-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, J9moGhOuM15EIp+66IMk/LwG+PyzXpK3kodXNor+qZUe/xLArv+XW+WbYo0ttyUJ j66Acv56kyt7MD8Ekibr2A== 0000793074-94-000009.txt : 19940715 0000793074-94-000009.hdr.sgml : 19940715 ACCESSION NUMBER: 0000793074-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: 4213 IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14690 FILM NUMBER: 94538910 BUSINESS ADDRESS: STREET 1: P O BOX 37308 CITY: OMAHA STATE: NE ZIP: 68137 BUSINESS PHONE: 4028956640 10-Q 1 WERNER ENTERPRISES, INC. 5/31/94 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended Commission file number May 31, 1994 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter.) NEBRASKA 47-0648386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) INTERSTATE 80 & HIGHWAY 50 POST OFFICE BOX 37308 OMAHA, NEBRASKA 68137 (402)895-6640 (Address of principal (Zip Code) (registrant's telephone number) executive offices) 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 [ ] As of June 30, 1994, 25,334,016 shares of the registrant's common stock, par value $.01 per share, were outstanding. PART I FINANCIAL INFORMATION Item 1. Financial Statements. The interim consolidated financial statements contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the financial condition and results of operations for the periods presented. They have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the three-month period ended May 31, 1994 are not necessarily indicative of the results that may be expected for the year ending February 28, 1995. In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived. These interim consolidated financial statements should be read in conjunction with the Company's latest annual report (which is incorporated by reference in the Form 10-K for the fiscal year ended February 28, 1994). Consolidated Statements of Income for the Three Months Ended May 31, 1994 and 1993 ....................... Page 3 Consolidated Condensed Balance Sheets as of May 31, 1994 and February 28, 1994.............................. Page 4 Consolidated Statements of Cash Flows for the Three Months Ended May 31, 1994 and 1993........................ Page 5 Notes to Consolidated Financial Statements as of May 31, 1994.............................................. Page 6 2 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended (Amounts in thousands, except per share data) May 31 1994 1993 (Unaudited) Operating revenues $126,899 $101,228 Operating expenses: Salaries, wages and benefits 45,201 36,467 Fuel 10,083 10,417 Supplies and maintenance 10,994 9,204 Taxes and licenses 11,204 9,066 Insurance and claims 4,508 3,751 Depreciation 12,694 10,694 Rent and purchased transportation 15,434 7,868 Communications and utilities 2,435 1,940 Other (638) (204) Total operating expenses 111,915 89,203 Operating income 14,984 12,025 Other expense (income): Interest expense 136 450 Interest income (138) (81) Other 57 35 Total other expense 55 404 Income before income taxes 14,929 11,621 Income taxes 5,822 4,100 Net income $ 9,107 $ 7,521 Average common shares outstanding 25,334 22,886 Earnings per share $ .36 $.33
3 WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) May 31 February 28 1994 1994 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 9,670 $ 10,833 Accounts receivable, net 48,759 45,681 Prepaid expenses and other current assets 21,513 22,068 Total current assets 79,942 78,582 Property and equipment 421,160 399,129 Less - accumulated depreciation 102,636 97,282 Property and equipment, net 318,524 301,847 $398,466 $380,429 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 18,993 $ 13,825 Accrued payroll 10,549 9,115 Current maturities of capitalized lease obligations 2,066 4,310 Income taxes payable 7,692 3,189 Other current liabilities 20,825 21,243 Total current liabilities 60,125 51,682 Insurance and claims accruals 21,200 21,200 Other long-term liabilities 3,136 3,136 Deferred income taxes 56,220 55,100 Stockholders' equity 257,785 249,311 $398,466 $380,429
4 WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (In thousands) May 31 1994 1993 (Unaudited) Cash flows from operating activities: Net income $ 9,107 $ 7,521 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 12,694 10,694 Deferred income taxes 1,120 556 Gain on disposal of operating equipment (853) (677) Tax benefit from exercise of stock options - 43 Changes in certain working capital items: Accounts receivable, net (3,078) (2,923) Prepaid expenses and other current assets 555 2,421 Accounts payable 5,168 (11,589) Accrued payroll 1,434 485 Other current liabilities 4,085 3,492 Net cash provided by operating activities 30,232 10,023 Cash flows from investing activities: Additions to property and equipment (34,390) (25,765) Retirements of property and equipment 5,872 5,448 Net cash used in investing activities (28,518) (20,317) Cash flows from financing activities: Short-term borrowing - 10,000 Repayments of capitalized lease obligations (2,244) (676) Dividends on common stock (633) (458) Stock options exercised - 65 Net cash provided by (used in) financing activities (2,877) 8,931 Net decrease in cash and cash equivalents (1,163) (1,363) Cash and cash equivalents, beginning of period 10,833 6,441 Cash and cash equivalents, end of period $ 9,670 $ 5,078
Supplemental disclosures of cash flow information:
Cash paid during the period for: Interest $ 136 $ 423 Income taxes 199 (1,154)
5 WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Commitments As of May 31, 1994, the Company has committed to capital expenditures of approximately $61,000,000 (net cost, after revenue equipment trade-in allowances of approximately $21,000,000). 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition: During the three months ended May 31, 1994, cash flow from operations generated $30.2 million, which enabled the Company to make net property additions of $28.5 million, repay capitalized lease obligations of $2.2 million and pay common stock dividends of $.6 million. The Company's long-term debt obligations to equity ratio at February 28, 1994 and at May 31, 1994 was 0%. Results of Operations: Three Months Ended May 31, 1994 and 1993 Operating revenues increased 25% in the three months ended May 31, 1994, compared to the same period in the prior year. The average number of tractors increased by 21%. Revenue per mile increased 3.6% while tractor utilization (miles per tractor) was almost unchanged. The increase in the average number of tractors primarily reflects the Company's continued growth in the regional, dedicated and temperature controlled markets as customer demand remains strong. The revenue per mile increase was the result of the Company's continued expansion into markets where the average revenue per mile is higher and the average miles per trip are less and as a result of rate increases obtained by the Company. Operating expenses, expressed as a percentage of operating revenues, were 88.2% for the three