SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
[X] Definitive Proxy Statement BY RULE 14A-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c)or(s)240.14a-12
FACTSET RESEARCH SYSTEMS INC.
- ------------------------------------------------
(Name of Registrant as specified in its charter)
- ------------------------------------------------
(Name of Person(s)Filing Proxy Statement, if other that the Registrant
Payment of Filing Fee (Check the appropriate box):
[X} No fee required.
[ ] Fee computed on table below Exchange Act Rules 14a-6(i)(4) and 0-11:
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transactions computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box, if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
FactSet Research Systems Inc.
One Greenwich Plaza
Greenwich, CT 06830
203.863.1500/203.863.1501 (Fax)
November 23, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
FactSet Research Systems Inc., which will be held at the Company's corporate
headquarters on Thursday, January 13, 2000, at 10:00 a.m. I look forward to
greeting you at the meeting.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted. Therefore, I urge you to promptly return the
enclosed proxy in the accompanying postage-paid envelope or, vote using the
Internet at http://proxy.shareholder.com/fds. Should you decide to attend the
annual meeting, you will of course have the opportunity to vote in person.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued support and loyalty.
Sincerely,
[OBJECT OMITTED]
Howard E. Wille Chairman of the Board and Chief Executive Officer
FACTSET RESEARCH SYSTEMS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 13, 2000
To Our Stockholders:
The Annual Meeting of Stockholders of FactSet Research Systems Inc., a
Delaware corporation (the "Company"), will be held at the Company's corporate
headquarters at One Greenwich Plaza, Greenwich, Connecticut 06830, on Thursday,
January 13, 2000, at 10:00 a.m. for the following purposes:
1. To elect two members of the Board of Directors for three year terms.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for fiscal 2000.
3. To ratify the adoption of the 2000 Employee Stock Option Plan.
4. To transact such other business as may properly come before the annual
meeting.
Only stockholders of record at the close of business on November 12, 1999
are entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Ernest S. Wong, Secretary
Greenwich, Connecticut
November 23, 1999
- --------------------------------------------------------------------------------
IMPORTANT
Whether or not you expect to attend in person, we urge you to vote at your
earliest convenience by returning the enclosed proxy card or by using the
Internet at http://proxy.shareholder.com/fds. Internet voting is available 24
hours a day, and will be accessible until 10:00 a.m. on January 12, 2000. This
will ensure the presence of a quorum at the meeting. Promptly using the Internet
to vote or returning the enclosed proxy card will save the Company incremental
expenses associated with additional solicitation. An addressed envelope for
which no postage is required if mailed in the United States is enclosed for that
purpose. Voting using the Internet or sending in your proxy will not prevent you
from voting your shares at the annual meeting if you desire to do so, as your
proxy is revocable at your option.
- --------------------------------------------------------------------------------
FACTSET RESEARCH SYSTEMS INC.
One Greenwich Plaza
Greenwich, Connecticut 06830
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
To Be Held January 13,2000
The Board of Directors of FactSet Research Systems Inc. (the "Company" or
"FactSet") furnishes this Proxy Statement, which was first mailed to
stockholders on November 23, 1999, in connection with the solicitation of
proxies and will be voted at the annual meeting of stockholders of the Company
("the Meeting"). The Meeting will be held at 10:00 a.m. on January 13, 2000 at
One Greenwich Plaza, Greenwich, Connecticut, and any adjournment thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
Your vote is important. Stockholders of record may vote their proxy by
internet or by mail. Stockholders who execute proxies retain the right to revoke
them at any time prior to the exercise of the powers conferred thereby by
delivering a signed statement to the Secretary of the Company at or prior to the
Meeting or by executing another proxy dated as of a later date. The cost of the
solicitation of proxies will be borne by the Company.
The only outstanding voting security of the Company is its Common Stock,
$0.01 par value per share (the "Common Stock"). Stockholders of record at the
close of business on November 12, 1999 will be entitled to vote at the Meeting
on the basis of one vote for each share of Common Stock held. On November 12,
1999, there were 15,817,209 outstanding shares of Common Stock.
I. DIRECTOR AND EXECUTIVE OFFICER INFORMATION
Information Regarding the Board of Directors and Related Committees
The Board of Directors (the "Board") and related Committees of the Company
are served by:
John D. Connolly, Director. Mr. Connolly, age 56, is an experienced
investment professional with a long career in the financial services industry.
He retired as a Principal/Partner and Portfolio Manager with Miller Anderson &
Sherrerd, serving that firm from 1990 to 1998. From 1984 to 1990, Mr. Connolly
served as Senior Vice President, Chief Investment Strategist for Dean Witter
Reynolds. Prior to joining Dean Witter, he held the position of Senior Vice
President, Director of Research at Shearson/American Express. Mr. Connolly has
also held various senior positions with E.F. Hutton; White Weld; Faulkner,
Dawkins & Sullivan, Inc.; National Securities & Research; and Citibank. Mr.
Connolly is a member of the Audit Committee and has served on the Board since
January 1999. His current Board term expires in concurrence with the Annual
Meeting of Stockholders for fiscal 2001.
David R. Korus, Director. Mr. Korus, age 38, is a Managing Member and
Portfolio Manager with Owenoke Capital Management LLC. Prior to founding Owenoke
Capital in 1998, Mr. Korus managed technology assets for Westcliff Capital
Management LLC and Kingdon Capital Management, both of which are large
diversified hedge funds. Mr. Korus began his career in 1983 with Kidder, Peabody
& Co. ("Kidder") researching technology stocks. Later he became Chairman of the
Research Steering Committee at Kidder and was responsible for managing the
Technology Research Department. Mr. Korus is a member of the Compensation
Committee and has served on the Board since July 1997. His current Board term
expires in concurrence with the Annual Meeting of Stockholders for fiscal 2000.
Joseph E. Laird, Jr., Director. Mr. Laird, age 54, serves as Chairman and
Chief Executive Officer of Laird Squared LLC, an investment banking company that
he formed in January 1999. Previously, Mr. Laird was a Managing Director of
Veronis, Suhler & Associates, a small leading specialty investment bank that has
served the media and information industries since 1989. From 1982 to 1989, he
was an institutional equity salesman and a senior securities analyst of database
information services for
1
Hambrecht & Quist. From 1975 to 1982, Mr. Laird was an institutional equity
salesman and investment strategist for PaineWebber Mitchell Hutchins. Mr. Laird
is the Chairman and a member of the Compensation Committee and has served on the
Board since 1993. His current Board term expires in concurrence with the Annual
Meeting of Stockholders for fiscal 2001.
John C. Mickle, Director. Mr. Mickle, age 73, has been President of
Sullivan, Morrissey & Mickle Capital Management Corporation since 1978. Mr.
Mickle is an experienced investment advisor, having held prior positions with
Shearson Hayden Stone, Inc., UBS-DB Corporation, and Faulkner, Dawkins &
Sullivan, Inc. Mr. Mickle is also a director of Mickelberry Communications Inc.
Mr. Mickle is the Chairman and a member of the Audit Committee and has served on
the Board since November 1997. His current Board term expires in concurrence
with the Annual Meeting of Stockholders for fiscal 2000.
Walter F. Siebecker, Director. Mr. Siebecker, age 58, joined the National
Securities Clearing Corporation ("NSCC") in 1996 as a Managing Director in
charge of the organization's Annuity Processing Service. Mr. Siebecker's
background is in retail and institutional investment services in the domestic
and global markets. Prior to joining NSCC, Mr. Siebecker was a consultant to the
Trading Services Division at Lehman Brothers and spent 16 years at Salomon Smith
Barney Inc., where he was responsible for the Operations Division as Executive
Vice President and Chief Operations Officer. Mr. Siebecker is a member of the
Audit Committee and has served on the Board since November 1997. His current
Board term expires in concurrence with the Annual Meeting of Stockholders for
fiscal 1999.
