shall
have all the powers of, and be subject to all the restrictions imposed upon, the
Secretary. Any such Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Board or any superior officer.
Section 15. Compensation. The compensation of the officers shall be fixed
from time to time by the Board; provided that the Board may authorize any
officer or Committee to fix the compensation of officers and employees. No
officer shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation.
ARTICLE V
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form as shall be approved by
the Board. The certificates shall be signed by the Chairman or the Vice Chairman
of the Board, the President, an Executive Vice President, Senior Vice President
or Vice President and also by the Treasurer or the Secretary, and may be sealed
with the seal of the Corporation, or a facsimile thereof.
Exhibit 3. (ii)
The signatures of the aforesaid officers may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation or its employee. The validity of any stock
certificate of the Corporation signed and executed by or in the name of duly
qualified officers of the Corporation shall not be affected by the subsequent
death, resignation, or the ceasing for any other reason of any such officer to
hold such office, whether before or after the date borne by or the actual
delivery of such certificate.
The name of the person owning the shares represented thereby, with
the number of such shares and the date of issue, shall be entered on the
Corporation's capital stock records.
All certificates surrendered to the Corporation shall be cancelled,
and no new certificates shall be issued until the former certificate for the
same number of shares shall have been surrendered and cancelled except in case
of a lost or destroyed certificate.
The Corporation may treat the holder of record of any share or shares
of stock as the holder in fact thereof, and shall not be bound to recognize any
equitable or other claim to interest in any such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
save as expressly provided by law.
Section 2. Lost, Stolen or Destroyed Certificates. The Corporation
may issue a new certificate for shares in place of a certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Board may
require the owner of the lost or destroyed certificate, or his legal
representative, to give the Corporation a bond in form satisfactory to the
Corporation sufficient to indemnify the Corporation, its transfer agents and
registrars against any claim that may be made against them on account of the
alleged lost or destroyed certificate or the issuance of such a new certificate.
Section 3. Transfer of Shares. Shares of the capital stock of the
Corporation shall be transferable by the owner thereof in person or by duly
authorized attorney, upon surrender of the certificates therefor properly
endorsed. The Board, at its option, may appoint a transfer agent and registrar,
or one or more transfer agents and one or more registrars, or either, for the
stock of the Corporation.
Section 4. Regulations. The Board shall have power and authority to
make all such rules and regulations, as they may deem expedient concerning the
issue, transfer and registration of certificates for shares of the capital stock
of the Corporation.
ARTICLE VI
[Intentionally Omitted in 1985]
ARTICLE VII
Execution of Instruments on Behalf of the Corporation
Section 1. Contracts. Except as herein provided, all contracts of the
Corporation shall be signed in the name of the Corporation, the President, a
Vice President or the Treasurer, sealed with the Corporate Seal and attested by
the Secretary or an Assistant Secretary.
Bids and contracts for the purchase or sale of merchandise in the
ordinary course of business of the Corporation or any of its divisions, together
with bonds given to secure the performance thereof, shall be executed in the
name of the Corporation or in an authorized divisional name by an officer
authorized to sign contracts as above specified in this section, or, if relating
to the business of a division, by an Officer, Manager or Assistant Manager of
such division.
Exhibit 3. (ii)
Section 2. Bills of Exchange, Promissory Notes, Bonds or Other
Evidence of Indebtedness of the Corporation, Bonds of Indemnity, and Securities
Received. All bills of exchange, promissory notes, bonds, or other evidences of
indebtedness of the Corporation shall be signed in the name of the Corporation
by the President, or a Vice President, and shall be countersigned by the
Treasurer or by an Assistant Treasurer.
All forms of bonds of indemnity, the execution of which is required
of the Corporation, shall be signed in the name of the Corporation by the
President, a Vice President, the Treasurer or an Assistant Treasurer, and shall
be countersigned by the Secretary or an Assistant Secretary.
Any securities received by the Corporation in settlement or for
security for the payment of any indebtedness due the Corporation may be sold,
assigned, transferred and delivered by the President, a Vice President or the
Treasurer, and all instruments of conveyance, assignment or transfer thereof
shall be executed in the name of the Corporation by such officers, attested by
the Secretary or an Assistant Secretary, and the corporate seal attached.
Section 3. Checks and Accounts. All checks shall be signed by either
the President, a Vice President, the Treasurer or an Assistant Treasurer, the
Controller or Assistant Controller and also signed by either the Controller or
an Assistant Controller, an Auditor or an Assistant Auditor, the Secretary or an
Assistant Secretary of the Corporation, and no other person or persons shall be
authorized to sign checks upon or against the funds of the Corporation except as
hereinafter provided.
Checks drawn for the payment of dividends on shares of the
Corporation's stock, and such other checks as may be designated in writing by
the President, together with a Vice President or the Treasurer, may bear
facsimile signatures, provided, however, that for the purpose of transfer ring
funds between banks in which the Corporation has monies on deposit, the
Treasurer or an Assistant Treasurer may direct or authorize the use of checks
payable to a depository bank for credit of the Corporation, which checks shall
have plainly printed upon their face "Depository Transfer Check" and shall
require no signature other than the printed name of the Corporation.
The respective Officers, Managers or Assistant Managers, Credit
Managers or Credit Supervisors of the Corporation's Divisions, are authorized to
file claims for and to collect on behalf of the Corporation any amounts due for
merchandise sold or invoiced from such divisions, and in the name of the
Corporation, or in an authorized divisional name, to give proper receipts,
releases and waivers of mechanics' and materialmen's liens in connection
therewith.
Section 4. Conveyances, Leases, Releases and Satisfaction of Judgment
and Mortgages. All conveyances, leases and releases and satisfactions of
judgment and mortgages shall be signed in the name of the Corporation by the
President, a Vice President or the Treasurer, sealed with the corporate seal and
attested by the Secretary or an Assistant Secretary.
Section 5. Other Instruments. All other instruments not hereinabove
specifically designated shall be signed in the name of the Corporation by the
President, a Vice President, or Treasurer, sealed with the corporate seal and
attested by the Secretary or an Assistant Secretary, provided, however, that
notwithstanding the provisions contained in these By-laws, the Board may at any
time direct the manner in which and the person by whom any particular
instrument, contract or obligation, or any class of instruments, contracts or
obligations of the Corporation may and shall be executed.
Section 6. Miscellaneous. Whenever the Board directs the execution of an
instrument, contract or obligation and does not specify the officer who shall
execute the same, it shall be executed as hereinabove provided.
Exhibit 3. (ii)
ARTICLE VIII
Corporate Seal
The corporate seal of the Corporation shall have inscribed thereon
the name of the Corporation and the words "Corporate Seal-1985-Delaware." Said
seal may be used by causing it or a facsimile or equivalent thereof to be
impressed or affixed or reproduced, and shall be in the custody of the
Secretary. If and when so directed by the Board, a duplicate of the seal may be
kept and used by the Treasurer, or by any Assistant Treasurer or Assistant
Secretary.