months ended May 31, 1994, compared to 88.1% for the three months ended May 31, 1993. Salaries, wages and benefits decreased from 36.0% of revenues to 35.6% of revenues due primarily to an increase in the percentage of owner-operator tractors compared to company-owned or controlled tractors, offset partially by an increase in driver pay due to a 2 cent per mile driver pay increase effective May 1, 1994 and the retention of more experienced, higher paid drivers. Owner-operators are independent contractors under contract with the Company and are responsible for such costs as their own salaries, wages and benefits; fuel; supplies and maintenance, taxes and licenses and depreciation. Owner-operator costs are included in the rent and purchased transportation expense category. Fuel decreased from 10.3% of revenues to 7.9% of revenues as a result of lower fuel prices, improved fuel efficiency, and an increase in the percentage of owner-operator tractors. Supplies and maintenance decreased from 9.1% of revenues to 8.7% of revenues due to the increase in the percentage of owner-operator tractors. Taxes and licenses decreased from 8.9% of revenues to 8.8% of revenues due to an increase in the percentage of owner-operator tractors, offset by an increase in the Federal diesel fuel tax rate of 4.3 cents per gallon which became effective October 1, 1993. Depreciation decreased from 10.6% of revenues to 10.0% of revenues due to the increase in the percentage of owner-operator tractors, offset partially by an increase in the trailer to tractor ratio. The increase in the trailer to tractor ratio provides additional trailers and improved service for customers. Other operating expenses decreased from (.2)% of revenues to (.5)% of revenues due to an increase in gains realized on the sale of revenue equipment. 7 Rent and purchased transportation increased from 7.8% of revenues to 12.2% of revenues due to an increase in the percentage of owner-operator tractors as compared to company-owned or controlled tractors. The average number of owner-operator tractors for the quarter ended May 31, 1994 was 560 compared to an average of 340 for the quarter ended May 31, 1993. The Company's effective income tax rate (income tax expense divided by income before income taxes) increased to 39.0% for the three months ended May 31, 1994, compared to 35.3% for the three months ended May 31, 1993. This increase in the effective income tax rate was due primarily to the Federal income tax rate increase enacted August 10, 1993, and the adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" effective March 1, 1993, which resulted in a $200,000 reduction of income tax expense during the quarter ended May 31, 1993. PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders of Werner Enterprises, Inc. was held on June 21, 1994, for the purpose of electing a board of directors and voting on the proposals described below. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management's solicitations. All of the nominees for directors as listed in the proxy were elected. The Company's proposal to amend the Company's Articles of Incorporation to authorize the establishment of up to three classes of directors was approved by the following vote: Shares Shares Shares Voted Voted Voted "FOR" "AGAINST" "ABSTAIN" 17,269,401 6,795,069 26,215 The Company's proposal to amend the Company's Stock Option Plan as set forth in the Proxy Statement for Annual Meeting of Stockholders, June 21, 1994, was approved by the following vote: Shares Shares Shares Voted Voted Voted "FOR" "AGAINST" "ABSTAIN" 23,297,963 736,733 127,510 8 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description 3(i) Articles of Amendment to Articles of Incorporation of Werner Enterprises, Inc. 3(ii) Revised and Amended By-Laws of Werner Enterprises, Inc. 10 Amended and Restated Stock Option Plan of Werner Enterprises, Inc. (b) Reports on Form 8-K - There were no reports on Form 8-K filed for the quarter ended May 31, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WERNER ENTERPRISES, INC. Date: July 13, 1994 By:/s/Robert E. Synowicki, Jr. Robert E. Synowicki, Jr., Vice President of Finance, Treasurer and Chief Financial Officer Date: July 13, 1994 By:/s/John J. Steele John J. Steele Secretary and Controller 9 EX-3.(I) 2 ARTICLES OF AMENDMENT EXHIBIT 3(i) TO ARTICLES OF INCORPORATION OF WERNER ENTERPRISES, INC. KNOW ALL MEN BY THESE PRESENTS, that the Articles of Incorporation of Werner Enterprises, Inc., have been amended in accordance with the Nebraska Business Corporations Act, Section 21- 2056 and 21-2060 in the following respect: I. The name of the corporation is WERNER ENTERPRISES, INC., and the effective date of its incorporation is September 14, 1982. II. Article X of the Articles of Incorporation has been amended to read as follows: "ARTICLE X The Board of Directors of the Corporation may be divided into up to three classes, each class to consist of not less than three directors and to be as nearly equal in number as possible. The number of classes of directors and the terms of office for directors in each such class shall be set forth in the Bylaws of the Corporation. Any vacancy in the office of a director shall be filled by the vote of the remaining directors, even if less than a quorum, or by the sole remaining director. The director class of any directors chosen to fill vacancies shall be designated by the Board and such directors shall hold office until the next election of directors of the class of which they are a member and until their successors shall be elected and qualified. Any newly created directorship resulting from any increase in the number of directors may be filled by the Board of Directors, acting by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. The director class of any directors chosen to fill newly created directorships shall be designated by the Board and such directors shall hold office until the next election of directors of the class of which they are a member and until their successors shall be elected and qualified." III. The date of adoption of this amendment by the shareholders was June 21, 1994. IV. The number of shares of the corporation outstanding at the time of such adoption was Twenty-Five Million Three Hundred Thirty Four Thousand and Sixteen (25,334,016) shares; and the number of shares entitled to vote thereon was Twenty-Five Million Three Hundred Thirty-Four Thousand and Sixteen (25,334,016) shares. V. The number of shares voting for such amendment were Seventeen Million Two Hundred Sixty-Nine Thousand Four Hundred One (17,269,401) shares; and the number of shares voted against such amendment were Six Million Seven Hundred Ninety-Five and Sixty Nine (6,795,069) shares. VI. The amendment does not provide for exchange, reclassification, or cancellation of issued shares. Dated at Omaha, Nebraska, on this 21st day of June, 1994. ATTEST: /s/John J. Steele /s/Richard S. Reiser John