DAIRY MART CONVENIENCE STORES, INC.
1995 STOCK OPTION AND INCENTIVE AWARD PLAN
Dairy Mart Convenience Stores, Inc. a Delaware corporation (the
"Company") sets forth herein the terms of this 1995 Stock Option
and Incentive Award Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company
by providing eligible individuals (as designated pursuant to
Section 4 below) with an opportunity to acquire or increase a
proprietary interest in the Company, which thereby will create a
stronger incentive to expend maximum effort for the growth and
success of the Company and its subsidiaries, and will encourage
such eligible individuals to remain in the employ or service of the
Company or its subsidiaries. Each stock option granted under the
Plan (an "Option") is intended to be an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the
Internal Revenue Code of 1986, or the corresponding provision of
any subsequently-enacted tax statute, as amended from time to time
(the "Code"), except (i) to the extent that any such Option would
exceed the limitations set forth in Section 7 below; and (ii) for
Options specifically designated at the time of grant as not being
Incentive Stock Options ("Non-Qualified Options"). Options granted
to eligible individuals may be accompanied by stock appreciation
rights ("SARs"), as defined in Section 11, below.
2. ADMINISTRATION
(a) Board. Subject to Sections 2(b) and (e), the Plan shall
be administered by the Board of Directors of the Company (the
"Board"), which shall have the full power and authority to take all
actions, and to make all determinations required or provided for
under the Plan or under any Option, SAR or incentive stock award
(collectively "Award") granted or Option Agreement (as defined in
Section 8 below) entered into hereunder and all such other actions
and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or
appropriate to the administration of the Plan or any Award granted
or Option Agreement entered into hereunder. The interpretation and
construction by the Board of any provision of the Plan or of any
Award granted or Option Agreement entered into hereunder shall be
final and conclusive.
(b) Committee. The Board may from time to time appoint a
committee (the "Committee") consisting of not less than two members
of the Board, none of whom shall be an officer or other salaried
employee of the Company or any of its subsidiaries, and each of
whom shall qualify in all respects as a "disinterested person" as
defined in Rule 16b-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") with respect to this Plan. The Board, in its sole
discretion, may provide that the role of the Committee shall be
limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate
to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as
the Board shall determine, consistent with the Certificate of
Incorporation and By-Laws of the Company and applicable law. The
Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's
Certificate of Incorporation and By-Laws, and with applicable law.
(c) No Liability. No member of the Board or of the Committee
shall be liable for any action or determination made in good faith
with respect to the Plan or any Award granted or Option Agreement
entered into hereunder.
(d) Delegation to the Committee. If the Plan or any Award
granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board,
such action may be taken by or such determination may be made by
the Committee if the power and authority to do so has been
delegated to the Committee by the Board as provided for in Section
2(b) above. Unless otherwise expressly determined by the Board, any
such action or determination by the Committee shall be final and
conclusive.
(e) Action by the Board. The Board may act under the Plan
with respect to any Award granted to or Option Agreement entered
into with an officer, director or shareholder of the Company who is
subject to Section 16 of the Exchange Act other than by, or in
accordance with the recommendations of, the Committee, constituted
as set forth in Section 2(b) above, only if all of the members of
the Board are "disinterested persons" as defined in Rule 16b-3 of
the Securities and Exchange Commission under the Exchange Act with
respect to this Plan.
3. STOCK SUBJECT TO PLAN
The stock that may be issued pursuant to Awards granted under
the Plan shall be shares of Class A Common Stock or Class B Common
Stock, par value $.01 per share, of the Company (the "Stock"),
which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant
to Awards granted under the Plan shall not exceed in the aggregate
650,000 shares. The foregoing numbers of shares are subject to
adjustment as provided in Section 19 below. If any Award expires,
terminates, or is terminated or canceled for any reason prior to
exercise (in the case of Options or SARs) in full, or if shares of
Stock are not
ultimately issued pursuant to an award for any reason, the shares
of Stock that were subject to the unexercised portion of such
Option or SAR, or the unissued shares that were subject to the
award, shall be available for future Awards granted under the Plan
and such number of shares shall be restored to the number of shares
available for issuance under Awards granted, except that such
shares shall not be so available whenever an Option has been
surrendered as a result of the exercise of the related SAR.