ARTICLE IX
Miscellaneous Provisions
Section 1. Dividends. Dividends upon the outstanding shares of the
Corporation may be paid from any source permitted by law. Dividends may be
declared at any regular or special meeting of the Board and may be paid in cash
or other property or in the form of a stock dividend.
Section 2. Fiscal Year. The fiscal year of the Corporation shall end on the
31st day of December each year, unless otherwise provided by resolution of the
Board.
Section 3. Stock in other Corporations. Any shares of stock in any
other corporation which may from time to time be held by the Corporation may be
represented and voted at any meeting of stockholders of such corporation by the
President of the Corporation or by any other person or persons thereunto
authorized by the Board, or by any proxy designated by written instrument of
appointment executed in the name of the Corporation either by the President, or
a Vice President, and attested by the Secretary or an Assistant Secretary.
Shares of stock in any other corporation which shares are owned by
the Corporation need not stand in its name, but may be held for its benefit in
the individual name of the President or of any other nominee designated for the
purpose by the Board. Certificates for shares so held for the benefit of the
Corporation shall be endorsed in blank, or have proper stock powers attached so
that said certificates are at all time in due form for transfer, and shall be
held for safekeeping in such manner as shall be determined from time to time by
the Board.
Section 4. Election of Auditors. The directors shall select
independent auditors to audit the books and records of the Corporation for the
current fiscal year, subject to the approval of the stockholders at the annual
meeting. Should the auditors so elect resign, be removed for good cause shown,
or otherwise fail to serve during or with respect to said year, a majority of
the directors shall select a substitute firm of auditors to serve with respect
to said year.
Exhibit 3. (ii)
ARTICLE X
Indemnification
Section 1. Actions, Suits or Proceedings other than by or in the
Right of the Corporation. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer or trustee of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding or any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Actions or Suits by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer or trustee of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or on his behalf in connection with the defense or settlement of
such action or suit and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 3. Indemnification for Costs, Charges and Expenses of
Successful Party. Notwithstanding the other provisions of this Article, to the
extent that a director or officer of the Corporation has been successful on the
merits or otherwise, including, without limitation, the dismissal of an action
without prejudice, in defense of any action, suit or proceeding referred to in
Sections 1 and 2 of this Article, or in defense of any claim issue or matter
therein, he shall be indemnified against all costs, charges and expenses
(including attorneys' fees) actually and reasonably incurred by him or on his
behalf in connection therewith.
Section 4. Determination of Right to Indemnification. Any
indemnification under Sections 1 and 2 of this Article (unless ordered by a
court) shall be paid by the Corporation unless a determination is made (1) by
the Board of Directors by a majority vote of the directors who are not parties
to such action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (3) by the stockholders, that
indemnification of the director or officer is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Sections
1 and 2 of this Article.
Exhibit 3. (ii)
Section 5. Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys' fees) incurred by a person referred to in
Sections 1 and 2 of this Article in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding; provided, however, that the payment of such costs, charges and
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer) in advance of the final disposition of
such action, suit or proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such director
or officer is not entitled to be indemnified by the Corporation as authorized in
this Article. The Board of Directors may, in the manner set forth above, and
upon approval of such director or officer of the Corporation, authorize the
Corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
Section 6. Procedure for Indemnification. Any indemnification under
Sections 1, 2 or 3, or advance of costs, charges and expenses under Section 5 of
this Article, shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. The right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction, if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with successfully
establishing right to indemnification, in whole or in part, in any such action
shall also be indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 5 of this Article where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Sections 1 or 2 of this Article,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 7. Other Rights; Continuation of Right to Indemnification.
The indemnification provided by this Article shall not be deemed exclusive of
any other rights to which a person seeking indemnification may be entitled under
any law (common or statutory), 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 office or while employed by or acting
as agent for the Corporation, and shall continue as to a person who has ceased
to be a director or officer, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person. All rights to
indemnification under this Article shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this Article is in effect. Any repeal or
modification of this Article or any repeal or modification of relevant
provisions of the Delaware General Corporation Law or any other applicable laws
shall not in any way diminish any rights to indemnification of such director or
officer or the obligations of the Corporation arising hereunder.
Section 8. Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors.
Exhibit 3. (ii)
Section 9. Savings Clause. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, any
portion of this Article so invalidated shall be severable and such invalidity
shall not by itself render any other portion of this Article invalid, and the
Corporation shall nevertheless indemnify each director or officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
ARTICLE XI
Amendments
Except as otherwise required by law or the Certificate of
Incorporation, these By-laws may be amended or repealed, and new By-laws may be
adopted, either by the affirmative vote of two-thirds of the shares of stock
outstanding and entitled to vote thereon, voting together as a single class, or
by the affirmative vote of a majority of the Board then in office.
Exhibit 10. (a)
AGREEMENT
THIS AGREEMENT (this "Agreement), made as of this 23rd day of April, 2001
(the "Effective Date), by and between Crane Co., a Delaware corporation (the
"Company"), and Robert S. Evans ("Mr. Evans").
WHEREAS, Mr. Evans has retired from his position as Chief Executive
Officer of the Company after seventeen years of service in that capacity;
WHEREAS, the Company wishes to appoint Mr. Evans as non-executive
Chairman of the Board of Directors of the Company (the "Board") and enter into
an agreement with Mr. Evans with respect to such appointment; and
WHEREAS, Mr. Evans wishes to accept such appointment and to serve
the Company on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties hereto agree as follows:
1. Position. Subject to the terms and provisions of this Agreement, the Company
hereby confirms the appointment of Mr. Evans as non-executive Chairman of the
Board ("Chairman") and Mr. Evans hereby agrees to serve the Company in that
position; provided, however, that Mr. Evans' continued service on the Board
shall be subject to any necessary approval by the Company's stockholders. Mr.
Evans' status during the Term (as defined in Section 3) shall be that of an
employee of the Company.
2. Duties. During the Term (as defined in Section 3), Mr. Evans shall serve as
Chairman, and Mr. Evans shall make reasonable business efforts to attend all
Board meetings, serve on appropriate subcommittees as reasonably requested by
the Board, and perform such duties, services and responsibilities and have the
authority commensurate to such position. Mr. Evans will devote at least fifty
(50) days annually to the performance of such duties, services and
responsibilities, and will use his best efforts to promote the interests of the
Company. During the minimum of fifty (50) days annually, Mr. Evans shall be
available, as appropriate, either at the Company's executive offices, or for
reasonable and appropriate assignment outside of such offices.
3. Term. The term of this Agreement (the "Term") shall be for a three (3)-year
period beginning on the Effective Date, unless otherwise terminated as provided
herein. The Term shall be automatically extended upon the same terms and
conditions contained herein for successive one-year periods unless a written
notice of termination is given by either party at least 90 days before the end
of the Term or any renewals or extensions thereof.