Charles J. Snyder, Vice Chairman of the Board of Directors and Director.
Mr. Snyder, age 57, retired as President and Chief Technology Officer of FactSet
on August 31, 1999. At that time he became Vice Chairman of the Board and agreed
to continue as a consultant to the Company's engineering and technology groups.
Mr. Snyder was a founder of FactSet in 1978 and held the position of President
and Chief Technology Officer from 1978 to August 1999. From 1964 to 1977, Mr.
Snyder worked for Faulkner, Dawkins & Sullivan, Inc., eventually becoming
Director of Computer Research, a position he retained with Shearson Hayden
Stone, Inc. after its acquisition of Faulkner, Dawkins & Sullivan, Inc. in 1977.
Mr. Snyder has been a Director of the Company since its formation in 1978. His
current Board term expires in concurrence with the Annual Meeting of
Stockholders for fiscal 2001.
Howard E. Wille, Chairman of the Board of Directors, Chief Executive
Officer, and Director. Mr. Wille, age 71, was a founder of the Company in 1978
and has held his current positions with the Company since that time. From 1966
to 1977, Mr. Wille was a Partner and Director of Research at Faulkner, Dawkins &
Sullivan, Inc., a Wall Street investment firm, and held a managerial position
with Shearson Hayden Stone, Inc. after its acquisition of Faulkner, Dawkins &
Sullivan, Inc. in 1977. He was President and Chief Investment Officer of
Piedmont Advisory Corporation from 1961 to 1966 and, prior to that time served
as a securities analyst, investment manager and investment counselor for several
firms. Mr. Wille has been a Director of the Company since its formation in 1978.
His current Board term expires in concurrence with the Annual Meeting of
Stockholders for fiscal 1999.
The Board has two Committees: the Compensation Committee and the Audit
Committee. The Compensation Committee has two members, Mr. Laird and Mr. Korus.
Its primary function is to assist the Board in fulfilling its oversight
responsibilities to ensure officers and other key executives are compensated in
accordance with the Company's total compensation and organizational objectives.
The Audit Committee has three members: Mr. Connolly, Mr. Mickle, and Mr.
Siebecker. Its primary function is to assist the Board in fulfilling its
oversight responsibilities by reviewing annual financial information provided to
stockholders, monitoring the Company's system of internal controls and
overseeing the external audit process performed by the Company's independent
public accountants.
During fiscal 1999, the Board of Directors met six times and the
Compensation Committee and the Audit Committee met three times. Overall
attendance by Directors at meetings of the Board and its committees on which the
Directors served was 100%.
Howard E. Wille and Charles J. Snyder, as officers of the Company during
fiscal 1999, received no compensation for serving on the Board. Non-employee
Directors receive an annual retainer of $10,000
2
plus 2,000 non-qualified stock options on the date of each annual meeting for
serving on the Board. In addition, non-employee Directors are entitled to $1,000
for attending each meeting of a committee of the Board (or $500 for
participating by telephone). In addition, Committee chairmen receive an annual
fee of $2,500.
Each non-employee Director is entitled to one FactSet password at no
charge. The password provides access to the FactSet system to allow Directors to
use the Company's services. In Fiscal 1999, Veronis and Westcliff, former
employers of Mr. Laird and Mr. Korus, respectively, received services from the
Company for which they were not separately charged. The value of these services
was $55,000 and $51,000 for Veronis and Westcliff, respectively. FactSet does
not have arrangements with any Director to provide FactSet services free of
charge other than the one password allocated to each Director.
Information Regarding Executive Officers
After the end of Fiscal 1999, Michael F. DiChristina was appointed
President of FactSet.
Michael F. DiChristina, President. Mr. DiChristina, age 37, joined the
Company in 1986 as a Software Engineer and has held the position of Director of
Software Engineering for the past nine years. Prior to joining the Company he
was a Software Engineer at Morgan Stanley & Co. Mr. DiChristina received a B. S.
in Electrical Engineering from Massachusetts Institute of Technology.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes that during fiscal 1999, its Executive Officers,
Directors, and beneficial owners of more than 10% of the common stock complied
with Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations adopted thereunder.
Information Regarding Beneficial Ownership of Principal Shareholders,
Directors, and Management
The following table sets forth, as of November 12, 1999, certain
information regarding the beneficial ownership of the Company's Common Stock by
(1) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of the Common Stock, (2) each Director and the named
Executive Officers of the Company, and (3) all Directors and Executive Officers
of the Company as a group.
Beneficial Ownership
of Common Stock Percentage of
Name at November 12, 1999 Common Stock
- -------------------------------------------------------------------------------------------------------------------
Howard E. Wille (1)(2)(3) 3,067,013 19.4 %
Charles J. Snyder (1)(3) 2,853,380 18.0
Ernest S. Wong (1)(3) 20,479 see note (4)
John D. Connolly (1) -- --
David R. Korus (1) -- --
Joseph E. Laird, Jr. (1) -- --
John C. Mickle (1) -- --
Walter F. Siebecker (1) 2,505 see note (4)
FactSet Research Systems Inc. Employee Stock Ownership Plan (1)(3) 1,200,676 7.6
All Directors and Executive Officers of the Company as a group (9 persons) 5,943,377 37.6
- -------------------------------------------------------------------------------------------------------------------
(1) The address for each of these beneficial owners is FactSet Research Systems
Inc., One Greenwich Plaza, Greenwich, CT 06830.
(2) Adelaide P. McManus, Mr. Wille's spouse and the Company's Chief
Administrative Officer, owns 81,561 shares of Common Stock and holds
options to purchase 86,000 shares of Common Stock. Mr. Wille disclaims
beneficial ownership of such shares.
(3) Shares reported for the Employee Stock Ownership Plan ("ESOP") excludes
ESOP shares owned by Mr. Wille (139), Mr. Snyder (49,695) and Mr. Wong
(209). Such shares are included in the number of Common shares beneficially
owned by each named Executive Officer.
(4) Percentage of Common Stock is less than 0.1%.
3
Information Regarding Named Executive Officer Compensation
Cash Compensation. The following table summarizes the compensation earned
by the Company's named Executive Officers for the latest three fiscal years
ended August 31, 1999.
Summary Compensation Table Securities
Underlying
Company
Fiscal Annual Compensation Options/ All Other
Name and Principal Position Year Salary Bonus SAR Grants Comp (1)
- -------------------------------------------------------------------------------------------------------------------
Howard E. Wille, 1999 $300,000 500,000 - $47,691
Chairman and 1998 300,000 400,000 - 47,228
Chief Executive Officer 1997 300,000 300,000 - 54,048
Charles J. Snyder, (2) 1999 300,000 500,000 - 23,373
President and 1998 300,000 400,000 - 18,034
Chief Technology Officer (Retired) 1997 300,000 300,000 - 24,326
Ernest S. Wong, 1999 235,577 142,308 10,000 6,531
Senior Vice President, 1998 212,500 75,000 11,250 7,410
Chief Financial Officer 1997 187,500 50,000 - -
and Secretary
- -------------------------------------------------------------------------------------------------------------------
(1) Represents annual employer contributions to named Executive Officers'
Employee Stock Ownership Plan accounts and annual premiums paid by the
Company on life insurance policies for Mr. Wille and Mr. Snyder.