4. ELIGIBILITY
(a) Employees. Awards may be granted under the Plan to any
employee of the Company or any "subsidiary" (as such term is
defined in Section 424(f) the Code, "Subsidiary"), including any
such employee who is an officer or director of the Company or any
subsidiary, as the Board shall determine and designate from time to
time prior to expiration or termination of the Plan.
(b) Multiple Grants. An individual may hold more than one
Option or SAR, subject to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the
date of adoption by the Board (the "Effective Date"), subject to
approval of the Plan within one year of the Effective Date by the
holders of a majority of the voting power of the Class A and Class
B Common Stock of the Company, present in person or by proxy and
entitled to vote at a duly held meeting of the shareholders of the
Company at which a quorum is present; provided, however, that upon
approval of the Plan by the shareholders of the Company as set
forth above, all Awards granted under the Plan on or after the
Effective Date shall be fully effective as if the shareholders of
the Company had approved the Plan on the Effective Date. If the
shareholders fail to approve the Plan within one year of the
Effective Date, any Awards granted hereunder shall be null and void
and of no effect.
(b) Term. The Plan shall terminate on the date that is ten
years from the Effective Date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board
may, at any time and from time to time, prior to the date of
termination of the Plan, grant to such eligible individuals as the
Board may determine ("Optionees"), Options to purchase such number
of shares of the Stock on such terms and conditions as the Board
may determine, including any terms or conditions which may be
necessary to qualify such Options as "incentive stock options"
under Section 422 of the Code. The date on which the Board approves
the grant of an Option (or such later date as is specified by the
Board) shall be considered the date on which such Option is
granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than a Non-Qualified Option shall constitute
an Incentive Stock Option to the extent that the aggregate fair
market value (determined at the time the option is granted) of the
stock with respect to which Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee's employer corporation
and its parent and subsidiary corporations within the meaning of
Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the
order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by
written agreements ("Option Agreements"), to be executed by the
Company and by the Optionee, in such form or forms as the Board
shall from time to time determine. Option Agreements covering
Options granted from time to time or at the same time need not
contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an
Option (the "Option Price") shall be fixed by the Board and stated
in each Option Agreement. The Option Price for Incentive Stock
Options shall be not less than the greater of par value or 100
percent of the fair market value of a share of the applicable class
of Stock on the date the Option is granted (as determined in good
faith by the Board); provided, however, that if the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by
reason of the provisions of Sections 422(b)(6) and 424(d) of the
Code (relating to stock ownership of more than ten percent), the
Option Price of an Option that is intended to be an Incentive Stock
Option for any such Optionee shall be not less than the greater of
par value or 110 percent of the fair market value of a share of the
applicable class of Stock on the date such Option is granted. The
Option Price for Non-Qualified Options may be set by the Board at
not less than 85 percent of the fair market value of the applicable
class of Stock on the Date of grant. If the applicable class of
Stock is listed on an established national or regional stock
exchange, is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System, or is publicly
traded on an established securities market, in determining the fair
market value of the applicable class of Stock, the Board shall use
the closing price of the applicable class of Stock on such exchange
or system or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading date
immediately before the Option is granted (or, if there is not such
closing price, then the Board shall use the mean between the high
and low prices on such date), or, if no sale of the applicable
class of Stock had been made on such day, on the next preceding day
on which any such sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall terminate
and all rights to purchase shares thereunder shall cease upon the
expiration of ten years from the date such Option is granted;
provided, however, that if the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the
provisions of Section 422(b)(6) and 424(d) of the Code (relating to
stock ownership of more than ten percent), an Option granted to
such Optionee that is intended to be an Incentive Stock Option
shall in no event be exercisable after the expiration of five years
from the date it is granted.
