-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NW9vLyqDQzpo7vJLAp7gq8vnjiiggwvhoX0+pCO36sCjyqoG4bpz63y8JnOwh4pt WZI0XiMCEb1bZNg5RmZn5Q== 0000950129-96-000879.txt : 19960517 0000950129-96-000879.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950129-96-000879 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANIEL INDUSTRIES INC CENTRAL INDEX KEY: 0000026821 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 741547355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06098 FILM NUMBER: 96565603 BUSINESS ADDRESS: STREET 1: 9753 PINE LAKE DR CITY: HOUSTON STATE: TX ZIP: 77055 BUSINESS PHONE: 7134676000 MAIL ADDRESS: STREET 1: 9753 PINE LAKE DRIVE CITY: HOUSTON STATE: TX ZIP: 77055 10-Q 1 DANIEL INDUSTRIES - FORM 10-Q - 3/31/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ____________________ Commission File Number 1-6098 DANIEL INDUSTRIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 74-1547355 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 9753 Pine Lake Drive, Houston, Texas 77055 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) 713-467-6000 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 _________ On May 3, 1996, there were outstanding 12,103,506 shares of Common Stock, $1.25 par value, of the registrant. 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. DANIEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET (In thousands of dollars, except per share data and number of shares) (Unaudited)
March 31, September 30, 1996 1995 ------------ ------------- ASSETS Current assets: Cash and cash equivalents $ 4,573 $ 3,895 Receivables, net of reserve of $310 and $98 35,845 34,807 Costs in excess 3,581 941 Inventories 41,398 35,889 Deferred taxes on income 8,139 7,982 Net assets held for sale 22,838 Other 6,341 2,427 ----------- --------- Total current assets 99,877 108,779 Property, plant and equipment at cost, net 51,782 52,677 Other assets 13,069 3,012 ---------- --------- $ 164,728 $ 164,468 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 10,200 $ 10,000 Current maturities of long-term debt 2,857 2,857 Accounts payable 10,538 11,702 Accrued expenses 16,937 18,834 ---------- ---------- Total current liabilities 40,532 43,393 Long-term debt 5,715 8,572 Deferred taxes on income 6,693 3,183 ---------- ---------- Total liabilities 52,940 55,148 ---------- ---------- Stockholders' equity: Preferred stock, $1.00 par value, 1,000,000 shares authorized, 150,000 shares designated as Series A junior participating preferred stock, no shares issued or outstanding Common stock, $1.25 par value, 20,000,000 shares authorized, 12,103,506 and 12,083,485 shares issued 15,129 15,104 Capital in excess of par value 90,498 90,247 Translation component (1,975) (295) Retained earnings 8,136 4,264 ---------- ---------- Total stockholders' equity 111,788 109,320 ---------- ---------- $ 164,728 $ 164,468 ========== ==========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 3 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS (In thousands of dollars, except per share data and number of shares) (Unaudited)
Quarter Ended March 31, Six Months Ended March 31, ---------------------------- -------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Revenues $ 42,500 $ 38,737 $ 83,138 $ 81,035 ---------- ---------- ---------- ---------- Costs and expenses: Cost of sales 24,608 27,460 48,451 53,679 Depreciation and amortization 1,615 1,950 3,360 4,184 Selling and administrative expenses 10,809 10,405 21,391 22,067 Research and develop- ment expenses 348 750 731 1,544 Unusual items 12,330 12,330 Interest expense 436 502 907 1,027 ---------- ---------- ---------- ---------- Total expenses 37,816 53,397 74,840 94,831 ---------- ---------- ---------- ---------- Income (loss) before income tax expense (benefit) 4,684 (14,660) 8,298 (13,796) Income tax expense (benefit) 1,898 (4,955) 3,337 (4,692) ---------- ---------- ---------- ---------- Net income (loss) $ 2,786 $ (9,705) $ 4,961 $ (9,104) ========== ========== ========== ========== Earnings (loss) per common share $ .23 $ (.81) $ .41 $ (.76) ========== ========== ========== ========== Cash dividends per common share $ .045 $ .045 $ .09 $ .09 ========== ========== ========== ========== Average number of shares outstanding 12,090,745 12,033,377 12,087,095 12,032,918 ========== ========== ========== ==========
See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 4 DANIEL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Condensed) (Unaudited)
Six Months Ended March 31, --------------------------------- 1996 1995 ---------- ---------- (in thousands) Cash flows from operating activities: Net income (loss) $ 4,961 $ (9,104) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Non-cash portion of restructurings and other items 11,124 Depreciation and amortization 3,360 4,184 Changes in operating assets and liabilities (10,167) 1,759 --------- --------- Net cash provided by (used in) operating activities (1,846) 7,963 --------- --------- Cash flows from investing activities: Acquisitions (2,733) (4,177) Capital expenditures (2,274) (2,404) Proceeds from sales of investment securities 2,039 Proceeds from sales of assets 11,062(a) 57 --------- --------- Net cash provided by (used in) investing activities 6,055 (4,485) --------- --------- Cash flows from financing activities: Net borrowings on lines of credit 200 3,300 Payments on long-term debt (2,857) (2,858) Cash dividends paid (1,089) (1,083) Activity under stock option and stock award plans 276 14 -------- --------- Net cash used in financing activities (3,470) (627) -------- --------- Effect of exchange rate changes on cash (61) 116 --------- --------- Increase in cash and cash equivalents 678 2,967 Cash and cash equivalents, beginning of period 3,895 2,520 --------- --------- Cash and cash equivalents, end of period $ 4,573 $ 5,487 ========= =========
(a) Includes proceeds from the divestiture of certain product lines. See Note 3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. See accompanying NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note 1 - General The foregoing financial statements have been prepared from the books and records of the Company without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods presented, are reflected in such financial statements. These condensed statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995. As a result of the divestiture of certain product lines, the Company evaluated its remaining product lines and determined that it has one business segment, fluid measurement and flow control products and systems. The Company has not elected early adoption of Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation", effective for fiscal years beginning after December 15, 1995, which is the Company's year ending September 30, 1997. The Company believes adoption of this statement will not materially affect the Company's financial statements. Note 2 - Acquisitions In February 1996, the Company acquired all of the outstanding stock of a valve manufacturer and refurbisher. Acquisition costs of $2,733,000 were paid in cash. The operations related to this acquisition, which was accounted for under the purchase method, are not material to the Company's results of operations. As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1995, the Company acquired the orifice metering product line assets of another company. Acquisition and related costs of $4,177,000 were paid in cash. The operations related to this acquisition, which was accounted for under the purchase method, are not material to the Company's results of operations. Note 3 - Divestitures As previously reported in the Company's Annual Report on Form 10-K for the year ended September 30, 1995, the Company sold, effective November 1995, the net assets of its fastener subsidiary, Daniel Industrial, Inc., to an investor group for $8,000,000 cash and $9,500,000 in notes, discounted to $8,600,000. The charge to operations from this transaction was recorded in fiscal 1995. Notes receivable include:
March 31, 1996 -------------- (in thousands) Note receivable; interest of 8.5% for the first five years and 12.5% thereafter; interest payable quarterly; principal due November 29, 2002 $6,000 Note receivable; collaterized by certain inventory; discounted at an effective rate of 11%; annual principal payments with the last payment due December 31, 1999 2,600 ------ 8,600 Less current portion (included in other current assets) (357) ------ Long-term portion (included in intangibles and other assets) $8,243 ======