(2) Mr.Snyder retired from his position as President and Chief Technology
Officer on August 31, 1999. At that time, he became Vice Chairman of the
Board and agreed to continue as a consultant to the Company's Engineering
and Technology groups.
Compensation Pursuant to Stock Options
Stock Option Grants in the Last Fiscal Year. During fiscal 1999, Mr. Wong
was granted stock options to purchase 10,000 shares of the Company's Common
Stock. The options expire ten years from the date of grant and vest at a rate of
20% per year beginning one year after the grant date. The option exercise price
was the fair value of the Company's stock on the date of grant. No other stock
option grants were made to the named Executive Officers in fiscal 1999.
% of Total
Number of Securities Options/SARs Grant Date (1)
Underlying Options/ Granted to Employees Exercise or Expiration Fair
SARs Granted in Fiscal Year Base Price Date Value
Name (#) (%) ($/sh) ($)
- -------------------------------------------------------------------------------------------------------------------
Howard E. Wille - - - - -
Charles J. Snyder - - - - -
Ernest S. Wong 10,000 2.9 $38.8125 3/29/2009 $ 152,300
- -------------------------------------------------------------------------------------------------------------------
(1) The fair value of the option grant is estimated using the Black-Scholes
option-pricing model. Assumptions used by the model were a risk-free
interest rate of 5.2%, an expected option life of 4 years, expected
volatility of 43% and a dividend yield of 0.4%.
4
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Stock
Option Values
The following table provides information on stock option exercises in
fiscal 1999 by the named Executive Officers and the value of such officers'
unexercised stock options at August 31, 1999.
Shares Number of Securities Value of
Acquired Value Underlying Unexercised Unexercised In-the-Money
On Exercise Realized Options/SARs at Fiscal Year-End Options/SARs at Fiscal Year-End
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
Howard E. Wille - - - - - -
Charles J. Snyder - - - - -
Ernest S. Wong (1) 15,000 $670,050 14,945 43,000 $503,264 $1,151,313
- -------------------------------------------------------------------------------------------------------------------
(1) On June 29, 1999, Mr. Wong exercised 15,000 stock options. Mr. Wong paid the aggregate stock option exercise
price through an exchange of 3,035 shares of FactSet Research Systems Inc. Common Stock directly owned by Mr.
Wong.
Report on Executive Compensation
The Compensation Committee (the "Committee") is responsible for
administering the Company's executive compensation policies and practices. The
Committee is composed solely of outside directors and reports regularly to the
Board. Outside directors are not eligible to participate in any of the plans or
programs it administers. In fiscal 1999, the Committee reviewed cash
compensation for the Chairman and the Chief Executive Officer, the President,
and the Chief Technology Officer (the "top two officers") and the Senior Vice
President, Chief Financial Officer, and the Secretary. The Committee also
reviews and approves the aggregate number of options granted to employees to
purchase Common Stock of the Company.
In carrying out its duties, the Committee has direct access to independent
compensation consultants and outside survey data. Compensation for the named
Executive Officers and other key management positions is designed to:
1. Attract, retain, and motivate key personnel.
2. Be competitive with compensation offered for similar positions by other
companies in the technology and financial services industries.
3. Tie a meaningful portion of compensation to the Company's operating and
financial performance through annual bonuses.
4. Link the financial interests of key employees and the Company's
stockholders via stock-based incentives.
Overall, the Company aims to deliver above-average compensation contingent
on achievement of superior levels of Company and individual performance.
Compensation is delivered through three major components, as described below:
Base Salary. Base salaries have been established according to the
experience and qualifications of the individual executives. Generally, base
salaries are intended to be sufficiently competitive to attract and retain key
employees.
The base salary and benefits of the top two officers were based on
employment agreements with the Company. The terms of such agreements are
described in the section entitled "Employment Agreements" below. In fiscal 1999,
the base salary for the two top officers remained at $300,000, and was not
increased. For Fiscal 2000, Mr. Wille's salary has been set at $350,000. For
Fiscal 2000, Mr. DiChristina's salary has been set at $300,000.
Annual Bonus. Annual bonuses have been determined on a discretionary basis
considering a number of factors including the Company's profitability, revenue
growth, achievement of strategic and
5
department goals, individual performances, and competitive market practices. As
discussed below, the Committee determined the bonuses for the top two officers
in fiscal 1999 based on the Company's operational and financial performance and
competitive total compensation levels determined by an independent compensation
consulting firm. In considering competitiveness, the Committee reviewed the
compensation levels for a sample of industry sector companies of similar size
and financial performance to FactSet. This is a more comparable set of companies
than those included in the NASDAQ Computer Index used for the performance graph.
For fiscal 1999, the Committee made a cash bonus award of $500,000 to each
of the top two officers. Such awards were based on 1) recognition of record
revenues ($103.8 million) and earnings per share ($1.11), continued momentum in
international growth (49.1% increase in revenues to $14.9 million), a 28.9%
return on average stockholders' equity, and 2) recognition of a 115% increase in
FactSet's Common Stock price during fiscal 1999.
Stock Options. Stock options are intended to align incentives with
long-term stock performance and act as a motivational and retention tool. Stock
option grants were made in fiscal 1999 to selected key employees based on
individual contribution and potential. Stock option grants have not been made to
the top two officers because of their significant ownership stake in the
Company.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("the
Code"), imposes a limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to named Executive Officers. As such,
compensation paid in fiscal 1999 by the Company is fully tax-deductible. The tax
deductibility of compensation for the named Executive Officers will be preserved
as long as such actions are consistent with the Committee's compensation
policies and objectives and in the best interests of the Company and its
stockholders.
The Committee believes that the fiscal 1999 compensation of the named
executive officers was aligned with the Company's performance and returns to
shareholders and provided a balanced mix between base pay and incentive
compensation.
Compensation Committee
Joseph E. Laird, Jr. David R. Korus
Employment Agreements
The Company has an employment contract with Howard E. Wille, the Company's
Chairman and Chief Executive Officer. Under the agreement, Mr. Wille was to be
employed in his current position for a one-year term ending in 2000. As provided
in the agreement, it was renewed for a one year period in 1999 and continues to
be terminable by the Company or Mr. Wille, on one year's notice. The agreement
provided for annual base salary of $300,000, which was increased to $350,000 for
Fiscal 2000, for Mr. Wille and entitles him to participate in any bonus or
employee benefit plans and arrangements in effect from time to time. In the
event the employment of Mr. Wille is terminated by the Company for reasons other
than their disability or cause, as defined in the agreements, Mr. Wille will be
entitled to receive 1) a lump sum payment of three times the sum of his base
salary and the highest annual bonus paid to him over the prior three calendar
years, 2) three years of continuing participation in the Company's benefit plans
(or, if not possible for any reason, comparable arrangements providing
substantially similar benefits), and 3) in the event such termination of
employment is in connection with a change of control (within the meaning of
Section 280G of the Code) of the Company, reimbursement for any excise taxes
incurred as a result of the termination payments described herein. Also under
the agreements, Mr. Wille agreed has not to engage in certain activities in
competition with the Company, including directly or indirectly owning, managing,
operating, joining, controlling, employment by or participation in or consulting
for any business that is similar to or competes with the Company or its
subsidiaries, during the term of his respective employment with the Company and
for two years thereafter.