J. Steele, Richard S. Reiser Secretary Vice-President STATE OF NEBRASKA ) ) ss. COUNTY OF SARPY ) On the 23rd day of June, 1994, before me, the undersigned Notary Public, personally came Richard S. Reiser, Vice-President of Werner Enterprises, Inc., and John J. Steele, Secretary of Werner Enterprises, Inc., to me known to be the identical persons whose names are affixed to the foregoing instrument and acknowledged the execution thereof to be their voluntary act and deed. Subscribed and sworn to before me on the day last above written. /s/Sheila Lenagh Notary Public ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF WERNER ENTERPRISES, INC. KNOW ALL MEN BY THESE PRESENTS, that the Articles of Incorporation of Werner Enterprises, Inc., have been amended in accordance with the Nebraska Business Act, Section 21-2056 and 21- 2060 in the following respect: I. The name of the Corporation is WERNER ENTERPRISES, INC., and the effective date of its incorporation is September 14, 1982. II. Article V of the Articles of Incorporation has been amended to read as follows: "ARTICLE V The aggregate number of shares of common stock which this corporation shall have authority to issue is 60,000,000 shares, having a par value of $0.01 each. All transfers of the shares of this corporation shall be made in accordance with the provisions of the By-Laws of the corporation." III. The date of adoption of this amendment by the shareholders was September 29, 1993. IV. The number of shares of the corporation outstanding at the time of such adoption was Twenty-Two Million Nine Hundred Thirty Seven Thousand Eight Hundred Sixty-Six (22,937,866) shares; and the number of shares entitled to vote thereon was Twenty-Two Million Nine Hundred Thirty Seven Thousand Eight Hundred Sixty-Six (22,937,866) shares. V. The number of shares voting for such amendment were seventeen million five hundred ninety-four thousand six hundred ninety-nine (17,594,699) shares; and the number of shares voted against such amendment were two million one hundred seventy-three thousand seven hundred ninety-five shares (2,173,795). VI. The amendment does not provide for exchange, reclassification, or cancellation of issued shares. Dated at Omaha, Nebraska on this 29th day of September, 1993. ATTEST: /s/John J. Steele /s/Richard S. Reiser John J. Steele Richard S. Reiser Secretary Vice-President STATE OF NEBRASKA : : ss. COUNTY OF SARPY : On the 29th day of September, 1993, before me, the undersigned Notary Public, personally came Richard S. Reiser, Vice-President of Werner Enterprises, Inc., and John J. Steele, Secretary of Werner Enterprises, Inc., to be known to be the identical persons whose names are affixed to the foregoing instrument and acknowledged the execution thereof to be their voluntary act and deed. Subscribed and sworn to before me on the day last above written. /s/Donna R. Ingram Notary Public EX-3.(II) 3 EXHIBIT 3(ii) REVISED AND AMENDED BY-LAWS OF WERNER ENTERPRISES, INC. (Amended June 21, 1994) ARTICLE I. SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the Shareholders shall be held on the second Tuesday in the month of June in each year, or such other time on such other day within such month as shall be fixed by the Board of Directors, for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Nebraska, such meeting shall be held on the next succeeding business day. Annual meetings shall be held in the office of the corporation or at such other place, either within or without the State of Nebraska, as shall be determined by the Board of Directors. If the election of Directors shall not be held on the day designated herein for any annual meeting of the Shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the Shareholders as soon thereafter as conveniently may be. Section 2. Special Meetings. Special meetings of the Shareholders may be called by the Chairman of the Board, the President or a majority of the Board of Directors. Special meetings shall be held at such place, either within or without the State of Nebraska, as shall be stated in the notice. Section 3.. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each Shareholder of record entitled to vote at such meeting. Section 4. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or Shareholders entitled to receive payment of any dividend, or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock transfer books shall be closed for the purpose of determining Shareholders entitled to notice of or to vote at a meeting of Shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of Shareholders, such date in any case to be not more than fifty (50) days and, in the case of a meeting of Shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of Shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Section 5. Voting Record. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten (10) days before each meeting of Shareholders, a complete record of the Shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order with the address of and the number of shares held by each. For a period of ten (10) days prior to such meeting, the list shall be kept on file at the registered office of the corporation and shall be subject to inspection by any Shareholder at any time during usual business hours. Such record, or a duplicate thereof, shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the Shareholders entitled to examine such record or transfer books or to vote at any meeting of Shareholders. Section 6. Quorum. A majority of the outstanding shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of Shareholders. The holders or their representatives of a majority of the shares present at a meeting, even though less than a majority of the shares outstanding, may adjourn the meeting from time to time without notice other than an announcement at the meeting, until such time as a quorum is present. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the original meeting. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the Shareholders, unless the vote of a greater number is required by law, by the Articles of Incorporation, or by these By- Laws. Section 7. Proxies. At all meetings of the Shareholders, a Shareholder may vote either in person or by proxy executed in writing by a Shareholder or his duly authorized attorney in fact. Proxies solicited on behalf of the management shall be voted as directed by the Shareholder or, in the absence of such direction, as determined by a majority of the Board of Directors. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. Section 8. Voting of Shares. Subject to the provisions of Sections 9 and 10 of this Article I, each Shareholder entitled to vote shall be entitled to one (1) vote for each share of stock held by him upon each matter submitted to a vote at a meeting of Shareholders. Section 9. Voting of Shares by Certain Holders. Treasury shares shall not be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Shares standing in the name of another corporation may be voted by such officer, agent, or proxy as the By-Laws of such corporation may prescribe, or in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the Court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee and thereafter the pledgee shall be entitled to vote the shares so transferred. Section 10. Cumulative Voting. At each election for directors, every Shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote, or to cumulate said shares and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them upon the same principle among as many candidates as he shall think fit. Section 11. Informal Action by Shareholders. Any action required to be taken at a meeting of the Shareholders, or any action which may be taken at a meeting of the Shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Shareholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of Shareholders and may be stated as such in any articles or document filed with the Secretary of State under applicable state law. Section 12. Inspectors of Election. In advance of any meeting of Shareholders, the Board of Directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. The number of inspectors shall be either one (1) or three (3). If the Board of Directors so appoints either one (1) or three (3) inspectors, that appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the Chairman of the Board of Directors or the President may make such appointment at the meeting. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the Board of Directors in advance of the meeting or at the meeting by the Chairman of the Board of Directors or the President. Unless otherwise prescribed by applicable regulations, the duties of such inspectors shall include: determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, the authenticity, validity, and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all Shareholders. Section 13. Nominations. The Board of Directors shall act as a nominating committee for selecting the management nominees for election as directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the Secretary no less than fifteen (15) days prior to the date of the annual meeting. Provided such committee makes such nominations, no nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by Shareholders are made in writing and delivered to the Secretary of the corporation at least ten (10) days prior to the date of the annual meeting. Section 14. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the Secretary of the corporation at least twenty (20) days before the date of the annual meeting, and all business so stated, proposed and filed shall be considered at the annual meeting, but no other proposal shall be acted upon at the annual meeting. Any Shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but, unless stated in writing and filed with the Secretary at least twenty (20) days before the meeting, such proposal shall be laid over for action at an adjourned, special, or annual meeting of the Shareholders taking place thirty (30) days or more thereafter. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees, but, in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided. ARTICLE II DIRECTORS Section 1. Number and Qualifications. The business and affairs of the corporation shall be managed by a Board of Directors consisting of nine (9) Directors. The Directors need not be residents of the State of Nebraska, nor Shareholders of the corporation. Although the number and qualifications of the Directors may be changed from time to time by amendment to these By-Laws, no change shall affect the incumbent Directors during the terms for which they were elected. Section 2. Classification of Board. The Board of Directors shall be divided, with respect to the time during which the Directors shall hold office, into classes which are designated as Classes I, II and III. The number of Directors in each such class shall be the same as in each other such class to the extent possible. When creating a new directorship through expansion of the size of the Board of Directors or when eliminating a directorship through reduction of the size of the Board of Directors, the Board shall designate the class of the new or eliminated directorship and any newly created or eliminated directorships resulting from an increase or decrease shall be apportioned by the Board among the classes of Directors so as to maintain such classes as nearly equal as possible. The term of office of the Class I will expire at the 1995 annual meeting of Shareholders, the term of office of the Class II will expire at the 1996 annual meeting of Shareholders and the term of office of the Class III will expire at the 1997 annual meeting of Shareholders with Directors in each class to hold office until his or her successor shall have been duly elected and qualified. The class into which each Director elected at the 1994 annual meeting of Shareholders shall be designated and the Directors then elected will hold office for terms corresponding to their respective class. At each subsequent annual meeting of Shareholders, Directors elected to succeed those Directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of Shareholders after their election, with each Director to hold office until his or her successor is elected and qualified. Section 3. Removal and Vacancies. A Director may be removed by vote of the holders of a majority of the shares entitled to vote at an election of Directors which vote is taken at a meeting of the Shareholders called expressly for that purpose. However, if less than the entire Board is to be removed at such special meeting, then no individual Director may be removed if the votes cast against the removal of such Director would be sufficient to elect such Director if then cumulatively voted at an election of Directors for the class of which such Director is a member. Any vacancies in the Board of Directors, occurring for any reason, shall be filled by the vote of the remaining Directors, even if less than a quorum, or by a sole remaining Director. The Director class of any Directors chosen to fill vacancies shall be designated by the Board and such Directors shall hold office until the next election of Directors of the class of which they are a member and until their successors shall be elected and qualified. Section 4. Quorum. A majority of the number of directors fixed by the By-Laws shall constitute a quorum for the transaction of any business at any meeting of the Board of Directors. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is specified by the Articles of Incorporation or these By-Laws. If less than a quorum is present at any meeting, the majority of these present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Section 5. Annual Meeting. The annual meeting of the Board of Directors shall be held without notice other than this By- Law immediately following adjournment of the annual meeting of Shareholders and shall be held at the same place as the annual meeting of Shareholders unless some other place is agreed upon. Section 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President or a majority of the Board of Directors, and shall be held at the office of the corporation or at such other place, either within or without the State of Nebraska, as the notice may state. Section 7. Notice. Notice of special meetings shall be mailed to each director at his last known address at least five (5) days prior to the date of holding said meetings. Any director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 8. Action Without a Meeting. Any action required to be taken at a meeting of the Board of Directors, or of any committee, may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall have the same effect as a unanimous vote. The consent may be executed by the directors in counterparts. Section 9. Voting. At all meetings of the Board of Directors, each director shall have one (1) vote irrespective of the number of shares he may hold. Members of the Board of Directors may vote and participate in meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Section 10. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. Section 11. Compensation. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 12. Committees. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, appoint an executive committee, an audit committee, and one or more other committees, each committee to consist of two (2) or more directors of the corporation, which committees shall, to the extent permitted by law, have and may exercise such powers of the Board of Directors in the management of the business and affairs of the corporation as shall be delegated to them. Section 13. Advisory Directors. The Board of Directors may by resolution appoint advisory directors to the Board, who shall serve as directors emeritus, and shall have such authority and receive such compensation and reimbursement as the Board of Directors shall provide. Advisory directors shall not have the authority to participate by vote in the transaction of business. ARTICLE III OFFICERS Section 1. Number and qualifications. The officers of the corporation shall be a Chairman of the Board, a President, one or more Vice-Presidents (as the Board of Directors shall determine), a Secretary, and a Treasurer and such other officers and agents as may be deemed necessary by the Board of Directors. Any two (2) or more offices may be held by the same person. Section 2. Election and Tenure. The officers of the corporation shall be elected by the Board of Directors at its annual meeting. Each officer shall hold office for a term of one (1) year or until his successor shall have been duly elected and shall have become qualified, unless his service is specified by an employment contract of greater length or is terminated sooner because of death, resignation, or otherwise. The Board of Directors may authorize the corporation to enter into an employment contract with any officer in accordance with state law. Section 3. Removal. Any officer or agent of the corporation, elected or appointed by the Board of Directors, may be removed by the Board of Directors whenever in its judgment the best interests of the corporation should be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. Vacancies occurring in any office by reason of death, resignation, or otherwise may be filled by the Board of Directors at any meeting. Section 5. Chairman of the Board. The Chairman of the Board shall be the Chief Executive Officer of the corporation and, subject to the control of the Board of Directors, shall, in general, supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the Shareholders and of the Board of Directors. He may sign, with the Secretary or any other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by the By-Laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incidental to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. Section 6. The President. The President shall be the principal operating officer of the corporation and, subject to the control of the Board of Directors and the direction of the Chairman of the Board, shall in general supervise and control the operation of the business and affairs of the corporation. He shall, in the absence of the Chairman of the Board, preside at all meetings of the Shareholders and of the Board of Directors. He may sign, with the Secretary or any other proper officer of the corporation, certificates for shares of the corporation, and deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general, shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. Section 7. The Vice-Presidents. In the absence of the President or in the event of his death, inability, or refusal to act, the Vice-President (or in the event there shall be more than one Vice-President, the Vice-Presidents in the order designated at the time of their election, or in the absence of any such designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President may sign with the Secretary or any other proper officer of the corporation, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors. Section 8. Secretary. The Secretary shall: (a) keep minutes of the proceedings of the Shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be the custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents, the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each Shareholder which shall be furnished to the Secretary by such Shareholder (e) sign with the Chairman of the Board of Directors, President or a Vice-President, certificates for shares of the corporation, the issuance of which shall be authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. Section 9. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the name of the corporation in such banks, trust companies, or in other depositories as shall be selected in accordance with the provisions of these By-Laws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. Section 10. Other Officers. Other officers shall perform such duties and have such powers as may be assigned to them by the Board of Directors. Section 11. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE IV SEAL The corporate seal of the corporation shall contain the name of the corporation and shall be in such form as the Board of Directors shall prescribe. ARTICLE V CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. The shares of the corporation shall be represented by certificates signed by the Chairman of the Board of Directors or by the President or a Vice- President and by the Treasurer or by the Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. Any or all of the signatures upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. If an officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before the certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. Section 2. Form of Share Certificates. Each certificate representing shares shall state upon the face thereof; that the corporation is organized under the laws of the State of Nebraska; the name of the person to whom issued; the number and class of shares; the designation of the series, if any, which such certificate represents; the par value of each share represented by such certificate, or a statement that the shares are without par value. Other matters in regard to the form of the certificates shall be determined by the Board of Directors. Section 3. Loss or Destruction. In case of loss or destruction of a certificate of stock, no new certificate shall be issued in lieu thereof except upon satisfactory proof to the Board of Directors of such loss or destruction, and upon the giving of satisfactory security by bond or otherwise against loss to the corporation. Section 4. Transfer of Shares. Transfer of shares of capital stock of the corporation shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record thereof or by his legal representative, who shall furnish proper evidence of such authority, or by his attorney thereunto authorized by power of attorney duly executed and filed with the corporation. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VI DIVIDENDS AND BANK ACCOUNT Section 1. Dividends. In addition to other dividends authorized by law, the Board of Directors, by resolution, may from time to time declare dividends to be paid out of the unreserved and unrestricted earned surplus of the corporation, but no dividend shall be paid when the corporation is insolvent, when the payment thereof would render the corporation insolvent or when otherwise prohibited by law. Section 2. Bank Account. The funds of the corporation shall be deposited in such banks, trust funds, or depositories as the Board of Directors may designate and shall be withdrawn upon the signature of the President and upon the signatures of such other person or persons as the directors may by resolution authorize. ARTICLE VII AMENDMENTS These By-Laws may be altered, amended or repealed and new By- Laws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors. ARTICLE VIII WAIVER OF NOTICE Whenever any notice is required to be given to any Shareholder or Director of the corporation under the provisions of the Articles of Incorporation or under the provisions of applicable state law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice. ARTICLE IX INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS At the discretion of the Board of Directors, and subject to the provisions of the Articles of Incorporation, the corporation may indemnify any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or other agent of another corporation, partnership, trust, or other enterprise as permitted by the Nebraska Business Corporation Act, as amended from time to time. ARTICLE X DIRECTORS' INTEREST IN CONTRACTS In the absence of fraud, no contract or other transaction between the corporation and any other person, corporation, firm, syndicate, association, partnership or joint venture shall be either void or voidable or otherwise affected by reason of the fact that one or more directors of the corporation are or become directors or officers of such other corporation, firm, syndicate or association or members of such partnership or joint venture, or are pecuniarily or otherwise interested in such contract or transaction, provided that (1) the fact such director or directors of the corporation are so situated or so interested, or both, is disclosed or known to the Board of Directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; (2) that such fact is disclosed or known to the Shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; or (3) the contract or transaction is fair and reasonable to the corporation. Any director of the corporation who is also a director or officer of such other corporation, firm, syndicate, or association, or a member of such partnership or joint venture or is pecuniarily or otherwise interested in such contract or transaction, may be counted for the purpose of determining the presence of a quorum at any meeting of the Board of Directors which shall authorize any such contract or transaction. ARTICLE XI FISCAL YEAR Section 1. Fiscal Year. The fiscal year of the corporation shall begin on the 1st day of March in each year, or at such other time as may be determined by the Board of Directors. EX-10 4 WERNER ENTERPRISES, INC. EXHIBIT 10 FIRST AMENDED AND RESTATED STOCK OPTION PLAN 1. Purpose. The purpose of the Werner Enterprises, Inc. (the "Company") Stock Option Plan (the "Plan") is to advance the interests of the Company and its shareholders by attracting and retaining those individuals whose skill and initiative enhance the Company's continued success, growth and profitability. This Plan is a nonqualified stock option plan, with stock appreciation rights. This Plan authorizes the grant of nonqualified stock options and stock appreciation rights in order to help attract and retain key employees, by providing them with participatory rights in the future success and growth of the Company, without necessarily requiring a financial outlay by these employees to ensure their participation in the Plan benefits. 2. Definitions. The following words shall have the following meaning: (a) "Company" shall mean Werner Enterprises, Inc., a Nebraska corporation. (b) "Board of Directors" shall mean the Board of Directors of the Company. (c) "Committee" shall mean the Option Committee, which is appointed by the Board of Directors, and which shall be composed of three or more members of the Board of Directors, none of whom shall be eligible to participate in the Plan while members of the Committee and none of whom, for one year prior to his or her appointment to the Committee, has been granted or awarded any equity security, including any derivative security such as an Option or Stock Appreciation Right, of the Company pursuant to this Plan or any other plan of the Company. (d) "Common Stock" shall mean the common stock of the Company, par value $.01 per share. (e) "Option" shall mean a right to purchase Common Stock, granted pursuant to the Plan. (f) "Option Price" shall mean the purchase price for Common Stock under an Option, as determined in Section 6 below. (g) "Plan" shall mean this Werner Enterprises, Inc. Stock Option Plan. (h) "Participant" shall mean an employee of the Company (or any of its subsidiaries) to whom an Option is granted under the Plan. (i) "Stock Appreciation Right" shall mean a right to receive cash or stock, granted pursuant to Section 8 below. 3. Stock To Be Optioned. Subject to the provisions of Section 13 of the Plan, the maximum number of shares of Common Stock that may be optioned or sold under the Plan is 1,000,000 shares. Such shares may be treasury, or authorized but unissued, shares of Common Stock of the Company. 