Minimum annual principal payments on these notes receivable are as follows: 1996 - $357,000, 1997 - $422,000, 1998 - $469,000, 1999 and thereafter - - $7,352,000. In December 1995, the Company sold its manufacturing facility in Matamoros, Mexico for approximately book value. The sales proceeds of $1,824,000 were received in cash. 6 During the six months ended March 31, 1996, the Company sold certain non-manufacturing properties in Germany for approximately $4,000,000 and recorded a pretax gain of $2,684,000. Note 4 - Inventories Major components of inventories include:
March 31, September 30, 1996 1995 ----------- ------------- (in thousands) Raw materials $16,599 $14,527 Work-in-process 10,238 10,752 Finished goods 19,910 15,751 ------- ------- 46,747 41,030 Less LIFO reserve 5,349 5,141 ------- ------- $41,398 $35,889 ======= =======
Note 5 - Accrued Expenses Accrued expenses are summarized as follows:
March 31, September 30, 1996 1995 ----------- ------------- (in thousands) Other accrued expenses $14,165 $14,382 Accrued taxes other than on income 1,141 2,325 Salaries and wages 1,631 2,127 ------- ------- $16,937 $18,834 ======= =======
Substantially all of the planned terminations associated with the Company's restructuring program announced in fiscal 1995 had occurred as of December 31, 1995. Note 6 - Notes Payable At March 31, 1996, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. One of these lines contains restrictions regarding the amount of the line available for short-term borrowings and the amount available for issuance of letters of credit. The other lines are available for either short-term borrowings or the issuance of letters of credit. Loans under these lines may be made in such amounts and at such maturities and interest rates as may be offered by the banks and accepted by the Company at the time of each borrowing. At March 31, 1996, borrowings under these lines were $10,200,000, and $22,600,000 was available for additional short-term borrowings. These borrowings were at a weighted average interest rate of 6.16% and were due at varying dates through April 10, 1996. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Six Months Ended March 31, 1996 vs. Six Months Ended March 31, 1995 As a result of the divestiture of certain product lines, the Company evaluated its remaining product lines and determined that it has one business segment, fluid measurement and flow control products and systems. Consolidated revenues for the six months ended March 31, 1996 were $83,138,000 compared to $81,035,000 for the same period last year, inclusive of revenues from divested product lines of $4,815,000 and $15,887,000, respectively. Revenues from sales of fluid measurement and flow control products increased from the prior year reflecting improved demand for the Company's products, particularly valves. This trend is expected to continue through the remainder of fiscal 1996. Revenues in the current period include pretax gains of $2,684,000 from the sales of certain non-manufacturing properties in Germany. The Company's backlog at March 31, 1996, was $42,176,000, an increase of 8% from the balance at March 31, 1995, reflecting a significant improvement in orders for valve products and a modest improvement in orders for measurement products. The consolidated gross profit margin for the six months ended March 31, 1996, inclusive of the pretax gains on the sales of the properties mentioned above, improved to 42% of revenues compared to 34% of revenues last year primarily due to the current year divestiture of the low-margin, fastener product line and the $3,785,000 charge for inventory writedowns recorded in fiscal 1995. Consolidated selling and administrative expenses, as a percentage of revenues, declined slightly to 26% of revenues in the current period. This decline is primarily attributed to the realization of benefits from the restructuring program, which was adopted in fiscal 1995, and from the pretax gains on sales of properties mentioned above. Consolidated depreciation and amortization expense decreased 20% to $3,360,000 for the six months ended March 31, 1996 primarily due to the current year divestiture of the fastener product line. Consolidated interest expense decreased 12% to $907,000 in the current period due to both lower short-term and long-term debt levels. The Company has not elected early adoption of Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation", effective for fiscal years beginning after December 15, 1995, which is the Company's year ending September 30, 1997. The Company believes adoption of this statement will not materially affect the Company's financial statements. Quarter Ended March 31, 1996 vs. Quarter Ended March 31, 1995 Consolidated revenues for the quarter ended March 31, 1996 were $42,500,000 compared to $38,737,000 last year, inclusive of revenues from divested product lines of $8,850,000 last year. Revenues from sales of fluid measurement and flow control products increased from the prior year reflecting improved demand for the Company's products, particularly valves. This trend is expected to continue through the remainder of fiscal 1996. Revenues in the current period include a pretax gain of $1,499,000 from the sale of certain non-manufacturing property in Germany. The consolidated gross profit margin for the quarter ended March 31, 1996, inclusive of the pretax gain on the sale of the property mentioned above, improved to 42% of revenues compared to 29% of revenues last year primarily due to the current year divestiture of the low- margin, fastener product line, the gain on sale of property mentioned above and the $3,785,000 charge for inventory writedowns recorded in fiscal 1995. 8 Consolidated selling and administrative expenses, as a percentage of revenues, declined two percentage points to 25% of revenues in the current period. This decline is primarily attributed to the realization of benefits from the restructuring program, which was adopted in fiscal 1995, and from the pretax gain on the sale of property mentioned above. Consolidated depreciation and amortization expense decreased 17% to $1,615,000 for the quarter ended March 31, 1996 primarily due to the current year divestiture of the non-core fastener product line. Consolidated interest expense decreased 13% to $436,000 in the current period due to both lower short-term and long-term debt levels. Liquidity and Capital Resources The primary sources of the Company's liquidity for the six months ended March 31, 1996, were proceeds from the divesture of certain product lines (see Note 3 of NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS), and cash and cash equivalents available at the beginning of the year. These funds were used primarily for capital expenditures, acquisition of a business, funding of operations, payments on short-term and long-term debt, and the payments of dividends. Working capital decreased $6,041,000 from the balance at September 30, 1995 to $59,345,000 at March 31, 1996, primarily due to the receipt of long-term notes in partial consideration for the net assets of the fastener business, which was held for sale and included in current assets. The Company considers its financial position to be strong, with debt to total capitalization of 14%. The Company's working capital ratio at March 31, 1996, of 2.5 to 1.0 is adequate to meet the Company's needs. In the first six months of fiscal years 1996 and 1995, the Company relied upon short-term borrowings under its bank lines of credit to supplement its working capital and other cash requirements. At March 31, 1996, the Company had uncommitted short-term lines of credit aggregating approximately $45,000,000. At March 31, 1996 and May 3, 1996, borrowings under these lines were $10,200,000 and $8,200,000, respectively, at weighted average interest rates of 6.16% and 5.89%, respectively. While the Company expects its borrowings requirements to generally decrease during the remainder of fiscal 1996 from current levels, the timing of one or several major expenditures or receipts may affect the level of borrowings at a particular time. The Company anticipates capital expenditures, exclusive of business acquisitions, in fiscal 1996 of approximately $4,000,000. Capital expenditures for the six months ended March 31, 1996 were $2,274,000. In February 1996, the Company acquired all of the outstanding stock of a valve manufacturer and refurbisher for $2,733,000 in cash. The Company continues to seek acquisitions that would build upon its expertise in the manufacturing and marketing of fluid measurement and flow control products and systems. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position of the Company. 9 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders held on February 1, 1996, the following proposals were approved:
Affirmative Negative Votes Votes Votes Withheld ----------- -------- -------- 1. Amendment to the 1977 Stock Option Plan reserving an additional 300,000 shares of common stock for issuance upon the exercise of options granted thereunder. 8,662,697 2,219,664 36,756 2. The 1995 Non-Employee Directors' Stock Option Plan which allows an aggregate of 170,000 shares of common stock to be issued to non-employee directors of the Company. 10,294,859 588,199 36,059 3. The Daniel Industries, Inc. Stock Award Plan which makes 100,000 shares of common stock available for issuance as a part of the incentive compensation paid to the Company's executive officers and operating officers. 9,927,020 919,594 72,503
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 - 1977 Stock Option Plan, as amended and restated on December 8, 1995. 10.10 - 1995 Non-Employee Directors' Stock Option Plan dated as of December 8, 1995. 10.11 - Stock Award Plan dated as of December 8, 1995. 27 - Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended March 31, 1996. 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by Henry G. Schopfer, III, thereunto duly authorized to sign on behalf of the registrant and as the principal financial officer thereof. DANIEL INDUSTRIES, INC. ----------------------------- (Registrant) Date May 14, 1996 By /s/ Henry G. Schopfer, III ---------------------------- ----------------------------------- Henry G. Schopfer, III Vice President and Chief Financial Officer 11 INDEX TO EXHIBITS 10.1 - 1977 Stock Option Plan, as amended and restated on December 8, 1995. 10.10 - 1995 Non-Employee Directors' Stock Option Plan dated as of December 8, 1995. 10.11 - Stock Award Plan dated as of December 8, 1995. 27 - Financial Data Schedule EX-10.1 2 1977 STOCK OPTION PLAN 1 EXHIBIT 10.1 DANIEL INDUSTRIES, INC. 1977 STOCK OPTION PLAN (As Amended and Restated on December 8, 1995) 1. Purpose. This 1977 Stock Option Plan (this "Plan") of Daniel Industries, Inc. (the "Company"), for executive officers and other key employees of the Company, is intended to advance the best interests of the Company by providing those individuals who have substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to remain in its employ. 2. Administration. This Plan shall be administered by a committee (the "Committee") designated by the Board of Directors of the Company in accordance with the provisions of Article III of the by-laws of the Company. The Committee shall consist of three directors of the Company, each of whom shall be a disinterested person. For purposes of this Paragraph 2, "disinterested person" means a person who is not, at any time during such person's service as a member of the Committee or at any time during one year prior to such service, granted Options (as hereinafter defined) or granted or awarded other equity securities pursuant to any other plan of the Company or any of its affiliates. All action by the Committee shall be taken in accordance with the provisions of Article III of the by-laws of the Company. The Committee shall designate a chairman from among its members, who shall preside at all of its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings of the Committee and all records, documents and data pertaining to the administration of this Plan. All questions of interpretation and application of this Plan, or of options granted or to be granted hereunder ("Options"), shall be subject to the determination, which shall be final, binding and conclusive, of the Committee. 3. Option Shares. Subject to the provisions of Paragraph 17 hereof, the shares of stock issuable upon the exercise of Options shall be shares of Common Stock, $1.25 par value ("Stock"), of the Company. The aggregate number of shares of Stock that may be issued upon the exercise of Options shall not exceed 1,287,363, consisting of (i) 100,000 shares provided for under this Plan on the date this Plan became effective, (ii) 250,000 additional shares provided for under this Plan on August 22, 1989, (iii) 400,000 additional shares provided for under this Plan on December 16, 1993, (iv) 300,000 additional shares provided for under this Plan on December 8, 1995, and (v) 237,363 shares that, after the date the Plan became effective but prior to December 9, 1995, became available for issuance upon the exercise of Options by reason of Paragraph 17 hereof. 215,908 shares have been issued in accordance with the terms of the Plan after the date the Plan became effective but prior to December 9, 1995, such that 1,071,455 of such aggregate number of shares, and the class thereof, shall be subject to adjustment in accordance with the provisions of Paragraph 17 hereof in respect of any event referred to in Paragraph 17 hereof that occurs on or after December 9, 1995. Such shares of Stock may be treasury shares or authorized but unissued shares. 2 In the event that any outstanding Option for any reason shall expire or terminate or be forfeited or canceled, whether by reason of the death or severance of employment of the individual to whom such Option was granted, the relinquishment of such Option, or any other cause, the shares of Stock allocable to the unexercised portion of such Option may be made the subject of one or more other Options granted on or after the date of the expiration, termination, forfeiture or cancellation of such first-mentioned Option. 4. Authority to Grant Options. The Committee may grant from time to time to such eligible individuals as it shall from time to time determine one or more Options to purchase a stated number of shares of Stock subject to the terms and conditions of this Plan and the terms and conditions of the agreement evidencing such Option. The number of shares of Stock issuable upon the exercise of any Option shall be determined by the Committee at the time such Option is granted, provided that such number of shares of Stock shall be subject to adjustment in accordance with the provisions of Paragraph 17 hereof. 5. Eligibility. The individuals who shall be eligible to be granted Options shall be those executive officers and other key employees (including officers who may be directors of the Company, but excluding any officer or other key employee who shall have been designated by the Board of Directors of the Company as ineligible for the grant of Options) of the Company, or of any parent or subsidiary corporation of the Company, as the Committee shall determine from time to time. 6. Option Price. The price at which shares of Stock may be purchased upon the exercise of an Option (the "Option Price") shall be determined by the Committee at the time such Option is granted and shall be expressed in United Sates dollars. The Option Price with respect to any Option may be less than, equal to, or greater than the fair market value on the date such Option is granted of the shares of Stock that may be purchased upon the exercise of such Option. In no event, however, shall the Option Price with respect to any Option be less than the greater of (i) 50% of the fair market value on the date such Option is granted of the shares of Stock that may be purchased upon the exercise of such Option or (ii) the aggregate par value of the shares of Stock that may be purchased upon the exercise of such Option. 7. Duration of Options. The Committee, in its discretion, may provide that an Option shall be exercisable during any period of time from the date such Option is granted, provided that no Option may be exercised until the expiration of six months following the date such Option was granted. 8. Amount Exercisable. Each outstanding Option may be exercised, either with respect to all or less than all of the number of shares of Stock subject to such Option, subject to such conditions as the Committee, in its discretion, may provide in the agreement evidencing such Option. 