Mr. Snyder's employment contract expired in 1999 and he retired as
President and Chief Technology Officer effective August 31, 1999. Previous to
Mr. Snyder's retirement, his employment contract
6
provided for an annual base salary of $300,000 and entitled him to participate
in any bonus or employee benefit plans. He has agreed to remain as a consultant
to the Company's Engineering and Technology groups and was elected Vice Chairman
of the Board of Directors. Upon his retirement, Mr. Snyder entered into a
consulting agreement with the Company effective September 1, 1999, that expires
September 1, 2000. Under terms of the contract 1) Mr. Snyder is paid a monthly
retainer of $10,000 and is reimbursed for all reasonable and necessary expenses
incurred in connection with the services contracted for with the Company; 2) Mr.
Snyder has agreed to keep proprietary information confidential; 3) all
inventions related to the business of the Company in which Mr. Snyder may be
involved and are the sole property of the Company; 4) Mr. Snyder has agreed not
to engage in certain activities in competition with the Company, including
directly or indirectly owning, managing, operating, joining, controlling,
employment by or participation in or consulting for any business that is similar
to or competes with the Company or its subsidiaries or to participate in the
solicitation of any Company employee to leave the employ of the Company; and 5)
Mr. Snyder currently performs consulting services under his consulting agreement
as an "independent contractor" and not as an "employee" of the Company.
The Company has an agreement dated May 8, 1996 with Ernest S. Wong relating
to the terms of his employment. Under the agreement, in the event Mr. Wong is
terminated by the Company at any time for reasons other than good cause, as set
forth in the agreement, the Company will continue to pay his base salary and
standard employee benefits for 12 months following the date of such termination.
In the event Mr. Wong is terminated for any reason within one year following a
change in control of the Company, as defined in the agreement, Mr. Wong will be
entitled to continue receiving his base salary and standard employee benefits
for two years from the date of such termination.
Performance Graph. Comparison of cumulative total return among FactSet
Research Systems Inc., the S&P 500 Index, and the NASDAQ Computer Index.
(Performance Graph Ommitted)
FactSet S&P 500 NASDAQ Computer Index
- --------------------------------------------------------------------------------
June 28, 1996 100 100 100
August 31, 1996 119 97 96
August 31, 1997 161 134 159
August 31, 1998 189 148 166
August 31, 1999 409 205 347
- --------------------------------------------------------------------------------
FactSet began trading on the New York Stock Exchange on June 28, 1996. The
initial public offering price was $11.33 per common share. At August 31, 1999,
the price per common share was $46.3125. At fiscal year-end 1998, 1997, and
1996, the price per common share was $21.50, $18.29, and $13.50, respectively.
FactSet's share prices give retroactive effect to the 3-for-2 stock split that
occurred on February 5, 1999. The stock performance graph assumes an investment
of $100 on June 28, 1996 in FactSet stock and an investment of $100 at that time
in both the S&P 500 Index (assuming dividends are reinvested) and the NASDAQ
Computer Index.
II. ELECTION OF DIRECTORS
Two Directors are to be elected at the Annual Meeting of Stockholders. Each
Director will hold office for a term not exceeding three years or until a
successor is elected and qualified. It is intended that the accompanying proxy
will be voted in favor of the following persons to serve as directors, unless
the stockholder indicates to the contrary on the proxy.
7
Management expects that the nominees will be available for election.
However, if a nominee is not a candidate at the time the election occurs, it is
intended that such proxy will be voted for the election of another nominee to be
designated by the Board to fill any such vacancy. The Board requests that the
stockholders vote in favor of the following nominees to serve a three-year term
expiring in concurrence with the Annual Meeting of Stockholders for fiscal year
2002:
Walter F. Siebecker. Refer to page 2 for Mr. Siebecker's biography and page
4 for information about Mr. Siebecker's stock ownership and compensation.
Howard E. Wille. Refer to page 2 for Mr. Wille's biography and page 4 for
information about Mr. Wille's stock ownership and compensation.
III. RATIFICATION OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board requests that the stockholders ratify its selection of
PricewaterhouseCoopers LLP as independent accountants for the Company for fiscal
2000. If the stockholders do not ratify the selection of PricewaterhouseCoopers
LLP, the Board will select another firm of independent accountants.
Representatives of PricewaterhouseCoopers LLP will be present at the
Meeting and will have an opportunity to make a statement. They will also be
available to respond to appropriate questions.
IV. RATIFICATION OF THE YEAR 2000 EMPLOYEE STOCK OPTION PLAN
The Board requests that the stockholders ratify the adoption of the 2000
Employee Stock Option Plan (the "Plan"). The purpose of the Plan is to secure
for the Company and its stockholders the benefits of the incentives from
increased Common Stock ownership by employees of the Company. The Board will
request ratification of the Plan at the Company's Annual Meeting. FactSet views
the Employee Stock Option Plan as an attractive benefit when recruiting for new
hires as well as a benefit that helps with the retention and morale of current
employees.
Under the Plan, stock options to purchase up to 2,000,000 shares of Common
Stock would be made available to employees of the Company and its subsidiaries
selected by the Compensation Committee. No employee may be granted more than
250,000 options during the term of the Plan. Options granted under the Plan may
be either incentive stock options ("ISOs") within the meaning of section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") or nonqualified
options ("NQSOs"). Options expire not more than ten years from the date of
grant. The option exercise price equals the fair market value of the Company's
stock on the date the option is granted. Options are non-transferable or
assignable other than by will or law of descent and distribution; provided,
however, that with the approval of the Compensation Committee, NQSOs may be
transferred to immediate family members or to a trust for the benefit of such
family members. The exercise price may be paid in cash or with previously
acquired shares of Common Stock and may be affected in whole or in part with
funds (i) received from the Company as a compensatory cash payment, or (ii)
borrowed from the Company. Vesting terms of option grants are determined by the
Compensation Committee. Historically, under the 1996 Stock Option Plan, the
vesting rate has been 20% per year beginning one year after the grant date
(i.e., over a five year period) and it is anticipated but not required that this
schedule will continue to be applied.
Each employee will be required to agree to pay the Company or make
arrangements to satisfy tax obligations, including withholding taxes, arising
from the exercise of a nonqualified stock option or disposition of an ISO.
Unless sooner terminated by the Board, the Plan will cease on January 1, 2010.
The Committee shall equitably adjust the aggregate number of shares of
Common Stock authorized under the Plan, the individual aggregate limit, the
numbers of shares subject to an outstanding option and the applicable exercise
price to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger consolidation, asset spin-off,
reorganization, or similar event of or by the Company.
8
No options have yet been awarded under the Plan nor are the value of such
options to be awarded determinable. The number of options awarded under the 1996
Stock Option Plan during fiscal 1999 to named executive officers is shown in the
chart entitled "Compensation Pursuant to Stock Options" on page 4.
Option Plan Summary. The foregoing is a summary of the terms and features of the
Plan and is qualified by reference to the Plan itself. The Plan is printed in
its entirety as Appendix A hereto. The following brief description of the tax
consequences of options under the Plan is based on Federal tax laws currently in
effect and does not purport to be a complete description of such Federal tax
consequences.
Options. There are no Federal tax consequences either to the optionee or to the
Company upon the grant of an ISO or NQSO. On the exercise of an ISO, the
optionee will not recognize any income and the Company will not be entitled to a
tax deduction, although such exercise may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of the grant or
one year of the date of exercise, the optionee will recognize ordinary income,
and the Company will be entitled to a tax deduction, equal to the excess of the
fair market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain, and any
loss, will be treated as a capital gain or loss to the optionee. If the shares
are disposed of after the foregoing holding requirements are met, the Company
will not be entitled to any tax deduction, and the entire gain or loss for the
optionee will be treated as a capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable to
the optionee as ordinary income and is tax deductible by the Company. The
disposition of shares acquired upon exercise of an NQSO will generally result in
a capital gain or loss for the optionee, but will have no tax consequences for
the Company.