4. Compensation and Benefits.
(a) Base Salary. During the Term, Mr. Evans shall receive an annual base
salary of $400,000, subject to such increases as the Board may approve from time
to time. Such base salary shall be payable no less frequently than monthly, in
accordance with the Company's regular payroll practices.
(b) Expense Reimbursements. During the Term, the Company shall reimburse
Mr. Evans for all reasonable out-of-pocket expenses incurred by Mr. Evans in
carrying out his duties, services and responsibilities under this Agreement,
provided that Mr. Evans complies with the generally applicable policies,
practices and procedures of the Company for submission of expense reports,
receipts or similar documentation of such expenses.
(c) EVA Incentive Compensation Plan. As promptly as is practicable after
execution of this Agreement, the Company shall pay to Mr. Evans in cash the full
amount credited to his bank account under the Company's EVA Incentive
Compensation Plan as of March 31, 2001. Mr. Evans shall remain a participant in
such Plan for 30% of the Corporate EVA Pool for the year 2001 prorated at 30.96%
(113 days from 1/1/01-4/23/01 / 365 days); and thereafter, Mr. Evans shall no
longer be a participant in such Plan.
(d) Pension Plans. As of the Effective Date, Mr. Evans shall cease his
participation in the Company's 401(k) plan and its qualified and non-qualified
pension plans.
Exhibit 10. (a)
(e) Restricted Stock Awards. Appendix A hereto lists the retirement-based
restricted shares presently held by Mr. Evans. As of the Effective Date, such
retirement restricted shares shall be deemed fully vested and non-forfeitable.
Appendix B hereto lists the performance-based restricted shares presently held
by Mr. Evans. As of the Effective Date, the performance restricted shares
granted on May 6, 1996 shall be forfeited and surrendered to the Company, and
the performance restricted shares granted on April 21, 1997 shall remain subject
to the same terms and conditions as were applicable immediately prior to the
execution of this Agreement. As of the Effective Date, Mr. Evans shall be
granted 100,000 shares of Crane Common Stock (the "Restricted Stock") under the
Crane Co. Restricted Stock Award Plan or other applicable stock incentive plan
(the "Restricted Stock Plan"). The Restricted Stock shall be subject to transfer
and forfeiture restrictions that shall lapse with respect to 50,000 shares on
each of the second and third anniversaries of the date of grant. All of the
terms and conditions of the Restricted Stock shall be governed by and set forth
in a written restricted stock agreement containing such terms and conditions,
consistent with this Agreement and the Restricted Stock Plan, as are customary
for such grants by the Company.
(f) Stock Options. Appendix C hereto lists the stock options presently
held by Mr. Evans. As of the Effective Date, such stock options shall be deemed
fully vested and exercisable. In addition, as of the Effective Date, Mr. Evans
shall be granted non-qualified stock options to purchase 250,000 shares of Crane
Common Stock. The exercise price per share of each such stock option shall be
equal to the fair market value per share of the Common Stock on the date of
grant of such option. For this purpose, the "fair market value" shall be
determined by the average of the high and low prices of the Common Stock on the
New York Stock Exchange on the ten consecutive trading days ending on the date
of grant. Each option shall vest and become exercisable 50% one year after the
grant date, 75% two years after the grant date and 100% three years after the
grant date, and shall remain outstanding unless exercised for a term of 10 years
notwithstanding any earlier termination of employment by Mr. Evans. All of the
terms and conditions of each such option shall be governed by and set forth in a
written stock option agreement containing such terms and conditions, consistent
with this Agreement and the applicable stock option plan, as are customary for
such grants by the Company.
(g) Employee Benefits and Perquisites.
(1) Mr. Evans and, as applicable, his family, shall have the right
to participate in any employee benefit plans or other fringe benefit programs or
perquisite arrangements maintained by the Company for its officers and/or other
key management employees or as a part of the Company's regular compensation
structure for its employees, including plans (to the extent offered) providing
group hospitalization, medical, dental, accidental death and disability and
long-term disability income replacement insurance benefits.
(2) Upon the termination of the group benefits described in Section
4(g)(1) at the end of the Term or as otherwise provided under this Agreement,
Mr. Evans and, as applicable, his family shall be entitled to any group medical
and/or life insurance coverage or other benefits offered to Company retirees
(and their families) with similar years of service or any other applicable
qualifications, including, but not limited to, retirees who, upon retirement,
are eligible to receive an immediate retirement benefit under the Crane Co.
Pension Plan for Non-Bargaining Employees.
(h) Office, Assistance and Technical Support. The Company shall provide Mr.
Evans with an office and an office assistant at the Company's business
headquarters. Additionally, the Company will provide Mr. Evans with appropriate
technical support for Mr. Evans' office outside of the Company's headquarters.
(i) Company Airplane. Mr. Evans shall be authorized to use the Company's
airplane for both business and personal use. The use of the Company's airplane
by Mr. Evans shall be subject to the approval of the Chief Executive Officer of
the Company, such approval not to be unreasonably withheld.
5. Death During Employment.
(a) If Mr. Evans dies during the Term, the Company shall pay to the estate
of Mr. Evans the base salary to which he would otherwise be entitled in
accordance with Section 4(a) above for a period equal to the lesser of (i)
twelve (12) months from the date of death or (ii) the balance of the Term. This
Agreement shall thereupon terminate, and the Company shall have no further
obligation to the estate of Mr. Evans under the terms of this Agreement other
than for compensation and benefits earned through the date of death.
(b) If Mr. Evans dies while payments are being made pursuant to Sections
8, 9 or 10, the balance of payments that would have been made to Mr. Evans shall
be paid to his designated beneficiary (or, if Mr. Evans has not designated a
beneficiary, to his estate) in the same amounts and at the same times as would
have been paid to Mr. Evans had he lived.
Exhibit 10. (a)
6. Permanent Disability During Employment. If Mr. Evans becomes permanently
disabled during the term of this Agreement, the Company shall pay to Mr. Evans
the base salary to which he would otherwise be entitled in accordance with
Section 4(a) above to the end of the month in which such permanent disability
occurs and thereafter Mr. Evans shall continue to receive such base salary,
minus any payments provided by the Company's benefit plans and by any government
sponsored program, for a period equal to the lesser of (i) twenty-four (24)
months or (ii) the balance of the Term. This Agreement shall thereupon terminate
and the Company shall have no further obligation to Mr. Evans except as may be
provided under the Company's short-term and long-term disability plans during
the term of such disability. Permanent disability for purposes of this Agreement
shall mean a physical or mental condition of Mr. Evans that renders Mr. Evans
incapable of performing the essential duties of his job and which condition
shall be medically determined to be of permanent duration as the same is
construed under the Company's disability plans.