9. Exercise of Options. The individual to whom an Option is granted (an "Optionee") may exercise such Option by delivering to the Company a written notice stating (i) that 2 3 such Optionee wishes to exercise such Option on the date such notice is so delivered, (ii) the number of shares of Stock with respect to which such Option is to be exercised and (iii) the address to which the certificate representing such shares of Stock should be mailed. In order to be effective, such written notice shall be accompanied by (i) payment of the Option Price of such shares of Stock and (ii) payment of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option. Each such payment shall be made to the Company in United States dollars. In its discretion, the Committee may require, as an additional condition to the issuance of shares of Stock upon the exercise of an Option, that the Optionee to whom such Option was granted execute and deliver to the Company a stock purchase agreement, in such form as may be required by the Committee, within three business days after such form of agreement is presented to such Optionee. As promptly as practicable after the receipt by the Company of (i) such written notice from the Optionee, (ii) payment, in the form required by the foregoing provisions of this Paragraph 9, of the Option Price of the shares of Stock with respect to which such Option is to be exercised, (iii) payment, in the form required by the foregoing provisions of this Paragraph 9, of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option, and (iv) an executed stock purchase agreement in the form required by the Committee, if any is so required, the Company shall cause to be delivered to such Optionee (or to a specified escrow agent, if so required under the terms of such stock purchase agreement) a certificate representing the number of shares of Stock with respect to which such Option has been so exercised, such certificate to be registered in the name of such Optionee, provided that such delivery shall be considered to have been made when such certificate shall have been mailed, postage prepaid, to such Optionee at the address specified for such purpose in such written notice from the Optionee to the Company. 10. Transferability of Options. An Option shall not be transferable by the Optionee to whom such Option was granted otherwise than by will or under the laws of descent and distribution or pursuant to a qualified domestic relations order, as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder. The designation by an Optionee of a beneficiary shall not constitute a transfer of an Option for purposes of this Plan. 11. Termination of Employment or Death of Optionee. All Options granted to an Optionee shall terminate immediately upon severance of the employment relationship between the Company and such Optionee for any reason, for or without cause, other than death. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment relationship between the Company and any Optionee shall be determined by the Committee at the time thereof. 3 4 In the event of the death of an Optionee while in the employ of the Company and before the date of expiration of any Option granted to such Optionee, such Option shall terminate on the earlier of such date of expiration or one year following the date of such Optionee's death. After the death of such Optionee, the Optionee's executors or administrators, or the person to whom such Optionee's Option shall have been transferred by will or under the laws of descent and distribution, shall have the right, at any time prior to such termination, to exercise such Option, as a whole (without regard to any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof) or in part. For the purpose of determining the employment relationship between the Company and an Optionee, employment by any parent or subsidiary corporation of the Company shall be considered employment by the Company. 12. Requirements of Law. The Company shall not be required to issue any shares of Stock upon the exercise of any Option if the issuance of such shares of Stock would constitute or result in a violation by the Company, or by the Optionee to whom such Option was granted, of any provision of any applicable law, statute or regulation of any governmental authority. Upon the exercise of any Option, the Company shall not be required to issue any shares of Stock unless the Committee shall have received evidence satisfactory to it that the Optionee to whom such Option was granted will not transfer such shares of Stock until a registration statement with respect to such shares of Stock shall have become effective under the Securities Act of 1933 or until an opinion of counsel satisfactory to the Company shall have been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register under the Securities Act of 1933, or register or otherwise qualify for sale under the securities laws of any state, the shares of Stock issuable upon the exercise of one or more Options. In the event that any shares of Stock issuable upon the exercise of an Option are not registered under the Securities Act of 1933, the Company may imprint on the certificates representing such shares of Stock the following legend or any other legend that counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer. The Company shall not be obligated to take any other affirmative action to cause the exercise of any Option, or the issuance of shares of Stock upon the exercise of any Option, to comply 4 5 with any law, statute or regulation of any governmental authority. 13. No Rights as Shareholder. No Optionee shall have any right as a shareholder with respect to any shares of Stock issuable upon the exercise of any Option granted to such Optionee until the date of issuance to such Optionee of a certificate representing such shares of Stock. Except as otherwise provided in Paragraph 17 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 14. Employment Obligation. The granting of any Option shall not impose upon the Company, or upon any parent or subsidiary corporation of the Company, any obligation to employ or continue to employ any Optionee. The right of the Company, or of any parent or subsidiary corporation of the Company, to terminate the employment of any person shall not be diminished or otherwise affected by reason of the fact that an Option has been granted to him. 15. Forfeiture for Competition. If the Committee finds that the holder of any outstanding Option, at any time following the date upon which such Option was granted, directly or indirectly owned, operated, managed or controlled, or participated in the ownership, management, operation or control of, or was employed or was paid as a consultant or as an independent contractor by, a business that competed at any time after that date with the Company or with any parent or subsidiary corporation of the Company, then such holder shall thereupon forfeit all outstanding Options granted to him, provided that such holder shall not forfeit any outstanding Option solely on account of such holder's ownership of shares or other securities issued by any corporation so long as such ownership does not result in the direct or indirect control by such holder of such corporation. 16. Forfeiture for Dishonesty. If the Committee finds that an Optionee has engaged in fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the course of such Optionee's employment by the Company or by any parent or subsidiary corporation of the Company and that such action has damaged the Company or such parent or subsidiary corporation, or if the Committee finds that an Optionee has disclosed trade secrets of the Company or of any parent or subsidiary corporation of the Company, then such Optionee shall thereupon forfeit all outstanding Options granted to such Optionee. 17. Changes in the Capital Structure of the Company. The existence of outstanding Options shall not affect in any manner the right of the Company (i) to make any change in the Company's capital structure or its business, (ii) to effect any merger or consolidation of the Company, (iii) to issue any bonds, debentures or other evidences of indebtedness, (iv) to issue any preferred stock or any other securities affecting the Stock or the rights of the holders thereof, (v) to cause the dissolution of the Company or any sale or transfer of all or any part of the assets or business of the Company, or (vi) to take any other corporate action or proceeding, whether of a similar character or otherwise. If the Company shall effect a reclassification of shares of Stock, the payment of a stock dividend to holders of shares of Stock, or some other increase or reduction in the number of 5 6 shares of Stock outstanding without receiving compensation therefor in money, services or property, then (i) the number, class and per share price of shares of Stock issuable upon the exercise of any outstanding Option shall be appropriately adjusted so that the Optionee to whom such Option was granted shall be entitled upon the exercise of such Option to receive, for the same aggregate consideration, the same number and class of shares that such Optionee would have received had such Optionee exercised such Option immediately prior to the occurrence of the event requiring such adjustment and (ii) the aggregate number of shares of Stock, and the class thereof, that may be issued upon the exercise of Options that are not at the time outstanding shall be adjusted by substituting for such number and class that number and class of shares that would have been received by the holder of record of any equal number of outstanding shares of Stock as the result of the occurrence of the event requiring such adjustments. After a merger of one or more corporations into the Company, or after a consolidation of the Company and one or more corporations under