Generally, the Company's tax deduction for all compensation paid to
specified officers in any one year is limited to $1,000,000. It is anticipated
that the Company's deduction arising from an officer's exercise of an NQSO (or
the sale of the underlying stock acquired through the exercise of an ISO before
the required holding periods are met) will be exempt from this limitation as
certain outside director and shareholder approval requirements will be met.
For the reasons stated herein, the Board of Directors recommends that the
stockholders vote FOR this proposal.
V. SOLICITATION OF PROXIES
The Board solicits the proxy accompanying this Proxy Statement. Officers,
directors, and regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their services, may solicit
proxies. Such solicitations may be made personally, or by mail, facsimile,
telephone, telegraph, or messenger. The Company will reimburse persons holding
shares of Common Stock in their names or in the names of nominees, but not
owning such shares beneficially, such as brokerage houses, banks, and other
fiduciaries, for the expense of forwarding solicitation materials to their
principals. The Company will pay all of the costs of solicitation of proxies.
VI. VOTE TABULATION
Vote Required. Under the Delaware General Corporation Law, the election of
the Company's Directors requires a plurality of the votes represented in person
or by proxy at the Meeting and the ratification of the selection of accountants
requires that the votes in favor exceed the votes against. The Bank of New York
will tabulate votes cast by proxy or in person at the Meeting.
9
Effect of an Abstention and Broker Non-Votes. A stockholder who abstains
from voting on any or all proposals will be included in the number of
stockholders present at the Meeting for the purposes of determining the presence
of a quorum. Abstentions will not be counted either in favor of or against the
election of the nominees or other proposals. Under the rules of the National
Association of Securities Dealers, brokers holding stock for the accounts of
their clients who have not been given specific voting instructions as to a
matter by their clients may vote their clients' proxies at their own discretion.
VII. PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the fiscal year 2001
Annual Meeting of Stockholders must be received by us, attention: Mr. Ernest S.
Wong, the Company's Secretary, at our principal executive offices, no later than
August 1, 2000, to be included in the Company's Proxy Statement.
VIII. OTHER MATTERS
The Board does not intend to bring any other business before the Meeting,
and so far as is known to the Board, no matters are to be brought before the
Meeting except as specified in the notice of the Meeting. However, as to any
other business, which may properly come before the Meeting, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
[GRAPHIC OMITTED]
Ernest S. Wong
Secretary
Greenwich, Connecticut, November 23, 1999
A COPY OF THE COMPANY'S FORM 10-K REPORT FOR FISCAL
1999, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY
BE OBTAINED OVER THE INTERNET AT WWW.FACTSET.COM OR BY CONTACTING:
INVESTOR RELATIONS
FACTSET RESEARCH SYSTEMS INC.
ONE GREENWICH PLAZA
GREENWICH, CONNECTICUT 06830
203.863.1500
10
APPENDIX A
TABLE OF CONTENTS
ARTICLE I. Purpose..........................................................3
ARTICLE II. Definiton........................................................3
ARTICLE III. Scope of the Plan................................................5
ARTICLE IV. Administration...................................................5
SECTION 4.01. Administrative Committee.........................................5
SECTION 4.02. Authority of the Committee.......................................5
ARTICLE V. Eligibility......................................................5
ARTICLE VI. Grant of Options.................................................6
SECTION 6.01. General Conditions...............................................6
SECTION 6.02. Option Price.....................................................6
SECTION 6.03. Grant of Incentive Stock Options.................................6
SECTION 6.04. Nontransferability...............................................7
ARTICLE VII. Exercise of Options..............................................7
SECTION 7.01. Exercise of Options..............................................7
SECTION 7.02. Payment of Option Price..........................................7
SECTION 7.03. Tax Withholding..................................................7
SECTION 7.04. Effects of a Change of Control...................................8
SECTION 7.05. Termination of Employment........................................8
SECTION 7.06. Noncompetition and Nonsolicitation...............................9
ARTICLE VIII. Miscellaneous....................................................9
SECTION 8.01. Substituted Options..............................................9
SECTION 8.02. Securities Law Matters...........................................9
SECTION 8.03. Funding.........................................................10
SECTION 8.04. No Employment Rights............................................10
SECTION 8.05. Rights as a Stockholder.........................................10
SECTION 8.06. Nature of Payments..............................................10
SECTION 8.07. Nonuniform Determinations.......................................10
SECTION 8.08. Adjustments.....................................................10
SECTION 8.09. Amendment of the Plan...........................................10
SECTION 8.10. Termination of the Plan.........................................11
SECTION 8.11. No Illegal Transactions.........................................11
SECTION 8.12. Severability....................................................11
SECTION 8.13. Headings........................................................11
SECTION 8.14. Number and Gender...............................................11
SECTION 8.15. Controlling Law.................................................11
1
FACTSET RESEARCH SYSTEMS INC.
2000 STOCK OPTION PLAN
FactSet Research Systems Inc. (the "Company") hereby establishes the
FactSet Research Systems Inc. 2000 Stock Option Plan (the "Plan") effective
January 1, 2000, subject to the approval of the Plan by the holders of a
majority of the shares of the tock present in person or by proxy and voting at a
duly called meeting of the stockholders of the Company.
ARTICLE I. PURPOSE
The primary purpose of the Plan is to provide a means by which key
employees of the Company and its Subsidiaries (as defined herein) can acquire
and maintain stock ownership, thereby strengthening their commitment to the
success of the Company and its Subsidiaries and their desire to remain employed
by the Company and its Subsidiaries. The Plan also is intended to attract,
employ, and retain key employees and to provide such employees with additional
incentive and reward opportunities designed to encourage them to enhance the
profitable growth of the Company and its Subsidiaries.
ARTICLE II. DEFINITIONS
The following words and phrases, when used herein, unless their context
clearly indicates otherwise, shall have the following respective meanings:
"Board" means the board of directors of the Company.
"Cause" means discharge of a Grantee (i) on account of fraud, embezzlement
or other unlawful or tortious conduct, whether or not involving or against the
Company or any Subsidiary or affiliate, (ii) for willful violation of a policy
of the Company or any Subsidiary or affiliate, (iii) for serious and wilful acts
of misconduct detrimental to the business or reputation of the Company or any
Subsidiary or affiliate or (iv) for "cause" or any like term as defined in any
written employment contract with the Grantee. The determination of whether a
discharge of a Grantee is for cause shall be determined in good faith by the
Committee whose decision shall be final and binding.
"Change of Control" means that either of the following events shall have
occurred: (a) a person, partnership, joint venture, corporation or other entity,
or two or more of any of the foregoing acting as a group (or a "person" within
the meaning of Section 13(d)(3) of the 1934 Act, other than the Company, a
Subsidiary, or an employee benefit plan (or related trust) of the Company or a
Subsidiary, become(s) the "beneficial owner" (as defined in Rule 13(d)(3) under
the 1934 Act) of 20% or more of the then-outstanding voting stock of the
Company; (b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board (together with any new director
whose election by the Board or whose nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors then in office; (c) all
or substantially all of the business of the Company is disposed of pursuant to a
merger, consolidation or other transaction in which the Company is not the
surviving corporation or the Company combines with another company and is the
surviving corporation (unless the shareholders of the Company immediately
following such merger, consolidation, combination, or other transaction
beneficially own, directly or indirectly, more than 50% of the aggregate voting
stock or other ownership interests of (x) the entity or entities, if any, that
succeed to the business of the Company or (y) the combined company); or (d) the
shareholders of the Company approve a sale of all or substantially all of the
assets of the Company or a liquidation or dissolution of the Company.