7. Termination of Employment for Cause. The Company may terminate Mr. Evans'
employment at any time "for cause." The term "for cause" shall mean (i) a
material default or other breach by Mr. Evans of his obligations under this
Agreement or (ii) fraud, dishonesty, misappropriation of the Company's assets,
or conviction of a felony. Upon the occurrence of (i) above, the Company shall
be entitled to terminate the employment relationship hereunder upon thirty (30)
days prior written notice to Mr. Evans, which notice shall state the reason for
such termination and shall provide Mr. Evans an opportunity to remedy or cure
such cause during such period. If such cause is not remedied or cured during
such period, the Company may terminate Mr. Evans' employment immediately. In the
event of a termination for cause, the Company shall have no obligation or
liability to Mr. Evans under this Agreement except for the compensation and
benefits earned through the date of termination.
8. Termination of Employment Without Cause.
(a) If the Company terminates this Agreement for any reason other than for
cause, as specified in Section 7 above, Mr. Evans shall be entitled to receive
in a lump sum payment within thirty (30) days of the date of termination an
amount equal to his then current monthly base salary in accordance with Section
4(a) above times the number of full and partial months then remaining in the
Term. Mr. Evans shall not be obligated in any way to mitigate the Company's
obligations to him under this Section 8 and any amounts earned by Mr. Evans
subsequent to his termination of employment shall not serve as an offset to the
severance payments due him by the Company under this Section.
(b) If Mr. Evans is terminated without cause, to the extent permitted by
law, he shall be permitted to continue to participate for the balance of the
Term in any and all of the medical, disability, life insurance, and other
benefits in which he was participating at the time of termination.
(c) Payments and benefits under this Section 8 are in addition to and not
in lieu of any benefits under the other benefit programs of the Company. The
Company shall thereafter have no other obligation or liability to Mr. Evans
under this Agreement.
9. Termination of Employment For Good Reason.
(a) Mr. Evans may terminate his employment for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean the occurrence of any of the following
events:
(i) a material diminution in the scope of Mr. Evans' assigned duties and
responsibilities or the assignment of duties or responsibilities that are
inconsistent with the Mr. Evans' status in the Company;
(ii) a reduction by the Company in Mr. Evans's base salary;
(iii) a material reduction in any benefits set forth in Section 4 other
than due to an across-the-board reduction applicable to all similarly situated
employees;
(iv) the Company's requirement that Mr. Evans be based anywhere other than
the Company's executive offices in Stamford, Connecticut; or
(v) the failure of a successor to the Company to assume in writing the
obligations of the Company under this Agreement upon becoming a successor of the
Company.
Exhibit 10. (a)
(b) If Mr. Evans shall terminate his employment for Good Reason, he shall
be entitled to receive in a lump sum payment within thirty (30) days of the date
of termination an amount equal to his then current monthly base salary in
accordance with Section 4(a) times the number of full and partial months then
remaining in the Term. Mr. Evans shall not be obligated in any way to mitigate
the Company's obligations to him under this Section 9 and any amounts earned by
Mr. Evans subsequent to his termination of employment shall not serve as an
offset to the severance payments due him by the Company under this Section.
(c) If Mr. Evans shall terminate his employment for Good Reason, to the
extent permitted by law, he shall be permitted to continue to participate for
the balance of the Term in any and all of the medical, disability, life
insurance, and other benefits in which he was participating at the time of
termination.
(d) Payments and benefits under this Section 9 are in addition to and not
in lieu of any benefits under the other benefit programs of the Company. The
Company shall thereafter have no other obligation or liability to Mr. Evans
under this Agreement.
10. Change in Control.
(a) This Section 10 shall be applicable only upon the occurrence of a
Change of Control. For the purpose of this Agreement, a "Change of Control"
shall mean the occurrence of any of the following:
(i) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) of the Company or
its subsidiaries, or the Crane Fund, a charitable trust under the laws of the
State of Illinois, or any corporation with respect to which, following such
acquisition, more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
substantially the same individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of the Company
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the then outstanding
shares of common stock of the Company or the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors, as the case may be; or
(ii) individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
substantially the same individuals and entities who were the respective
beneficial owners of the common stock and voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such reorganization, merger
or consolidation, or a complete liquidation or dissolution of the Company or of
the sale or other disposition of all or substantially all of the assets of the
Company.
(b) If a Change of Control occurs and Mr. Evans resigns from his position
as Chairman of the Board, he shall be entitled to receive in a lump sum payment
within thirty (30) days of the date of such Change of Control an amount equal to
his then current monthly base salary in accordance with Section 4(a) above times
thirty-six (36). Mr. Evans shall not be obligated in any way to mitigate the
Company's obligations to him under this Section 10 and any amounts earned by Mr.
Evans subsequent to his termination of employment shall not serve as an offset
to the severance payments due him by the Company under this Section.
Exhibit 10. (a)
(c) If a Change of Control occurs, to the extent permitted by law, Mr.
Evans shall be permitted to continue to participate for the balance of the Term
in any and all of the medical, disability, life insurance, and other benefits in
which he was participating at the time of termination.
(d) Payments and benefits under this Section 10 are in addition to and not
in lieu of any benefits under the other benefit programs of the Company. The
Company shall thereafter have no other obligation or liability to Mr. Evans
under this Agreement.
11. Non-Waiver of Rights. The failure to enforce at any time the provisions of
this Agreement or to require at any time performance by the other party of any
of the provisions hereof shall in no way be construed to be a waiver of such
provisions or to affect either the validity of this Agreement or any part
hereof, or the right of either party to enforce each and every provision in
accordance with its terms. No waiver by either party hereto of any breach by the
other party hereto of any provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions at that
time or at any prior or subsequent time.
12. Notices. Every notice relating to this Agreement shall be in writing and
shall be given by personal delivery by registered or certified mail, or by
Federal Express postage prepaid, return receipt requested; to:
If to the Company:
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attention: Corporate Secretary
If to Mr. Evans:
Robert S. Evans
114 Glenwood Drive
Greenwich, CT 06830
Either of the parties hereto may change their address for purposes of
notice hereunder by giving notice in writing to such other party pursuant to
this Section 12.
13. Tax Withholding. The payments to Mr. Evans under this Agreement shall be
subject to all applicable tax withholdings.
14. Binding Effect/Assignment. This Agreement is personal to Mr. Evans and
without the prior written consent of the Company shall not be assignable by Mr.
Evans. This Agreement shall inure to the benefit of and be enforceable by Mr.
Evans' legal representatives.
15. Entire Agreement. This Agreement sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, between them as to such subject matter.
Notwithstanding the foregoing, the Indemnification Agreement between Mr. Evans
and the Company, dated as of January 22, 1996, and the stock option and
restricted stock agreements evidencing the option and restricted stock awards
described in Appendix A, Appendix B and Appendix C hereto (other than the
restricted stock award dated May 6, 1996) shall remain in full force and effect
in accordance with their respective terms, but the Employment/Severance
Agreement between Mr. Evans and the Company, dated as of March 1, 1995, shall be
deemed terminated in its entirety upon execution of this Agreement.
16. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without reference to
principles of conflict of laws.