(b) Option Period and Limitations on Exercise. Each Option
granted to persons shall be exercisable, in whole or in part, at
any time and from time to time, over a period commencing on or
after the date of grant and ending upon the expiration or
termination of the Option, as the Board shall determine and set
forth in the Option Agreement relating to such Option. Without
limiting the foregoing, the Board, subject to the terms and
conditions of the Plan, may in its sole discretion provide that an
Option may not be exercised in whole or in part for any period or
periods of time during which such Option is outstanding; provided,
however, that any such limitation on the exercise of an Option
contained in any Option Agreement may be rescinded, modified or
waived by the Board, in its sole discretion, at any time and from
time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option granted
to an Optionee under the Plan shall be exercisable in whole or in
part prior to the date the Plan is approved by the shareholders of
the Company as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable
hereunder may be exercised by delivery to the Company on any
business day, at its principal office, addressed to the attention
of the Committee, of written notice of exercise, which notice shall
specify the number of shares and class with respect to which the
Option is being exercised. The minimum number of shares of Stock
with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum
number of shares available for purchase under the Option at the
time of exercise. Except as provided in the next following
sentence, payment in full of the Option Price of the shares for
which the Option is being exercised shall accompany the written
notice of exercise of the Option and shall be made either (i) in
cash; (ii) through the tender to the Company of shares of the
Company's Class A or Class B Common Stock, which shares shall be
valued, for purposes of determining the extent to which the Option
Price has been paid thereby, at their fair market value (determined
in the manner described in Section 9 above) on the date of
exercise; (iii) the delivery to the Company of a written statement
of an election to make a cashless exercise, in which case the
number of shares to be transferred to the holder pursuant to the
exercise of the Option shall be reduced by a number of shares
having a fair market value (determined in the manner described in
Section 9 above) equal to the exercise price of the Option or
portion thereof being exercised; or (iv) by a combination of the
methods described in (i) and (ii); provided, however, that the
Board may in its discretion impose and set forth in the Option
Agreement pertaining to an Option such limitations or prohibitions
on the use of shares of Stock to exercise Options as it deems
appropriate.
Unless the Board shall provide otherwise in an Option
Agreement, payment in full of the Option Price need not accompany
the written notice of exercise, provided the notice of exercise
directs that the Stock certificate or certificates for the shares
for which the Option is exercised be delivered to a licensed broker
acceptable to the Company as the agent for the individual
exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Company cash
(or cash equivalents acceptable to the Company) equal to the Option
Price for the shares of Stock purchased pursuant to the exercise of
the Option plus the amount (if any) of federal and other taxes
which the Company may, in its judgment, be required to withhold
with respect to the exercise of the Option. An attempt to exercise
any Option granted hereunder other than as set forth above shall be
invalid and of no effect. Promptly after the exercise of an Option
and Payment in full of the Option Price for the shares covered, the
individual shall be entitled to the issuance of a Stock certificate
or certificates evidencing his ownership of such shares. A separate
Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an
Incentive Stock Option, which certificate or certificates shall not
include any shares which were purchased pursuant to the exercise of
an Option which is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a
shareholder until the shares of Stock covered thereby are fully
paid and issued to him and, except as provided in Section 19 below,
no adjustment shall be made for dividends or other rights for which
the record date is prior to the date of such issuance.
(d) Notice of Restrictions on Transfer of Stock. The Option
Agreement to be delivered in connection with an Option grant
hereunder will contain language (i) in the event the Option is an
Incentive Stock Option, regarding the applicable holding periods
for the stock subject to the Option in order to qualify as an
Incentive Stock Option under the Code and (ii) that if an Option is
exercised prior to the date that is six months from the later of
(A) the date of grant of the Option or (B) the date of shareholder
approval of the Plan, and the individual exercising the Option is
a reporting person under Section 16(a) of the Exchange Act, then in
order to qualify for exemptive treatment under Section 16(a), the
holder may not transfer the stock received pursuant to the exercise
of such Option until the expiration of six months from the later of
the date specified in clause (A) above or the date specified in
clause (B) above.