"Committee" means the committee of the Board appointed pursuant to
Section 4.01.
"Company" means FactSet Research Systems Inc., a Delaware corporation.
3
"Disability" means a disability of a nature that would qualify the Grantee
for long-term benefits under the Company's long-term disability plan.
"Effective Date" means January 1, 2000.
"Fair Market Value" of any share of Stock, as of any applicable date, means
(i) if shares of Stock are then listed on a national securities exchange, the
"fair market value" shall be the closing price for a share of Stock on such
exchange on the date in question, or, if there has been no sale of such security
on that date, the closing price for a share of Stock on such exchange on the
last preceding business day on which such security was traded; or (ii) if shares
of Stock are then not listed on a national securities exchange, the "fair market
value" shall be the mean of the bid and asked prices for a share of Stock in the
over the counter market as reported in the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") on that date, or, if there be no
such quotation on that date, such prices on the last preceding business day on
which there was such a quotation.
"Grant Date" means the date of grant of an Option determined in accordance
with Section 6.01(a).
"Grantee" means an individual who has been granted an Option.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and any succeeding Internal Revenue Code, and references to sections
herein shall be deemed to include any such section as amended, modified or
renumbered.
"1934 Act" means the Securities and Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Option" means any incentive stock option or nonqualified stock option
granted under the Plan.
"Option Agreement" has the meaning specified in Section 4.02(e).
"Option Price" means the per share purchase price of Stock subject to an
Option.
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the employer corporation if, at the time of
granting an option, each of the corporations other than the employer corporation
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"Plan" means the FactSet Research Systems Inc. 2000 Stock Option Plan as
set forth herein and as it may from time to time be amended.
"SEC" means the Securities and Exchange Commission.
"Section 16 Grantee" means a person subject to potential liability under
Section 16(b) of the 1934 Act with respect to transactions involving equity
securities of the Company.
"Stock" means the Common Stock of the Company, par value $0.01 per share.
"Subsidiary" means a corporation as defined in Section 424(f) of the
Internal Revenue Code with the Company being treated as the employer corporation
for purposes of this definition.
"10% Owner" means a person who owns stock (including stock treated as owned
under Section 424(d) of the Internal Revenue Code) possessing more than 10% of
the total combined voting power of all classes of stock of the Company.
"Termination of Employment" occurs on the last day an individual is
employed by the Company or any of its Subsidiaries or any Parent;
notwithstanding the foregoing, for an individual who is an employee of a
Subsidiary, the individual shall be deemed to have a Termination of Employment
on the last day on which the Company owns voting securities possessing at least
50% of the aggregate voting power of such Subsidiary's outstanding voting
securities.
4
ARTICLE III. SCOPE OF THE PLAN
An aggregate of 2,000,000 shares of Stock is hereby made available and is
reserved for delivery on account of the exercise of Options. In no event shall
any employee be granted more than 250,000 Options in the aggregate (including,
for this purpose, any Options granted hereunder which are subsequently canceled
for any reason) during the term of this Plan (as determined under Section 8.10).
Subject to the foregoing limit, shares of Stock held as treasury shares may be
used for or in connection with Options. If and to the extent an Option shall
expire or terminate for any reason without having been exercised in full, or
shall be forfeited, the shares of Stock associated with such Option shall become
available for other Options.
ARTICLE IV. ADMINISTRATION
SECTION 4.01. Administrative Committee. The Plan shall be administered by
the Compensation Committee (the "Committee") of the Board, which shall consist
of not less than two persons who are directors of the Company, each of whom
shall qualify as (i) an "outside director" within the meaning of Section 162(m)
of the Internal Revenue Code and (ii) a "non-employee director" within the
meaning of Rule 16b-3 promulgated under Section 16(b) of the 1934 Act, or, (iii)
if there are less than two persons who so qualify, then the Committee shall
consist of all the directors serving on the Board.
SECTION 4.02. Authority of the Committee. The Committee shall have full and
final authority, in its discretion, but subject to the express provisions of the
Plan, as follows:
(a) to grant Options;
(b) to determine (1) when Options may be granted and (2) whether or not
specific Options will be incentive stock options or nonqualified stock
options;
(c) to interpret the Plan and to make all determinations necessary or
advisable for the administration of the Plan;
(d) to prescribe, amend, and rescind rules relating to the Plan;
(e) to determine, subject to the terms of the Plan, the terms and
provisions of the written agreements by which all Options shall be granted
("Option Agreements") and, with the consent of the Grantee, to modify any
such Option Agreement at any time; and
(f) to impose such additional conditions, restrictions, and limitations
upon the grant, exercise or retention of Options as the Committee may,
before or concurrently with the grant thereof, deem appropriate.
The determination of the Committee on all matters relating to the Plan or
any Option or Option Agreement shall be conclusive and final. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.
ARTICLE V. ELIGIBILITY
Options may be granted to any employee of the Company or its Subsidiaries.
In selecting the individuals to whom Options may be granted, in determining the
number of shares of Stock subject to each Option, and in determining the other
terms and conditions applicable to each Option, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan.
5
ARTICLE VI. GRANT OF OPTIONS
SECTION 6.01. General Conditions.
(a) The Grant Date of an Option shall be the date on which the Committee
grants the Option or such later date as specified in advance by the
Committee.
(b) The term of each Option shall be a period of not more than 10 years
from the Grant Date, and shall be subject to earlier termination as herein
provided.
(c) A Grantee may, if otherwise eligible, be granted additional Options.
(d) No Option may be granted more than 10 years from the earlier of the
date the Plan is adopted or the date the Plan is approved by the
Stockholders of the Company.
SECTION 6.02. Option Price. No later than the Grant Date of any Option, the
Committee shall determine the Option Price of such Option. Subject to
Section 6.03 with respect to incentive stock options, the Option Price of an
Option shall be at such price (which may not be less than 100% of the Fair
Market Value of the Stock on the Grant Date), as the Committee, in its
discretion, shall determine.
SECTION 6.03. Grant of Incentive Stock Options. At the time of the grant of
any Option, the Committee may designate that such Option shall be made subject
to additional restrictions to permit it to qualify as an incentive stock option
under the requirements of Section 422 of the Internal Revenue Code. Any Option
designated as an incentive stock option:
(a) shall have an Option Price of (1) not less than 100% of the Fair Market
Value of the Stock on the Grant Date or (2) in the case of a 10% Owner, not less
than 110% of the Fair Market Value of the Stock on the Grant Date;
(b) shall be for a period of not more than 10 years (5 years, in the case
of a 10% Owner) from the Grant Date, and shall be subject to earlier termination
as provided herein or in the applicable Option Agreement;
(c) shall not have an aggregate Fair Market Value (determined for each
incentive stock option at its Grant Date) of Stock with respect to which
incentive stock options are exercisable for the first time by such Grantee
during any calendar year (under the Plan and any other employee stock option
plan of the Grantee's employer or any Parent or Subsidiary thereof ("Other
Plans")), determined in accordance with the provisions of Section 22 of the
Internal Revenue Code, which exceeds $100,000 (the "$100,000 Limit");
(d) shall, if the aggregate Fair Market Value of Stock (determined on the
Grant Date) with respect to all incentive stock options previously granted under
the Plan and any Other Plans ("Prior Grants") and any incentive stock options
under such grant (the "Current Grant") which are exercisable for the first time
during any calendar year would exceed the $100,000 Limit, be exercisable as a
separate nonqualified stock option at such date or dates as are provided in the
Current Grant;
(e) shall be granted within 10 years from the earlier of the date the Plan
is adopted or the date the Plan is approved by the stockholders of the Company;
and
(f) shall require the Grantee to notify the Committee of any disposition of
any Stock issued pursuant to the exercise of the incentive stock option within
two years of the date of grant or within one year of the date of exercise
(except in the event of the death of the Grantee), within 10 days of such
disposition.