circumstances in which the Company is the surviving corporation, each holder of an outstanding Option shall be entitled upon the exercise of such Option to receive (subject to any required action by shareholders), in lieu of the number of shares of Stock issuable upon the exercise of such Option, the number and class of shares or other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such holder had been the holder of record of a number of shares of Stock equal to the number of shares of Stock issuable upon the exercise of such Option. If the Company is merged into or consolidated with another corporation under circumstances in which the Company is not the surviving corporation, or if the Company dissolves, (i) subject to the provisions of Clause (iii) of this grammatical paragraph, after the effective date of such merger or consolidation, as the case may be, each holder of an outstanding Option shall be entitled upon the exercise of such Option to receive, in lieu of shares of Stock, such shares or other securities as the holders of shares of Stock received pursuant to the terms of such merger or consolidation; (ii) the Board of Directors of the Company, in its discretion, may waive any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof so that all outstanding Options shall be exercisable in full from and after a date prior to the effective date of such merger, consolidation or dissolution, as the case may be; and (iii) all outstanding Options may be canceled by the Board of Directors as of the effective date of such merger, consolidation or dissolution, provided that (x) notice of such cancellation shall be given to each holder of an outstanding Option and (y) such holder shall have the right to exercise such Option in full (without regard to any limitations set forth in or imposed pursuant to the first sentence of Paragraph 8 hereof) during the 30-day period immediately preceding the effective date of such merger, consolidation or dissolution. Except as in this Paragraph 17 expressly provided, the issue by the Company of shares of any class, or securities convertible into shares of any class, for money or services or property, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class 6 7 or Option Price of any shares issuable upon the exercise of any outstanding Option. 18. Substitute Options. Options may be granted from time to time in substitution for options held by employees of other corporations who concurrently become employees of the Company as the result of a merger or consolidation of such other corporation with or into the Company, the acquisition by the Company of assets of such other corporation, or the acquisition by the Company of stock of such other corporation. The terms and conditions of such substitute Options may vary from the terms and conditions set forth herein to such extent as the Board of Directors of the Company may deem appropriate to conform, in whole or in part, to the provisions of the options in substitution for which such substitute Options are granted. 19. Amendment or Termination of Plan. The Board of Directors of the Company may modify, revise or terminate this Plan at any time and from time to time, provided that without the further approval of the holders of a majority of the outstanding shares of Stock, the Board of Directors of the Company may not (i) materially increase the benefits accruing to participants under this Plan, (ii) change the aggregate number of shares of Stock that may be issued upon the exercise of Options (except to the extent that the actions of the Board of Directors may require adjustment of such number pursuant to the provisions of Paragraph 17), or (iii) change the class of employees to whom Options may be granted. 20. Option Agreements. Each Option shall be evidenced by a written agreement that shall be subject to the terms and conditions of this Plan and shall be executed by the Optionee to whom such Option is granted and by the Company. Each such agreement shall contain such other provisions as the Committee, in its discretion, shall deem advisable. 21. Effective Date of Plan. This Plan shall become effective and shall be deemed to have been adopted on January 1, 1977, subject only to approval by the holders of a majority of the outstanding shares of Stock within 12 months after such date. This Plan shall terminate (i) when the total number of shares of Stock with respect to which Options may be granted shall have been issued upon the exercise of Options or (ii) by action of the Board of Directors of the Company pursuant to Paragraph 19 hereof. 7 EX-10.10 3 1995 NON-EMPLOYEE DIRECTOR'S STOCK OPTION PLAN 1 EXHIBIT 10.10 DANIEL INDUSTRIES, INC. 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN 1. PURPOSE. This 1995 Non-Employee Directors' Stock Option Plan (this "Plan") of Daniel Industries, Inc., a Delaware corporation (the "Company"), is adopted, subject to stockholder approval to the extent required by Section 15 hereof, for the benefit of the directors of the Company, including advisory directors and directors who are full-time consultants to the Company, who at the time of their service are not employees of the Company or any of its subsidiaries ("Non-Employee Directors"), and is intended to advance the interests of the Company by providing the Non-Employee Directors with additional incentive to serve the Company by increasing their proprietary interest in the success of the Company. 2. ADMINISTRATION. This Plan shall be administered by the Board of Directors of the Company. All questions of interpretation and application of this Plan, or as to options granted hereunder (the "Options"), shall be subject to the determination by the Board of Directors, which determination shall be final and binding. Notwithstanding the above, the selection of Non-Employee Directors to whom Options are to be granted, the number of shares subject to any Option, the exercise price of any Option and the term of any Option shall be as hereinafter provided and the Board of Directors shall have no discretion as to such matters. 2 3. OPTION SHARES. The stock subject to the Options and other provisions of this Plan shall be shares of the Company's Common Stock, $1.25 par value per share (or such other par value as may be designated by act of the Company's stockholders, the "Common Stock"). The total amount of the Common Stock with respect to which Options may be granted shall not exceed 170,000 shares in the aggregate; provided, that the class and aggregate number of shares which may be subject to the Options granted hereunder shall be subject to adjustment in accordance with the provisions of Section 12 hereof. Such shares may be treasury shares or authorized but unissued shares. If any outstanding Option for any reason shall expire or terminate by reason of the death of the optionee, the surrender of any such Option, or any other cause, the shares of Common Stock allocable to the unexercised portion of such Option may again be subject to an Option under this Plan. 4. GRANT OF OPTIONS. Subject to the provisions of Section 5 hereof, there shall be granted to each person who is a Non-Employee Director following the annual meeting of stockholders of the Company on February 1, 1996, an Option to purchase 15,000 shares of the Common Stock at an Option Price equal to the closing sale price per share, as reported on the New York Stock Exchange on such date. For so long as this Plan is in effect and shares are available for the grant of Options hereunder, each person who shall become a Non-Employee Director after the February 1, 1996 annual meeting of stockholders shall be granted, on the date of his initial election, an Option to purchase 15,000 shares of Common Stock at an Option Price equal to the closing sale price of a share of Common Stock on that date as reported on the New York Stock Exchange; provided that, if no sale of the Common Stock was reported on such date, then the fair market value shall mean the closing sale price of a share of the Common Stock as of the first preceding date for which such prices were reported; 3 and provided further that if the Common Stock is no longer traded on the New York Stock Exchange, the Board of Directors may provide for another means for determining the fair market value of a share of Common Stock on the date of grant. 5. DURATION OF OPTIONS. Subject to the vesting provisions of Section 6 hereof, each Option granted under this Plan shall be exercisable for a term of ten years from the date of grant, subject to earlier termination as provided in Section 9 hereof. 