Exhibit 10. (a)
18. Legal Fees. The parties hereto agree that the non-prevailing party in any
dispute, claim, action or proceeding between the parties hereto arising out of
or relating to the terms and conditions of this Agreement or any provision
thereof (a "Dispute"), shall reimburse the prevailing party for reasonable
attorney's fees and expenses incurred by the prevailing party in connection with
such Dispute; provided, however, that Mr. Evans shall only be required to
reimburse the Company for its fees and expenses incurred in connection with a
Dispute, if Mr. Evans' position in such Dispute was found by the court,
arbitrator or other person or entity presiding over such Dispute to be frivolous
or advanced not in good faith.
19. Modifications. Neither this Agreement nor any provision hereof may be
modified, altered, amended or waived except by an instrument in writing duly
signed by the party to be charged.
20. Tense and Headings. Whenever any words used herein are in the singular form,
they shall be construed as though they were also used in the plural form in all
cases where they would so apply. The headings contained herein are solely for
the purposes of reference, are not part of this Agreement and shall not in any
way affect the meaning or interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
Exhibit 10. (a)
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by authority of its Board of Directors, and Mr. Evans has hereunto set
his hand, on the day and year first above written.
CRANE CO.
By:
-------------------------------
Title
-----------------------------------
Robert S. Evans
Exhibit 10. (a)
Appendix A
Retirement-Based Restricted Shares
held by R. S. Evans
Award Date Current Outstanding Shares
May 8, 1995 254,003
May 6, 1996 43,523
April 21, 1997 21,088
April 20, 1998 12,764
May 26, 2000 165,850
Exhibit 10. (a)
Appendix B
Performance-Based Restricted Shares
held by R. S. Evans
Award Date Current Outstanding Shares
May 6, 1996 95,132
April 21, 1997 79,277
Exhibit 10. (a)
Appendix C
Non-Qualified Stock Options
held by R. S. Evans
Grant Date Total Shares Exercisable* Option Price
May 8, 1995 73,188 73,188 $14.12
May 6, 1996 73,188 73,188 $16.96
April 21, 1997 97,584 97,584 $20.71
April 20, 1998 260,225 195,168 $33.54
April 5, 1999 216,854 108,427 $21.96
January 24, 2000 175,000 - $19.86
* All options vest 50% after one year, 75% after two years and 100% after three
years.
Exhibit 10. (b)
CRANE CO.
2001 STOCK INCENTIVE PLAN
1. Purpose and Adoption of the Plan
The purpose of the Crane Co. 2001 Stock Incentive Plan (as the same may be
amended from time to time, the "Plan") is (i) to attract and retain key
employees of Crane Co. (the "Company"), and its Subsidiaries (as defined below)
who are and will be contributing to the success of the business; (ii) to
motivate and reward key employees who have made significant contributions to the
success of the Company and encourage them to continue to give their best efforts
to its future success; (iii) to provide competitive incentive compensation
opportunities; and (iv) to further opportunities for stock ownership by such key
employees in order to increase their proprietary interest in the Company and
their personal interest in its continued success.
The Plan has been approved by the Board of Directors of the Company (the
"Board") and shall become effective upon approval by the stockholders of the
Company (the "Effective Date"). The Plan shall remain in effect until terminated
by action of the Board; provided, however, that no Incentive Stock Option (as
defined below) may be granted hereunder after the tenth anniversary of the
Effective Date.
2. Definitions
For the purposes of this Plan, capitalized terms shall have the following
meanings:
(a) "Award" means any grant to a Participant of one or a combination of
Non-Qualified Stock Options or Incentive Stock Options described in Section 6
and Restricted Shares described in Section 8.
(b) "Award Agreement" means a written agreement between the Company and a
Participant or a written notice from the Company to a Participant specifically
setting forth the terms and conditions of an Award granted under the Plan.
(c) "Beneficiary" means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan
and an Award Agreement upon the Participant's death.
(d) "Board" shall have the meaning given to such term in Section 1.
(e) "Change in Control" means the first to occur of the following events after
the Effective Date: (i) the first purchase of shares pursuant to a tender offer
or exchange offer (other than a tender offer or exchange offer by the Company)
for all or part of the Company's Common Stock or any securities convertible into
such Common Stock; (ii) the receipt by the Company of a Schedule 13D or other
advice indicating that a person is the "beneficial owner" (as that term is
defined in Rule 13d-3 under the Exchange Act) of 20% or more of the Company's
Common Stock calculated as provided in paragraph (d) of said Rule 13d-3; (iii)
the date of approval by the stockholders of the Company of an agreement
providing for any Merger of the Company in which the Company will not be the
continuing or surviving corporation or pursuant to which shares of Common Stock
of the Company would be converted into cash, securities or other property, other
than a Merger of the Company in which the holders of Common Stock of the Company
immediately prior to the Merger would have the same proportion of ownership of
common stock of the surviving corporation immediately after the Merger; (iv) the
date of the approval by the stockholders of the Company of any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company; (v) the
adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or (vi) the date upon which the
individuals who constitute the Board as of the Effective Date (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to such date whose
election, or nomination for election by the Company's stockholders, was approved
by a vote of at least three-quarters of the directors comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall, for purposes of this Plan, be considered as though such person were a
member of the Incumbent Board.
(f) "Code" means the Internal Revenue Code of 1986, as amended. References to a
section of the Code include that section and any comparable section or sections
of any future legislation that amends, supplements or supersedes said section.
Exhibit 10. (b)
(g) "Committee" means the Organization and Compensation Committee of the Board
or such other committee composed of at least three members of the Board as may
be designated by the Board from time to time.
(h) "Company" shall have the meaning given to such term in Section 1.
(i)"Common Stock" means Common Stock, par value $1.00 per share, of the Company.
(j) "Date of Grant" means the date as of which the Committee grants an Award. If
the Committee contemplates an immediate grant to a Participant, the Date of
Grant shall be the date of the Committee's action. If the Committee contemplates
a date on which the grant is to be made other than the date of the Committee's
action, the Date of Grant shall be the date so contemplated and set forth in or
determinable from the records of action of the Committee; provided, however,
that the Date of Grant shall not precede the date of the Committee's action.
(k) "Effective Date" shall have the meaning given to such term in Section 1.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any applicable date, for all purposes in
this Plan, the average of the high and low sales prices of the Common Stock on
the New York Stock Exchange-Composite Transactions Tape on the ten (10)
consecutive trading days ending on that day, or if no sale of stock has been
recorded on such day, then on the next preceding day on which a sale was so
made. In the event the Common Stock is not admitted to trade on a securities
exchange, the Fair Market Value as of any given date shall be as determined in
good faith by the Committee.
(n) "Incentive Stock Option" means a stock option within the meaning of Section
422 of the Code.
(o) "Merger" means any merger, reorganization, consolidation, share exchange,
transfer of assets or other transaction having similar effect involving the
Company.
(p) "Non-Qualified Stock Option" means a stock option which is not an Incentive
Stock Option.