4. Administration. The Plan shall be administered by the Committee. Two members of the Committee shall constitute a quorum for the transaction of business. The Committee is granted the authority to determine the recipients of the Options and the Stock Appreciation Rights, the number of shares subject to such Options and the corresponding Stock Appreciation Rights, the date on which these Options and Stock Appreciation Rights are to be granted and are exercisable, whether or not such Options and Stock Appreciation Rights may be exercisable in installments, and any other terms of the Options and Stock Appreciation Rights consistent with the terms of this Plan. Options for no more than 250,000 shares in the aggregate may be granted to one person, and Options may be granted at any time during the Plan's duration. The interpretation and construction of any provision of the Plan by the Committee shall be final, unless otherwise determined by a majority of the entire Board of Directors. No member of the Board of Directors or the Committee shall be liable for any action or determination made by him in good faith. 5. Eligibility. The Committee may grant Options to any management employee (including an employee who is a director and/or an officer) of the Company and its subsidiaries; provided, however, that no such grant may be made to any management employee who is a member of the Committee while he or she is a member of the Committee. Options may be awarded by the Committee at any time and may include or exclude new or previous Participants as the Committee shall determine. Options granted at different times need not contain similar provisions. 6. Option Price. The purchase price of Common Stock under each Option shall be 100 percent of the fair market value of the Common Stock on the date the Option is granted, but in no event less than the par value of the Common Stock. If the Common Stock is traded in a public trading market, the fair market value will be the last reported sales price on the date preceding the date of determination. If there is no active public trading market for the Common Stock, the fair market value shall be determined in good faith by the Committee. In addition, the Plan allows, at the discretion of the Committee, the surrender of an Option and its subsequent regrant. The regranting of the Option may allow for lower-priced shares (as then valued) to be granted or for a lesser number of shares than originally intended to be issued. However, as with the originally issued option shares, the price to the Participant may not be less than the fair market value of the regranted optioned shares, as determined at the time of regrant. 7. Terms and Conditions of Options. Options granted pursuant to this Plan shall comply with and be subject to the following terms and conditions: (a) Time and Method of Payment. The Option Price shall be paid in full in cash at the time an Option is exercised under the Plan. Exercise of an Option without concurrent payment in full in cash shall be invalid and of no effect. Upon the exercise of an Option and the payment of the full Option Price, the Participant shall be entitled to the issuance of a stock certificate evidencing his ownership of such Common Stock and, as of that date, the Participant shall have all the rights of a shareholder. No adjustment will be made for dividends or other rights for which the record date is prior to the date the Participant is entitled to the issuance of a stock certificate. (b) Number of Shares. Each Option shall state the total number of shares of Common Stock to which it pertains. The number of shares to which a Participant is entitled under an Option shall be reduced by the number of Stock Appreciation Rights (described in Section 8 below) related to the Option that have been previously exercised by the Participant. (c) Option Period and Limitations on Exercise of Options. The Committee may in its discretion provide that an Option may become exercisable only after the expiration of a period of time specified in the Option agreement. Except as provided in the Option agreement, Options shall not be exercisable until the expiration of six months from the date the Option is granted, and any Option may be exercised in whole or in part. No Option may be exercised after the expiration of ten years and one day from the date it is granted. Unless otherwise noted in the Option agreement, no Option may be exercised for a fractional share of Common Stock. 8. Terms and Conditions of Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights at the same time as Participants are awarded Options under the Plan. Such Stock Appreciation Rights shall be evidenced by agreements which shall comply with, and be subject to, the following terms and conditions: (a) Grant. Each Stock Appreciation Right shall relate to a specific Option under the Plan and shall be awarded to a Participant concurrently with the grant of such Option. The number of Stock Appreciation Rights granted to a Participant may be equal to the number of shares that the Participant is entitled to receive pursuant to the related Option. The number of Stock Appreciation Rights held by a Participant shall be the number of Stock Appreciation Rights granted reduced by: (1) the number of Stock Appreciation Rights exercised for Common Stock or cash pursuant to the Stock Appreciation Rights agreement; (2) the number of shares of Common Stock purchased by such Participant pursuant to the related Option. (b) Manner of Exercise. A Participant shall exercise Stock Appreciation Rights by giving written notice of such exercise to the Company. The date on which such written notice is received by the Company shall be the exercise date for the Stock Appreciation Rights. (c) Appreciation Available. Each Stock Appreciation Right shall entitle a Participant to the excess of the fair market value of a share of Common Stock on the exercise date over the Option Price of the related Option. (d) Payment of Appreciation. In the discretion of the Committee, the appreciation available to a Participant from an exercise of Stock Appreciation Rights may be paid to the Participant either in cash or Common Stock. If paid in cash, the amount thereof shall be the amount of appreciation available (see (d) above). If paid in Common Stock, the number of shares that shall be issued pursuant to the exercise of Stock Appreciation Rights shall be determined by dividing the amount of appreciation by the fair market value of a share of Common Stock on the exercise date of the Stock Appreciation Rights; provided, however, that no fractional shares shall be issued upon the exercise of Stock Appreciation Rights. (e) Limitations Upon Exercise of Stock Appreciation Rights. If a Participant exercises a Stock Appreciation Right for cash, the Option to which the Stock Appreciation Right relates shall expire. Stock Appreciation Rights may be exercised only at such times and by such persons as may exercise Options under the Plan. Adjustment to the number of shares in the Plan and the price per share pursuant to Section 13 below shall also be made to any Stock Appreciation Rights held by each Participant. 