Notwithstanding the foregoing and Section 4.02(e), the Committee may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an incentive stock option), take any action necessary to prevent
such Option from being treated as an incentive stock option.
6
SECTION 6.04. Nontransferability. Unless the Committee shall otherwise
determine, each Option granted hereunder shall by its terms not be assignable or
transferable other than by will or the laws of descent and distribution and may
be exercised, during the Grantor's lifetime, only by the Grantee. With the
approval of the Committee, an option may be transferred by gift to any member of
the Grantee's immediate family or to a trust for the benefit of one or more such
immediate family members. For purposes of this Section 6.04, "immediate family"
shall mean the Grantee's spouse, children and grandchildren, parents,
grandparents, former spouses, siblings, nieces, nephews, parents-in-law,
sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, including
adoptive or step relationships and any person sharing the employee's household
(other than as a tenant or employee).
ARTICLE VII. EXERCISE OF OPTIONS
SECTION 7.01. Exercise of Options. Subject to Sections 4.02(f), 7.04 and
7.05 and such terms and conditions as the Committee may impose, each Option
shall be exercisable in such manner as the Committee, in its discretion, shall
determine as set forth in the Option Agreement. Each Option shall be exercised
by delivery to the Company of a written notice of intent to purchase (in such
form as prepared by the Committee) a specific number of shares of Stock subject
to the Option. The Option Price of any shares of Stock shall be paid in full at
the time of the exercise.
SECTION 7.02. Payment of Option Price. In the discretion of the Committee,
a Grantee may pay the Option Price payable upon the exercise of an Option in
cash, previously acquired Stock valued at its Fair Market Value on the business
day next preceding the date of exercise, or any combination thereof, and may be
affected in whole or in part (a) with monies received from the Company at the
time of exercise as a compensatory cash payment, or (b) with monies borrowed
from the Company pursuant to repayment terms and conditions as shall be
determined from time to time by the Committee, in its discretion, separately
with respect to each exercise of options and each Grantee; provided, however,
that each such method and time for payment and each such borrowing and terms and
conditions of repayment shall be permitted by and be in compliance with
applicable law; and provided, further, in the event the Option Price is paid
with monies borrowed from the Company, such fact shall be noted conspicuously on
the certificate for such shares in accordance with applicable law. Payments in
Stock shall be made by delivery of (i) stock certificates in negotiable form or
(ii) a completed attestation form prescribed by the Company setting forth the
whole shares of Stock owned by the holder which the holder wishes to utilize to
satisfy the exercise price. If certificates representing Stock are used to pay
all or part of the purchase price of an Option, a separate certificate shall be
delivered by the Company representing the same number of shares as each
certificate so used, and an additional certificate shall be delivered
representing the additional shares to which the holder of the Option is entitled
as a result of the exercise of the Option. No previously acquired Stock may be
used by a Grantee unless such shares were acquired in the open market or have
been held by the Grantee for at least six months.
SECTION 7.03. Tax Withholding.
(a) Mandatory Tax Withholding.
(1) Whenever under the Plan, shares of Stock are to be delivered to an
individual who is either a U.S. citizen or is otherwise subject to U.S. Federal
Income Taxes upon exercise of an Option that is a non-qualified stock option,
the Company shall be entitled to require as a condition of delivery (i) that the
Grantee remit an amount sufficient to satisfy all federal, state, and local
withholding tax requirements related thereto, (ii) the withholding of such sums
from compensation otherwise due to the Grantee or from any shares of Stock due
to the Grantee under the Plan, or (iii) any combination of the foregoing; or
(2) If any disqualifying disposition described in Section 6.03(f) is made
with respect to shares of Stock acquired under an incentive stock option granted
pursuant to the Plan, then the person making such disqualifying disposition
shall remit to the Company an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Company shall have the right to withhold such
sums from compensation otherwise due to the Grantee or from any shares of Stock
due to the Grantee under the Plan.
7
(b) Elective Share Withholding.
(1) Subject to Section 7.03(b)(2), a Grantee may elect the withholding
("Share Withholding") by the Company of a portion of the shares of Stock
otherwise deliverable to such Grantee upon the exercise of an Option ("Taxable
Event") having a Fair Market Value equal to the minimum amount necessary to
satisfy required federal, state, or local withholding tax liability attributable
to the Taxable Event.
(2) Each Share Withholding election by a Grantee shall be subject to the
following restrictions:
(i) any Grantee's election shall be subject to the Committee's right to
revoke such election of Share Withholding by such Grantee at any time before the
Grantee's election if the Committee has reserved the right to do so in the
Option Agreement;
(ii) if the Grantee is a Section 16 Grantee, such Grantee's election shall
be subject to the disapproval of the Committee at any time, whether or not the
Committee has reserved the right to do so;
(iii) the Grantee's election must be made before the date (the "Tax Date")
on which the amount of tax to be withheld is determined; and
(iv) the Grantee's election shall be irrevocable.
SECTION 7.04. Effects of a Change of Control. Notwithstanding any other
provisions of the Plan or any Option Agreement, upon the occurrence of a Change
of Control, (i) all Options granted under the Plan to a Grantee which have not
been exercised or which have not expired by their terms shall immediately be
fully exercisable for the remainder of their respective terms and (ii) the
Committee may, in its sole discretion, determine that such Options be
immediately terminated in which case the Grantee will be paid an amount in cash
(subject to any applicable withholding taxes) in respect of each Option equal to
the difference between the Fair Market Value of a share of Stock and the Option
Price of such Option.
SECTION 7.05. Termination of Employment.
(a) Termination for Cause. If the Grantee has a Termination of Employment
for Cause, any unexercised Option shall terminate immediately upon the Grantee's
Termination of Employment.
(b) Termination other than for Cause. If the Grantee has a Termination of
Employment for any reason other than Cause, then any unexercised Option, to the
extent exercisable on the date of the Grantee's Termination of Employment, may
be exercised as follows:
(i) Death. If the Grantee's Termination of Employment is caused by the
death of the Grantee, then any unexercised Option to the extent exercisable on
the date of the Grantee's death, may be exercised in whole or in part, at any
time within one year after the Grantee's death by the Grantee's personal
representative or by the person to whom the Option is transferred by will or the
applicable laws of descent and distribution, but in no event beyond the
scheduled expiration of the Option;
(ii) Disability. If the Grantee's Termination of Employment is on account
of the Disability of the Grantee, then any unexercised Option to the extent
exercisable at the date of such Termination of Employment, may be exercised, in
whole or in part, at any time within one year after the date of such Termination
of Employment; provided, however, that, if the Grantee dies after such
Termination of Employment and before the end of such one year period, such
Option may be exercised by the deceased Grantee's personal representative or by
the person to whom the Option is transferred by will or the applicable laws of
descent and distribution within one year after the Grantee's Termination of
Employment, or, if later, within 180 days after the Grantee's death, but in no
event beyond the scheduled expiration of the Option; and
(iii) Other. If the Grantee's Termination of Employment is for any reason
other than Cause, death or Disability, then any unexercised Option, to the
extent exercisable at the date of such Termination of Employment, may be
exercised, in whole or in part, at any time within three months after such
Termination of Employment; provided, however, that if the Grantee dies within
such three-month period following such termination of Employment, such Option
may be exercised by the deceased
8
Grantee's personal representative or by the person to whom the Option is
transferred by will or the applicable laws of descent and distribution within
180 days of the Grantee's death, but in no event beyond the scheduled expiration
of the Option.