(q) "Options" means all Non-Qualified Stock Options and Incentive Stock Options
granted at any time under the Plan.
(r) "Participant" means a person designated to receive an Award under the Plan
in accordance with Section 5.
(s) "Permanent Disability" means a physical or mental disability or infirmity
that prevents the performance of a Participant's services for the Company and
its Subsidiaries lasting (or likely to last, based on competent medical evidence
presented to the Committee) for a period of six months or longer. The
Committee's reasoned and good faith judgment of Permanent Disability shall be
final and shall be based on such competent medical evidence as shall be
presented to it by such Participant or by any physician or group of physicians
or other competent medical expert employed by the Participant or the Company to
advise the Committee.
(t) "Plan" shall have the meaning given to such term in Section 1.
(u) "Purchase Price," with respect to Options, shall have the meaning set forth
in Section 6(a).
(v) "Restricted Shares" means Common Stock subject to restrictions imposed in
connection with Awards granted under Section 8.
(w) "Retirement" means a Participant's retirement at or after age 65.
(x) "Subsidiary" means a subsidiary of the Company within the meaning of Section
424(f) of the Code.
Exhibit 10. (b)
3. Administration
(a) This Plan shall be administered by the Committee; provided, however, if any
member of the Committee does not meet the qualifications for an "outside
director" established from time to time by Section 162(m) of the Code, and any
proposed or future regulations thereunder, or the qualifications for a
"non-employee director" established from time to time by rules or regulations of
the Securities and Exchange Commission under Section 16 of the Exchange Act, the
remaining members of the Committee (but not less than two) shall administer the
Plan. The Committee shall have the sole discretionary authority to interpret the
Plan, to establish and modify administrative rules for the Plan, to impose such
conditions and restrictions on Awards as it determines appropriate, and to take
such steps in connection with the Plan and Awards granted hereunder as it may
deem necessary or advisable. No member of the Committee shall be eligible to
participate in, and no person shall become a member of the Committee if within
one year prior thereto he or she shall have been eligible to participate in this
Plan or any other plan of the Company or its Subsidiaries (other than the Crane
Co. 2000 Non-Employee Director Stock Compensation Plan) entitling the
participants therein to acquire stock, stock options, stock appreciation rights
or restricted stock of the Company or its Subsidiaries. Decisions of the
Committee in connection with the administration of the Plan shall be final,
conclusive and binding upon all parties, including the Company, its stockholders
and the Participants.
(b) The Committee may employ attorneys, consultants, accountants or other
persons and the Committee and the Company and its officers and directors shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
All usual and reasonable expenses of the Committee shall be paid by the Company.
No Committee member shall receive compensation with respect to his or her
services for the Committee except as may be authorized by the Board. All actions
taken and all interpretations and determinations made by the Committee in good
faith shall be final and binding upon all employees who have received awards,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretations taken or
made in good faith with respect to this Plan or Awards made hereunder, and all
members of the Committee shall be fully indemnified and protected by the Company
in respect of any such action, determination or interpretation.
4. Shares
(a) The total number of shares of Common Stock authorized to be issued under the
Plan shall not exceed 3,000,000 shares; provided that no more than 500,000
shares of Common Stock shall be issued as Restricted Shares. The number of
shares available for issuance under the Plan shall be subject to adjustment in
accordance with Section 9. The shares to be offered under the Plan shall be
authorized and unissued shares of Common Stock, or issued shares of Common Stock
which will have been reacquired by the Company, including shares purchased in
the open market.
(b) Subject to the provisions of Section 6(d), any shares subject to an Option
granted under this Plan or any predecessor stock option plan of the Company that
expires or is terminated for any reason without having been exercised in full,
shares of Common Stock forfeited as provided in Section 8(h) and shares of
Common Stock subject to any Award under this Plan or any predecessor stock
option or restricted stock plan of the Company that are otherwise surrendered by
a Participant or terminated shall continue to be available for future grants
under this Plan. If any shares of Common Stock are withheld from those otherwise
issuable or are tendered to the Company, by attestation or otherwise, in
connection with the exercise of an Option, only the net number of shares of
Common Stock issued as a result of such exercise shall be deemed delivered for
purposes of determining the maximum number of shares available for delivery
under the Plan.
5. Participation
Participants in the Plan shall be such key employees of the Company and its
Subsidiaries as the Committee, in its sole discretion, may designate from time
to time. For purposes of the Plan, "key employees" shall mean officers as well
as other employees (including officers and other employees who are also
directors of the Company or any Subsidiary) designated by the Committee in its
discretion upon the recommendation of management, but shall not include any
employee who, assuming the full exercise of such Option, would own more than 10%
of the combined voting power of all classes of stock of the Company or any
Subsidiary. Subject to adjustment in accordance with Section 9, the maximum
number of shares for which Awards may be granted under this Plan to any single
individual in any calendar year shall not exceed 400,000 shares of Common Stock.
Options under the Plan may be Incentive Stock Options within the meaning of
Section 422 of the Code or Non-Qualified Stock Options. Awards granted hereunder
shall be evidenced by Award Agreements in such form as the Committee shall
approve, which Agreements shall comply with and be subject to the terms and
conditions of this Plan.
Exhibit 10. (b)
6. Grant and Exercise of Stock Options
(a) The purchase price of each share of Common Stock upon exercise of any
Options granted under the Plan shall not be less than 100% of the Fair Market
Value of the Common Stock on the Date of Grant (the "Purchase Price").
(b) Each Option granted under this Plan shall be exercisable in whole or in part
(in lots of ten shares or any multiple thereof) from time to time beginning from
the Date of Grant, subject to the provision that an Option may not be exercised
by the Participant, except as provided in Section 7, (i) more than 90 days after
the termination of the Participant's employment by the Company or a Subsidiary
or more than 10 years from the Date of Grant, whichever period is shorter, or
(ii) prior to the expiration of one year from the Date of Grant; provided
further, that, unless otherwise determined by the Committee, the Option may not
be exercised in excess of 50% of the total shares subject to such Option during
the second year after the Date of Grant, 75% during the third year, and 100%
thereafter.
(c) The Purchase Price of the shares purchased upon the exercise of an Option
shall be paid in full at the time of exercise in cash or, in whole or in part,
by tendering (either actually or by attestation) shares of Common Stock. The
value of each share of Common Stock delivered in payment of all or part of the
Purchase Price upon the exercise of an Option shall be the Fair Market Value of
the Common Stock on the date the Option is exercised. Exercise of Options shall
also be permitted, if approved by the Committee, in accordance with a cashless
exercise program under which, if so instructed by a Participant, shares of
Common Stock may be issued directly to the Participant's broker or dealer upon
receipt of an irrevocable written notice of exercise from the Participant.