9. Termination of Employment. A Participant's Options and Stock Appreciation Rights will immediately terminate and his or her right to exercise Options and Stock Appreciation Rights will immediately terminate upon the involuntary termination by the Company of the Participant's employment with the Company or a subsidiary of the Company. If a Participant's employment with the Company or a subsidiary of the Company is voluntarily terminated by the Participant, the Participant may exercise his or her Options or Stock Appreciation Rights that are otherwise exercisable pursuant to this Plan on the date of such termination for up to and including one hundred and eighty (180) days after such termination of his or her employment, but in no event shall any Option or Stock Appreciation Right be exercisable more than ten years and one day from the date it was granted. The Committee has the right to cancel an Option or Stock Appreciation Right during such 180 day period if the Participant engages in employment or activities contrary, in the opinion of the Committee, to the best interests of the Company. The Committee shall also determine in each case whether a termination of employment (including a termination due to disability) shall be considered voluntary or involuntary. In addition, the Committee shall determine, subject to applicable law, whether a leave of absence or similar circumstance shall constitute a termination of employment and the date upon which a termination resulting therefrom became effective. Any such determination of the Committee shall be final and conclusive, unless overruled by the entire Board of Directors at its next regular or special meeting. A Participant's right to exercise Options or Stock Appreciation Rights after his or her death are governed by Section 10 of this Plan. 10. Rights in Event of Death. If a Participant dies while employed by the Company, or within one hundred and eighty (180) days after having retired or voluntarily terminated his or her employment, and at the time of death had unexercised Options or Stock Appreciation Rights, the executors or administrators, or legatees or heirs, of his estate shall have the right to exercise such Options and Stock Appreciation Rights within one year of the Participant's death to the extent that such deceased Participant was entitled to exercise the Options and Stock Appreciation Rights on the date of his death; provided, however, that in no event shall the Options or Stock Appreciation Rights be exercisable more than ten years and one day from the date they were granted. As a condition to any such exercise, the Committee may require any such executor, administrator, legatee or heir seeking to exercise such Options or Stock Appreciation Rights to provide evidence satisfactory to the Committee, in its sole discretion, of his or her authority to exercise such Options or Stock Appreciation Rights on behalf of the Participant's estate. 11. No Obligation To Exercise Option of Stock Appreciation Rights. The granting of an Option or Stock Appreciation Rights shall impose no obligation upon the Participant to exercise such Option or Stock Appreciation Rights. 12. Nonassignability. Options and Stock Appreciation Rights shall not be transferable other than by will or by the laws of descent and distribution and during a Participant's lifetime shall be exercisable only by such Participant. 13. Effect of Change in Stock Subject to the Plan. The aggregate number of shares of Common Stock available for Options under the Plan, the shares subject to any Option, the price per share, and the number of related Stock Appreciation Rights shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock subsequent to the effective date of the Plan resulting from (1) a subdivision or consolidation of shares or any other capital adjustment, (2) the payment of a stock dividend or (3) other increase or decrease in such shares effected without receipt of consideration by the Company. If the Company shall be the surviving corporation in any merger or consolidation, any Option or Stock Appreciation Rights shall pertain, apply and relate to the securities to which a holder of the number of shares of Common Stock subject to the Option would have been entitled after the merger or consolidation. Upon dissolution or liquidation of the Company, or upon a merger or consolidation in which the Company is not the surviving corporation, all outstanding Options and Stock Appreciation Rights under the Plan shall terminate; provided, however, that each Participant shall have the right, immediately prior to such dissolution or liquidation, or such merger or consolidation, to exercise such Options and Stock Appreciation Rights in whole or in part, but only those Options and Stock Appreciation Rights exercisable on the date of the dissolution, liquidation, merger or consolidation. 14. Amendment. The Board of Directors, by resolution, may terminate, amend or revise the Plan with respect to any shares as to which Options have not been granted. Neither the Board of Directors nor the Committee may, without the consent of the holder of an Option, alter or impair any Options or Stock Appreciation Rights previously granted pursuant to the Plan, except as authorized herein. 15. Agreement and Representation of Employees. As a condition to the exercise of a portion of any Options or Stock Appreciation Rights, the Company may require the person exercising such Options or Stock Appreciation Rights to represent and warrant at the time of such exercise that any shares of Common Stock acquired by exercise are being acquired only for investment and without any present intention to sell or distribute such shares, if, in the opinion of counsel for the Company, such a representation is required under the Securities Act of 1933 or any other applicable law, regulation or rule of any governmental agency. 16. Reservation of Shares of Common Stock. The Company, during the term of the Plan, will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan. The inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed necessary by legal counsel for the Company for the lawful issuance and sale of its Common Stock hereunder shall relieve the Company of any liability in respect of the failure to issue or sell Common Stock as to which the requisite authority has not been obtained. 17. Effective Date of Plan. The Plan shall be effective as of June 9, 1987. 18. Termination Date of Plan. This Plan may be terminated by the Board of Directors, in its sole discretion, and no Options or Stock Appreciation Rights shall be granted pursuant to this Plan after such termination. Termination of this Plan shall not affect any Options or Stock Appreciation Rights granted during the term of this Plan. -----END PRIVACY-ENHANCED MESSAGE-----