SECTION 7.06. Noncompetition and Nonsolicitation. During the period of the
Grantee's employment and for two years thereafter, the Grantee shall not,
directly or indirectly, (a) own, manage, operate, join or control, be employed
by or participate in the ownership, management, operation or control of, or be a
consultant to or connected in any other manner with, any business, firm or
corporation which is similar to or competes with a principal business of the
Company or its Subsidiaries (a "Competitive Activity") or (b) for himself or any
person or business entity, induce or attempt to induce any employee of the
Company or a Subsidiary to terminate employment with the Company or a Subsidiary
or solicit, entice, take away or employ any person employed by the Company or a
Subsidiary ("Solicitation"). For these purposes, the Grantee's ownership of
securities of a public company not in excess of one percent of any class of such
securities shall not be considered to be competition with the Company or its
Subsidiaries. If the Grantee shall engage in a Competitive Activity or
Solicitation, as determined by the Committee in good faith (a) all Options then
held by the Grantee shall expire as of the date that the Grantee first engaged
in such Competitive Activity or Solicitation, (b) the Company shall have the
right to acquire any shares of Stock then owned by the Grantee as the result of
the exercise of an Option at a price equal to the lesser of (i) the Fair Market
Value of such shares or (ii) the aggregate Option Price paid there for by the
Grantee, and (c) the Company shall have the right to require the Grantee to
return to the Company any other gain (whether or not realized) the Grantee had
on the exercise of any Options granted under this Stock Option Plan (that is,
the amount by which, at the time of the exercise of any Option, the Fair Market
Value of the shares to be received was greater than the aggregate Option Price
paid therefor by the Grantee).
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Substituted Options. If the Committee cancels any Option
granted under this Plan, or any plan of any entity acquired by the Company or
any of its Subsidiaries), and a new Option is substituted there-for, then the
Committee may, in its discretion, determine the terms and conditions of such new
Option and may, in its discretion, provided that the grant date of the canceled
option shall be the date used to determine the earliest date or dates for
exercising the new substituted Option under Section 7.01 hereof so that the
Grantee may exercise the substituted Option at the same time as if the Grantee
had held the substituted Option since the grant date of the canceled option;
provided that no Option shall be canceled without the consent of the Grantee if
the terms and conditions of the new Option to be substituted are not at least as
favorable as the terms and conditions of the Option to be canceled.
SECTION 8.02. Securities Law Matters.
(a) If the Committee deems it necessary to comply with the 1933 Act and
there is not in effect a registration statement under the 1933 Act relating to
the shares to be acquired pursuant to the Option, the Committee may require a
written investment intent representation by the Grantee and may require that a
restrictive legend be affixed to certificates for shares of Stock.
(b) If based upon the opinion of counsel for the Company, the Committee
determines that the exercise or nonforfeitability of, or delivery of benefits
pursuant to, any Option would violate any applicable provision of (1) federal or
state securities law or (2) the listing requirements of any securities exchange
on which are listed any of the Company's equity securities, then the Committee
may postpone any such exercise, nonforfeitability or delivery, as the case may
be, but the Company shall use its best efforts to cause such exercise,
nonforfeitability or delivery to comply with all such provisions at the earliest
practicable date. The Committee's authority under this Section 8.02(b) shall
expire on the date of any Change of Control.
9
SECTION 8.03. Funding. Benefits payable under the Plan to any person shall
be paid directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for, benefits under the Plan.
SECTION 8.04. No Employment Rights. Neither the establishment of the Plan
nor the granting of any Option shall be construed to (i)give any Grantee the
right to remain employed by the Company or any of its Subsidiaries or to any
benefits not specifically provided by the Plan or (ii) in any manner modify the
right of the Company or any of its Subsidiaries to modify, amend, or terminate
any of its employee benefit plans.
SECTION 8.05. Rights as a Stockholder. A Grantee shall not, by reason of
any Option have any right as a stockholder of the Company with respect to the
shares of Stock which may be deliverable upon exercise of such Option until such
shares have been delivered to him. As a condition of exercise, a Grantee will be
required to execute a stockholder agreement if any such agreement is then in
effect with respect to the Stock.
SECTION 8.06. Nature of Payments. Any and all grants or deliveries of
shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (i) any pension, retirement, profit
sharing, bonus, life insurance or other employee benefit plan of the Company or
any of its Subsidiaries or (ii) any agreement between the Company or any
Subsidiary, on the one hand, and the Grantee, on the other hand, except as such
plan or agreement shall otherwise expressly provide.
SECTION 8.07. Nonuniform Determinations. Neither the Committee's nor the
Board's determinations under the Plan need be uniform and may be made by the
Committee or the Board selectively among persons who receive, or are eligible to
receive, Options (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be entitled, among
other things, to make non-uniform and selective determinations and to enter into
non-uniform and selective Option Agreements as to (a) the identity of the
Grantees, (b) the terms and provisions of Options, and (c) the treatment, under
Section 7.05, of Terminations of Employment. Notwithstanding the foregoing, the
Committee's interpretation of Plan provisions shall be uniform as to similarly
situated Grantees.
SECTION 8.08. Adjustments.
(a) The Committee shall make equitable adjustment of:
(i) the aggregate numbers of shares of Stock available under Article III;
(ii) the number of shares of Stock covered by an Option; and
(iii) the Option Price of any Option;
to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, asset spinoff,
reorganization, or similar event, of or by the Company.
(b) In the event of a change in the Stock as presently constituted, the
shares resulting from any such charge shall be deemed to be the Stock within the
meaning of the Plan.
(c) Any adjustment made by the Committee pursuant to this Section 8.08
shall be final, binding and conclusive. Any fractional shares resulting from
such adjustment shall be eliminated.
SECTION 8.09. Amendment of the Plan. The Board may from time to time in its
discretion amend or modify the Plan without the approval of the stockholders of
the Company, except as such stockholder approval may be required (a) to permit
transactions in Stock pursuant to the Plan to be exempt from liability under
Section 16(b) of the 1934 Act or (b) under the listing requirements of any
securities exchange on which are listed any of the Company's equity securities.
10
SECTION 8.10. Termination of the Plan. The Plan shall terminate on the
tenth anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect any
Option or Option Agreement then outstanding under the Plan.
SECTION 8.11. No Illegal Transactions. The Plan and all Options granted
pursuant to it are subject to all laws and regulations of any governmental
authority which may be applicable thereto; and notwithstanding any provision of
the Plan or any Option, Grantees shall not be entitled to exercise Options or
receive the benefits thereof and the Company shall not be obligated to deliver
any Stock or pay any benefits to a Grantee if such exercise, delivery, receipt
or payment of benefits would constitute a violation by the Grantee or the
Company of any provision of any such law or regulation.
SECTION 8.12. Severability. If all or any part of the Plan is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity shall not serve to invalidate any portion of the Plan not declared
to be unlawful or invalid. Any Section or part of a Section so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.
SECTION 8.13. Headings. The headings of Articles and Sections are included
solely for convenience of reference, and if there is any conflict between such
headings and the text of this Plan, the text shall control.
SECTION 8.14. Number and Gender. When appropriate the singular as used in
this Plan shall include the plural and vice versa, and the masculine shall
include the feminine.
SECTION 8.15. Controlling Law. The laws of the State of Connecticut, except
its laws with respect to choice of laws, shall be controlling in all matters
relating to the Plan.
11