(d) The Committee, upon such terms and conditions as it shall deem appropriate,
may (but shall not be obligated to) authorize on behalf of the Company the
acceptance of the surrender of the right to exercise an Option or a portion
thereof (but only to the extent and in the amounts that such Option shall then
be exercisable) and the payment by the Company therefor of an amount equal to
the excess of the Fair Market Value on the date of surrender of the shares of
Common Stock covered by such Option or portion thereof over the aggregate option
price of such shares. Such payment shall be made in shares of Common Stock
(valued at such Fair Market Value) or in cash, or partly in cash and partly in
shares of Common Stock, as the Committee shall determine. The shares of Common
Stock covered by any Option or portion thereof, as to which the right to
exercise shall have been so surrendered, shall not again be available for the
purposes of this Plan.
(e) Each Option granted under this Plan shall not be transferable by the
Participant otherwise than by will or the laws of descent and distribution, and
shall be exercisable, during the Participant's lifetime, only by the
Participant. Notwithstanding the foregoing, Non-Qualified Stock Options may be
transferable, without payment of consideration, to immediate family members of
the Participant or to trusts or partnerships for the benefit of such family
members.
(f) No Participant may be granted Incentive Stock Options under the Plan (or any
other plans of the Company and its Subsidiaries) that would result in shares
with an aggregate Fair Market Value (measured on the Date of Grant) of more than
$100,000 first becoming exercisable in any one calendar year.
(g) The Company shall have the right to require a Participant to pay to the
Company the cash amount of any taxes which the Company is required to withhold
upon the exercise of an Option granted hereunder, provided that anything
contained herein to the contrary notwithstanding, the Committee may, in
accordance with such rules as it may adopt, accept shares of Common Stock
received in connection with the exercise of the Option being taxed or otherwise
previously acquired in satisfaction of any withholding requirements or up to the
entire tax liability arising from the exercise of such Option.
(h) The Committee, in its sole discretion, shall have the right (but shall not
in any case be obligated), exercisable at any time after the Date of Grant, to
permit the exercise of any Option prior to the time such Option would otherwise
become exercisable under the terms of the Award Agreement.
Exhibit 10. (b)
(i) The Committee shall have the authority to specify, either at the Date of
Grant of an Option or at a later date, that upon exercise of all or a portion of
that Option (the "Original Option") a reload stock option ("Reload Option")
shall be granted under specified conditions. A Reload Option shall entitle the
Participant to purchase a number of shares equal to the shares delivered in
payment of all or part of the Purchase Price of the Original Option pursuant to
Section 6(c) plus the shares delivered or withheld to satisfy the tax liability
associated with such exercise pursuant to Section 6(g). The specific terms and
conditions applicable for Reload Options shall be determined by the Committee
and shall be set forth in rules adopted by the Committee or in agreements or
other documentation evidencing such Reload Options; provided, however, that (i)
the exercise price of the Reload Option shall be the Fair Market Value of the
Common Stock at the Date of Grant, (ii) the Reload Option shall not be
exercisable, except as provided in Section 7, earlier than six months after its
Date of Grant, and (iii) the expiration date of the Reload Option shall not be
later than the expiration date of the Original Option. 7. Exercise of Options
Upon Termination of Employment
(a) If a Participant shall retire or shall cease to be employed by the Company
or by a Subsidiary by reason of Permanent Disability or after a Change in
Control, all Options theretofore granted to such Participant, whether or not
previously exercisable, may be exercised in whole or in part, and/or the
Committee may authorize the acceptance of the surrender of the right to exercise
such Options or any portion thereof as provided in Section 6(d), at any time
within 90 days after such Retirement, termination by reason of Permanent
Disability, or termination after a Change in Control, but not after the
expiration of the term of the Option.
(b) If a Participant shall die while employed by the Company or by a Subsidiary
or within 90 days of the cessation or termination of such employment under
circumstances described in Section 7(a), all Options theretofore granted to such
Participant, whether or not previously exercisable, may be exercised in whole or
in part, and/or the Committee may authorize the acceptance of the surrender of
the right to exercise such Options or any portion thereof as provided in Section
6(d), by the estate of such Participant (or by a person who shall have acquired
the right to exercise such Option by bequest or inheritance), at any time within
one year after the death of such Participant but not after the expiration of the
term of the Option.
(c) If a Participant's employment is terminated for any reason other than death,
disability or retirement or after a Change in Control, such Participant may
exercise any Option in whole or in part, at any time within 90 days after such
termination of employment, but only to the extent such Option is exercisable at
the date of termination in accordance with Section 6(b). In no event may any
Option be exercised after the expiration of the term of the Option.
8. Grant of Restricted Shares
(a) The Committee may grant to any Participant an Award of such number of shares
of Common Stock on such terms, conditions and restrictions, whether based on
performance standards, periods of service, retention by the Participant of
ownership of specified shares of Common Stock or other criteria, as the
Committee shall establish. With respect to performance-based Awards of
Restricted Shares intended to qualify for deductibility under the
"performance-based" compensation exception contained in Section 162(m) of the
Code, performance targets will include specified levels of one or more of the
following (in absolute terms or relative to one or more other companies or
indices): revenues, free cash flow, return on assets, operating income, return
on investment, economic value added, return on stockholders' equity, stock price
appreciation, total share return, earnings before interest, taxes, depreciation
and amortization, earnings per share and/or growth in earnings per share. The
terms of any Restricted Share Award granted under this Plan shall be set forth
in an Award Agreement which shall contain provisions determined by the Committee
and not inconsistent with this Plan.
(b) As soon as practicable after the Date of Grant of a Restricted Share Award
by the Committee, the Company shall cause to be transferred on the books of the
Company or its agent, shares of Common Stock, registered on behalf of the
Participant, evidencing the Restricted Shares covered by the Award, subject to
forfeiture to the Company as of the Date of Grant if an Award Agreement with
respect to the Restricted Shares covered by the Award is not duly executed by
the Participant and timely returned to the Company. All shares of Common Stock
covered by Awards under this Section 8 shall be subject to the restrictions,
terms and conditions contained in the Plan and the applicable Award Agreements
entered into by the appropriate Participants. Until the lapse or release of all
restrictions applicable to an Award of Restricted Shares the share certificates
representing such Restricted Shares may be held in custody by the Company, its
designee, or, if the certificates bear a restrictive legend, by the Participant.
Upon the lapse or release of all restrictions with respect to an Award as
described in Section 8(e), one or more share certificates, registered in the
name of the Participant, for an appropriate number of shares as provided in
Section 8(e), free of any restrictions set forth in the Plan and the related
Award Agreement shall be delivered to the Participant.
Exhibit 10. (b)
(c) Beginning on the Date of Grant of a Restricted Share Award and subject to
execution of the related Award Agreement as provided in Section 8(b), and except
as otherwise provided in such Award Agreement, the Participant shall become a
stockholder of the Company with respect to all shares subject to the Award
Agreement and shall have all of the rights of a stockholder, including, but not
limited to, the right to vote such shares and the right to receive dividends;
provided, however, that any shares of Common Stock or other securities
distributed as a dividend or otherwise with respect to any Restricted Shares as
to which the restrictions have not yet lapsed, shall be subject to the same
restrictions as such Restricted Shares and held or restricted as provided in
Section 8(b).