6. AMOUNT EXERCISABLE. Each Option will be exercisable as follows: (a) Beginning on the day after the first anniversary of the date of grant, an Option may be exercised for up to 1/3 of the shares subject to the Option; (b) After the expiration of each succeeding anniversary date of the date of grant, an Option may be exercised for up to an additional 1/3 of the shares initially subject to the Option, so that after the expiration of the third anniversary of the date of grant, the Option shall be exercisable in full; (c) To the extent not exercised, installments shall be cumulative, and an Option may be exercised in whole or in part until it expires on the tenth anniversary of the date of grant. 7. EXERCISE OF OPTIONS. An optionee may exercise such optionee's Option by delivering to the Company a written notice stating (i) that such optionee wishes to exercise such Option on the date such notice is so 4 delivered, (ii) the number of shares of stock with respect to which such Option is to be exercised and (iii) the address to which the certificate representing such shares of stock should be mailed. To be effective, such written notice shall be accompanied by payment of the Option Price of each of such shares of stock, together with the amount of any required withholding tax. As promptly as practicable after the receipt by the Company of (i) such written notice from the optionee, (ii) payment of the Option Price of the shares of stock with respect to which such Option is to be exercised and (iii) payment of an amount necessary to satisfy any withholding tax liability that may result from the exercise of such Option, a certificate representing the number of shares of stock with respect to which such Option has been so exercised, such certificate to be registered in the name of such optionee, shall be delivered to such optionee, provided that such delivery shall be considered to have been made when such certificate shall have been mailed, postage prepaid, to such optionee at the address specified for such purpose in such written notice from the optionee to the Company. 8. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the optionee otherwise than by will or under the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended (the "Code"), and shall be exercisable, during his lifetime, only by the optionee. 9. TERMINATION OF SERVICE, DEATH AND CHANGE IN CONTROL. In the event an optionee gives notice of his resignation from the Board of Directors before the expiration of the Option, the Option shall terminate on the earlier of the 30th day following the effective date of such resignation or the expiration date of the Option. 5 In the event an optionee gives notice that he does not intend to stand for reelection or is given notice that he will be asked to retire from the Board of Directors, then, notwithstanding Article 6 hereof, the Option shall become exercisable with respect to all shares subject thereto, and the Option shall terminate on the earlier of one year from the effective date of his retirement from the Board or the date of expiration of the Option. In the event of the death or disability of an optionee while a member of the Board of Directors, then, notwithstanding Article 6 hereof, the Option shall become exercisable with respect to all shares subject thereto and the Option shall terminate on the earlier of one year from the date of such death or disability or the date of expiration of the Option. After the death of the optionee, his executors or administrators, or any person or persons to whom the option may be transferred by will or by the laws of descent and distribution shall have the right, at any time prior to the Option's termination, to exercise the Option pursuant to the terms of the Plan. If there shall occur a change in the control of the Company while any shares of Common Stock remain subject to an outstanding Option, then the Option shall terminate only upon the expiration of the Option without regard to the other provisions of this Section 9. For purposes of this Plan, a "change in control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") as in effect on the date hereof; provided, that, without limitation, such a change in control shall be deemed to have occurred if (i) any person, including a "person" as defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Company's Board of Directors cease for any reason to constitute at least a majority thereof. 6 10. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any shares under any Option if the issuance of such shares shall constitute a violation by the optionee or the Company of any provisions of any law or regulation of any governmental authority. Each Option granted under this Plan shall be subject to the requirements that, if at any time the Board of Directors of the Company shall determine that the listing, registration or qualification of the shares subject thereto upon any securities exchange or under any state or federal law of the United States or of any other country or governmental subdivision thereof, or the consent or approval of any governmental regulatory body, or investment or other representations, are necessary or desirable in connection with the issue or purchase of shares subject thereto, no such Option may be exercised in whole or in part unless such listing, registration, qualification, consent, approval or representation shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. If required at any time by the Board of Directors, an Option may not be exercised until the optionee has delivered an investment letter to the Company. In addition, specifically in connection with the Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of any Option, the Company shall not be required to issue the underlying shares unless the Board of Directors has received evidence satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Board of Directors shall be final, binding and conclusive. If the shares issuable on exercise of an Option are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF 7 ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER." The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) and, if any shares are so registered, the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any other affirmative action to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 11. NO RIGHTS AS STOCKHOLDER. No optionee shall have rights as a stockholder with respect to shares covered by his Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Section 12 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of outstanding Options shall not affect in any manner the right of the Company (i) to make any change in the Company's capital structure or its business, (ii) to effect any merger or consolidation of the Company, (iii) to issue any bonds, debentures or other evidences of indebtedness, (iv) to issue any preferred stock or any other securities affecting the Common Stock or the rights of the holders thereof, (v) to cause the dissolution of the Company or any sale or transfer of all or any part of the assets or business of the Company, or (vi) to take any other corporate action or proceeding, whether of a similar character or otherwise. 8 If the Company shall effect a reclassification of shares of Common Stock, the payment of a stock dividend to holders of shares of Common Stock, or some other increase or reduction in the number of shares of Common Stock outstanding without receiving compensation therefor in money, services or property, then (i) the number, class and per share price of shares of Common Stock issuable upon the exercise of any outstanding Option shall be appropriately adjusted so that the optionee to whom such Option was granted shall be entitled upon the exercise of such Option to receive, for the same aggregate consideration, the same number and class of shares that such optionee would have received had such optionee exercised such Option immediately prior to the occurrence of the event requiring such adjustment and (ii) the aggregate number of shares of Common Stock, and the class thereof, that may be issued upon the exercise of Options that are not at the time outstanding shall be adjusted by substituting for such number and class that number and class of shares that would have been received by the holder of record of an equal number of outstanding shares of Common Stock as the result of the occurrence of the event requiring such adjustment. After a merger of one or more corporations into the Company, or after a consolidation of the Company and one or more corporations under circumstances in which the Company is the surviving corporation, each holder of an outstanding Option shall be entitled upon the exercise of such Option to receive (subject to any required action by shareholders), in lieu of the number of shares of Common Stock issuable upon the exercise of such Option, the number and class of shares or other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such