(d) None of the Restricted Shares may be assigned or transferred (other than by
will or the laws of descent and distribution or to an inter vivos trust with
respect to which the Participant is treated as the owner under Sections 671
through 677 of the Code), pledged or sold prior to the lapse of the restrictions
applicable thereto.
(e) Upon expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions
prescribed by the Committee, or at such earlier time as provided under the
provisions of Section 8(i), the restrictions applicable to the Restricted Shares
shall lapse. As promptly as administratively feasible thereafter, subject to the
requirements of Section 8(k), the Company shall deliver to the Participant or,
in case of the Participant's death, to the Participant's Beneficiary, one or
more share certificates for the appropriate number of shares of Common Stock,
free of all such restrictions, except for any restrictions that may be imposed
by law.
(f) A Participant's Restricted Share Award shall not be contingent on any
payment by or consideration from the Participant other than the rendering of
services.
(g) The Committee will have the discretion, as to any Restricted Share Award, to
award a separate cash amount, payable to the Participant at the time when the
forfeiture restrictions on the Restricted Shares lapse or at such earlier time
as the Participant may elect to be taxed with respect to such Restricted Shares
equal to (i) the federal income tax and the Section 4999 golden parachute excise
tax, if any, payable with respect to the lapse of such restrictions or with
respect to such election, divided by (ii) one (1) minus the total effective
federal income and excise tax rate applicable as a result of the lapse of such
restrictions or a result of such election.
(h) Subject to Sections 8(i) and 8(j), Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues in the
service of the Company or a Subsidiary until the expiration of the forfeiture
period for such Restricted Shares and satisfies any and all other conditions set
forth in the Award Agreement. The Committee shall determine the forfeiture
period (which may, but need not, lapse in installments) and any other terms and
conditions applicable with respect to any Restricted Share Award.
(i) Notwithstanding anything contained in this Section 8 to the contrary, the
Committee may, in its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under appropriate circumstances
(including the death, disability or Retirement of the Participant or a material
change in circumstances arising after the date of an Award) and subject to such
terms and conditions (including forfeiture of a proportionate number of the
Restricted Shares) as the Committee shall deem appropriate.
(j) Unless otherwise provided by the Committee in the applicable Award
Agreement, in the event of a Change in Control, all restrictions applicable to
the Restricted Share Award shall terminate fully and the Participant shall
immediately have the right to the delivery of share certificates for such shares
in accordance with Section 8(e).
(k) The Company shall have the right to require a Participant to pay to the
Company the cash amount of any taxes which the Company is required to withhold
with respect to any amount payable and/or shares issuable under such
Participant's Award. The Company may defer payment of cash or issuance of shares
upon exercise or vesting of an Award unless indemnified to its satisfaction
against any liability for any such tax. The amount of such withholding or tax
payment shall be determined by the Committee and shall be payable by the
Participant at such time as the Committee determines.
Exhibit 10. (b)
9. Adjustments to Reflect Capital Changes
In the event that there is an increase in the number of issued shares of the
Common Stock by reason of any stock dividend, stock split, recapitalization or
other similar event, the total number of shares available for Awards under the
Plan, the maximum number of shares for which Options may be granted to any
single individual in any calendar year and the number of shares remaining
subject to purchase under each outstanding Option shall be increased and the
Purchase Price per share of such outstanding Options shall be decreased, in
proportion to such increase in issued shares. Conversely, in case the issued
shares of Common Stock shall be combined into a smaller number of shares, the
total number of shares available for Awards under the Plan, the maximum number
of shares for which Options may be granted to any single individual in any
calendar year and the number of shares remaining subject to purchase under each
outstanding Option shall be decreased and the Purchase Price per share of such
outstanding Options shall be increased, in proportion to such decrease in issued
shares. In the event of any Merger, the Committee may make such adjustment in
the shares available for Awards under the Plan, the maximum number of shares for
which Options may be granted to any single individual in any calendar year and
the shares subject to outstanding Awards and the Purchase Price thereof, if
applicable, as the Committee, in its sole discretion, deems appropriate. In the
event of an exchange of Common Stock, or other securities of the Company
convertible into Common Stock, for the stock or securities of another
corporation, the Committee may, in its sole discretion, equitably substitute
such new stock or securities for a portion or all of the shares of Common Stock
subject to outstanding Awards.
10. Amendment and Termination
This Plan may be amended or terminated at any time by the Board except with
respect to any Awards then outstanding, and any Award granted under this Plan
may be terminated at any time with the consent of the Participant. The Board may
make such changes in and additions to this Plan as it may deem proper and in the
best interest of the Company; provided, however, that no such action shall,
without the consent of the Participant, materially impair any Award theretofore
granted under this Plan; and provided, further, that without the approval of the
stockholders of the Company (i) the total number of shares that may be issued
under this Plan shall not be increased, and (ii) the minimum Purchase Price
shall not be changed. Notwithstanding the foregoing, the Board may amend or
revise this Plan to comply with applicable laws or governmental regulations.
11. General Provisions
(a) Each Option granted under this Plan shall be evidenced by a written Award
Agreement containing such terms and conditions as the Committee may require, and
no person shall have any rights under any Award granted under this Plan unless
and until such Award Agreement has been executed and delivered by the
Participant and the Company.
(b) In the event of any conflict between the terms of this Plan and any
provision of any Award Agreement, the terms of this Plan shall be controlling.
(c) No Participant or other person shall have any claim or right to be granted
an Award under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving any Participant any right to be retained in the employ of
the Company or any of its Subsidiaries. Unless otherwise agreed by contract, the
Company reserves the right to terminate its employment relationship with any
person at any time and for any reason.
(d) Income realized as a result of a grant or an exercise of any Award under
this Plan shall not be included in the Participant's earnings for the purpose of
any benefit plan in which the Participant may be enrolled or for which the
Participant may become eligible unless otherwise specifically provided for in
such plan.
(e) The obligation of the Company to sell and deliver shares of Common Stock
with respect to any Award granted hereunder shall be subject to, as deemed
necessary or appropriate by counsel for the Company, (i) all applicable laws,
rules and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the effectiveness of a registration
statement under the Securities Act of 1933, and (ii) the condition that such
shares shall have been duly listed on such stock exchanges as the Common Stock
is then listed.
(f) Anything in this Plan to the contrary notwithstanding, it is expressly
agreed and understood that if any one or more provisions of this Plan shall be
illegal or invalid such illegality or invalidity shall not invalidate this Plan
or any other provisions thereof, but this Plan shall be effective in all
respects as though the illegal or invalid provisions had not been included.
Exhibit 10. (b)
(g) All determinations made and actions taken pursuant to the Plan shall be
governed by the laws of the State of Delaware, other than the conflict of laws
provisions thereof, and construed in accordance therewith.