holder had been the holder of record of a number of shares of Common Stock equal to the number of shares of Common Stock issuable upon the exercise of such Option. If the Company is merged into or consolidated with another corporation under circumstances in which the Company is not the surviving corporation, or if the Company dissolves, (i) subject to the provisions of clause (iii) of this grammatical paragraph, after the effective date of such merger or 9 consolidation, as the case my be, each holder of any outstanding Option shall be entitled upon the exercise of such Option to receive, in lieu of shares of Common Stock, such shares or other securities as the holders of shares of Common Stock received pursuant to the terms of such merger or consolidation; (ii) the Board of Directors of the Company, in its discretion, may waive any limitations set forth in or imposed pursuant to Section 6 hereof so that all outstanding Options shall be exercisable in full from and after a date prior to the effective date of such merger, consolidation or dissolution, as the case may be; and (iii) all outstanding Options may be canceled by the Board of Directors as of the effective date of such merger, consolidation or dissolution, provided that (x) notice of such cancellation shall be given to each holder of an outstanding Option and (y) such holder shall have the right to exercise such Option in full (without regard to any limitations set forth in or imposed pursuant to Section 6 hereof) during the 30-day period immediately preceding the effective date of such merger, consolidation or dissolution. Except as in this Paragraph 12 expressly provided, the issue by the Company of shares of any class, or securities convertible into shares of any class, for money or services or property, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or Option Price of any shares issuable upon the exercise of any outstanding Option. 13. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the stockholders of the Company, the Board of Directors may not (a) change the aggregate number of shares which may be issued under Options pursuant to the provisions of this Plan; (b) reduce the Option Price permitted for the Options; or (c) extend the term during which an Option may be exercised or the termination date of this Plan unless, in each such case, the Board of Directors of the Company shall have obtained an opinion of 10 legal counsel to the effect that stockholder approval of the amendment is not required (i) by law, (ii) by the rules and regulations of, or any agreement with, the New York Stock Exchange or (iii) to make available to the optionee with respect to any option granted under this Plan, the benefits of Rule 16b-3 of the Rules and Regulations under the Securities Exchange Act of 1934 (the "1934 Act"), or any similar or successor rule. In addition, this Plan may not be amended more than once every six months with respect to the plan provisions referred to in Rule 16b-3(c)(2)(ii)(A) of the Rules and Regulations under the 1934 Act other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules thereunder. 14. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a written option agreement, which shall be subject to the terms and conditions prescribed above, and shall be signed by the optionee and by the appropriate officer of the Company for and in the name and on behalf of the Company. Such an option agreement shall contain such other provisions as the Committee in its discretion shall deem advisable. 15. EFFECTIVE DATE OF PLAN. This Plan shall become effective and shall be deemed to have been adopted on February 1, 1996, if within one year of that date either (i) it shall have been approved by the stockholders of the Company or (ii) the Board of Directors shall have received an opinion of legal counsel to the effect that such approval is not required (a) by law, or (b) to make available to the optionee with respect to the Option the benefits of Rule 16b-3 of the Rules and Regulations under the 1934 Act. No Option shall be granted pursuant to this Plan on or after February 1, 2006. EX-10.11 4 STOCK AWARD PLAN 1 EXHIBIT 10.11 DANIEL INDUSTRIES, INC. STOCK AWARD PLAN 2 DANIEL INDUSTRIES, INC. STOCK AWARD PLAN TABLE OF CONTENTS
SECTION ARTICLE I - PURPOSE ARTICLE II - DEFINITIONS Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Disinterested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 Grantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.13 ARTICLE III - ELIGIBILITY ARTICLE IV - STOCK AWARDS Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Awards Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Award Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Grantee's Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Changes in the Company's Capital Structure . . . . . . . . . . . . . . . . . . . . 4.5 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 ARTICLE V - ADMINISTRATION ARTICLE VI - TAX WITHHOLDING General Method of Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Section 83(b) Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 ARTICLE VII - AMENDMENT OR TERMINATION OF PLAN
3 ARTICLE VIII - MISCELLANEOUS No Employment Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Other Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
4 DANIEL INDUSTRIES, INC. STOCK AWARD PLAN ARTICLE I PURPOSE The purpose of the Daniel Industries, Inc. Stock Award Plan is to promote the interests of Daniel Industries, Inc. (the "Company") and its stockholders by providing the Company with a mechanism to enable the Company and its subsidiaries to attract, retain and motivate their key employees with compensatory arrangements and benefits that make use of the Company's stock so as to provide for or increase the proprietary interests of such employees in the Company. ARTICLE II DEFINITIONS 2.1 "AWARD" shall mean an award of Stock granted under this Plan. 2.2 "BOARD" shall mean the Board of Directors of the Company. 2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. 2.4 "COMMITTEE" shall mean the committee appointed by the Board to administer this Plan. 2.5 "COMPANY" shall mean Daniel Industries, Inc. 2.6 "DISINTERESTED" shall mean disinterested within the meaning of applicable regulatory requirements, including those promulgated under Section 16 of the Exchange Act. 2.7 "EMPLOYEE" shall mean an officer or employee of the Company or a Subsidiary. 5 2.8 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. 2.9 "FAIR MARKET VALUE" shall mean the closing price of the Stock on the date in question as reported in the New York Stock Exchange -- Composite Transactions listing or if, in the discretion of the Committee, another means of determining the fair market value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another means of determining such fair market value. 2.10 "GRANTEE" shall mean an Employee to whom an Award is granted pursuant to this Plan. 2.11 "PLAN" shall mean this Daniel Industries, Inc. Stock Award Plan. 2.12 "STOCK" shall mean the Company's common stock, $1.25 par value (or such other par value as may be designated by act of the Company's stockholders). 2.13 "SUBSIDIARY" shall mean any subsidiary of the Company. ARTICLE III ELIGIBILITY The individuals who shall be eligible to participate in the Plan shall be those full-time key Employees as the Committee shall determine during the term of this Plan. ARTICLE IV STOCK AWARDS 4.1 STOCK SUBJECT TO THE PLAN. The total amount of the Stock with respect to which Awards may be granted shall not exceed in the aggregate 100,000 shares. The class and aggregate number of shares which may be subject to Awards granted under the Plan shall be subject to adjustment under Section 4.5. Shares may be treasury shares or authorized but unissued shares. 2 6 4.2 AWARDS PROCEDURE. The Committee may make awards of Stock to eligible Employees selected by it. The amount of each Award and the vesting and/or transferability restrictions with respect to each Award shall be determined by the Committee in its sole discretion. If the Committee imposes vesting and/or transferability restrictions on the Grantee's rights with respect to shares of Stock granted to him, the Committee may issue such instructions to the Company's transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for shares issued pursuant to an Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions. 4.3 AWARD AGREEMENTS. Each Award shall be evidenced by a written agreement between the Company and the Grantee containing the vesting and/or transferability restrictions and other provisions not inconsistent with the Plan as the Committee may require. Any Stock forfeited by a Grantee pursuant to an Award Agreement shall again be available for use in future Awards. 4.4 GRANTEE'S RIGHTS AS STOCKHOLDER. (a) Commencing on the date of the transfer of shares of stock to a Grantee on the books of the Company pursuant to an Award, the Grantee shall have the right to receive all dividends or other distributions paid or made with respect to the shares awarded. (b) Commencing on the date of the transfer of shares of Stock to a Grantee on the books of the Company pursuant to an Award, the Grantee shall have the right to vote the shares. 4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights 3 7 thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a dividend in capital stock or other equity securities of the Company on its Stock, or other increase or reduction of the number of shares of Stock outstanding, without receiving consideration therefor in money, services, or property, or the reclassification of its Stock, in whole or in part, into other equity securities of the Company, then the number and class of shares then reserved for issuance under the Plan (or in the case of a dividend of, or reclassification into, other equity securities, those other securities) shall be adjusted by substituting for the total number and class of shares of stock then reserved, the number and class or classes of shares of stock (or in the case of a dividend of, or reclassification into, other equity securities, those other securities) that would have been received by the owner of an equal number of outstanding shares of Stock as a result of the event requiring the adjustment. 4.6 REQUIREMENTS OF LAW. The Company shall not be required to issue or deliver any shares of Stock under any Award if such issuance or delivery shall constitute a violation by the Grantee or the Company of any provisions of any law or regulation of any governmental authority. Each Award granted under this Plan shall be subject to the requirements that, if at any time the Board or the Committee shall determine that the listing, registration or qualification of the shares upon any securities exchange or under any state or federal law of the United States or of any other country or governmental subdivision, or the consent or approval of any governmental regulatory body, or investment or other representations, are necessary or desirable in connection with the issue or purchase or delivery of shares subject to an Award, no shares shall be delivered pursuant to an Award 4 8 unless the listing, registration, qualification, consent, approval or representations shall have been effected or obtained free of any conditions not acceptable to the Committee. Any determination in this connection by the Committee shall be final. In the event the shares issued pursuant to an Award are not registered under the Securities Act of 1933, the Company may imprint on the certificate for those shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon registration or upon receipt by the Company of an opinion of counsel satisfactory to the Company, in form and substance satisfactory to the Company, that registration is not required for a sale or transfer. The Company may, but shall in no event be obligated to, register any securities covered by this Plan under the Securities Act of 1933 (as now in effect or as later amended) and, in the event any shares are registered, the Company may remove any legend on certificates representing those shares. The Company shall not be obligated to take any other affirmative action in order to cause the issuance or delivery of shares under an Award to comply with any law or regulation or any governmental authority. ARTICLE V ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board, the members of which shall be Disinterested persons. The Committee shall consist of not less than two members of the Board who are not Employees. The Board shall have the power from time to time 5 9 to add or remove members of the Committee and to fill vacancies arising for any reason. Meetings shall be held at any time and place as the Committee shall choose. A majority of the members of the Committee shall constitute a quorum for the transaction of business. The vote of a majority of those members present at any meeting shall decide any question brought before that meeting. In addition, the Committee may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. All questions of interpretation and application of the Plan or as to Awards granted under it shall be subject to the determination of a majority of the Committee. The Committee, in exercising any power or authority granted under this Plan or in making any determination under this Plan, shall perform or refrain from performing those acts using its sole discretion and judgment. Any decision made by the Committee or any refraining to act or any act taken by the Committee in good faith shall be final and binding on all parties. The Committee's decision shall never be subject to de novo review. ARTICLE VI TAX WITHHOLDING 6.1 GENERAL METHOD OF WITHHOLDING. The Company may meet its tax withholding obligations under the Code and applicable state or local law arising upon the later of the date of transfer of the shares of Stock to a Grantee or the first date on which his rights with respect to the Stock are transferable by him by delivering to him (or his estate, if applicable) a reduced number of shares of Stock in the manner specified herein. The Company shall (i) calculate the amount of withholding tax due on the assumption that all such shares of Stock are made available for 6 10 delivery, (ii) reduce the number of such shares made available for delivery so that the Fair Market Value of the shares withheld approximates the amount of tax the Company is obliged to withhold, and (iii) in lieu of the withheld shares, remit cash to the United States Treasury and other applicable governmental authorities, on behalf of the participant, in the amount of the withholding tax due. The Company shall withhold only whole shares of Stock to satisfy its withholding obligation. If the Fair Market Value of the withheld shares does not equal the Company's withholding tax obligation, the Company shall withhold shares with a Fair Market Value slightly in excess of the amount of its withholding obligation and shall remit the excess cash to the Grantee (or his estate, if applicable) with the shares of Stock made available for delivery. The withheld shares of Stock not made available for delivery by the Company shall be retained as treasury stock or will be cancelled and, in either case, the recipient's right, title and interest in such Stock shall terminate. In the alternative, the Treasurer of the Company may permit the Grantee to pay the sum necessary to satisfy the Company's withholding obligation directly to the Company. 6.2 SECTION 83(B) ELECTIONS. No Employee shall exercise the election permitted under Section 83(b) of the Code with respect to an Award without written approval of the Treasurer of the Company. If the Treasurer permits such an election with respect to any Award, the Company shall require the Grantee to pay the Company an amount necessary to satisfy the Company's tax withholding obligation. ARTICLE VII AMENDMENT OR TERMINATION OF PLAN The Board may modify, revise or terminate this Plan at any time. However, no amendment or termination of the Plan may impair a Grantee's rights with respect to an Award granted prior to the amendment or termination without the written consent of the Grantee. 7 11 ARTICLE VIII MISCELLANEOUS 8.1 NO EMPLOYMENT OBLIGATION. The granting of any Award shall not impose upon the Company any obligation to employ or continue to employ any Grantee. The right of the Company to terminate the employment of any officer or other Employee shall not be diminished or affected by reason of the fact that an Award has been granted to him. 8.2 GENDER. If the context requires, words of one gender when used in this Plan shall include the other and words used in the singular or plural shall include the other. 8.3 HEADINGS. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of this Plan and shall not be used in construing the terms of this Plan. 8.4 OTHER AWARDS. The grant of an Award shall not confer upon the Grantee the right to receive any future or other Awards under this Plan or the right to receive future Awards subject to the same transferability conditions as Awards previously granted. 8.5 GOVERNING LAW. The provisions of this Plan shall be construed, administered and governed under the laws of the State of Texas. 8 EX-27 5 FINANCIAL DATA SCHEDULE
5 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 4,573 0 36,155 310 41,398 99,877 51,782 0 164,728 40,532 0 0 0 15,129 96,659 164,728 83,138 83,138 48,451 48,451 25,482 0 907 8,298 3,337 4,961 0 0 0 4,961 .41 .41
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