11. STOCK APPRECIATION RIGHTS (SARs)
(a) In General. Subject to the terms and conditions of the
Plan, the Board may, in its sole and absolute discretion, grant to
an Optionee rights (SAR's) to surrender to the Company, in whole or
in part, either in tandem with an Option or alone and unrelated to
an Option, and to receive in exchange therefor payment by the
Company of an amount equal to the excess of the fair market value
of the shares of the applicable class of Stock (i) subject to such
Option if in tandem with an Option or (ii) set forth in the
agreement evidencing the SAR, or portion thereof, so surrendered
(determined in the manner described in Section 9 above as of the
date the SARs are exercised) over the Option Price of such shares
or the exercise price set forth in the SAR Agreement. Such payment
may be made, as determined by the Board in accordance with Section
11(d) and 11(e) below and set forth in the Option Agreement, either
in shares of Stock or in cash or in any combination thereof, if the
SAR is in tandem with an Option, or in cash if the SAR is not in
tandem with an Option. All SARs granted in tandem with an Option
shall be evidenced by provisions in the Option Agreement pertaining
to the related Option, which provisions shall comply with and be
subject to the terms and conditions set forth in this Section 11.
SARs not in tandem with Options will be evidenced by an SAR
Agreement which shall comply with and be subject to the terms and
conditions set forth in this Section 11.
(b) Grant. Each SAR granted in tandem with an Option shall
relate to a specific Option granted under the Plan and shall be
awarded to the Optionee concurrently with the grant of such Option
pursuant to Section 6 above. SARs not in tandem with an Option
shall be separately granted and evidenced by an SAR Agreement. The
number of SARs granted to an Optionee shall be equal to the number
of shares of Stock which such Optionee is entitled to purchase
pursuant to the related Option or as set forth in the SAR
Agreement. The number of SARs held by an Optionee shall be reduced
by (i) the number of SARs exercised for Stock or cash under the
provisions of the Option Agreement pertaining to the related Option
or the SAR Agreement, and (ii) the number of shares of Stock
purchased pursuant to the exercise of the related Option, if
applicable.
(c) Exercise. SARs that are exercisable hereunder and under
the Option Agreement may be exercised by delivering to the Company
on any business day, at its principal office, addressed to the
attention of the Committee, written notice of exercise, which
notice shall specify the number of SARs being exercised. The date
upon which such written notice is received by the Company shall be
the exercise date of the SARs. Except to the extent that SARs are
exercised for cash as provided in Section 11(e) below, the
individual exercising SARs shall receive, without payment therefor
to the Company, the number of shares of Stock determined under
Section 11(d) below. Promptly after the exercise of SARs, the
individual exercising the SARs shall be entitled to the issuance of
a Stock certificate or certificates evidencing ownership of such
shares. An individual holding or exercising SARs shall have none of
the rights of a shareholder with respect to any shares of Stock
covered by the SARs until shares of Stock are issued to him or her,
and, except as provided in Section 19 below, no adjustment shall be
made for dividends or other rights for which the record date is
prior to the date of such issuance.
(d) Number of Shares. The number of shares of Stock which
shall be issued pursuant to the exercise of SARs shall be
determined by dividing (i) the total number of SARs being
exercised, multiplied by the amount by which the fair market value
(determined in the manner described in Section 9 above) of a share
of the applicable class of Stock on the exercise date exceeds the
Option Price of the related Option, by (ii) the fair market value
(determined in the manner described in Section 9 above) of a share
of the applicable class of Stock on the exercise date of the SARs;
provided, however, that no fractional share shall be issued on
exercise of SARs, and that cash shall be paid by the Company to the
individual exercising SARs in lieu of any such fractional share.
(e) Exercise of SARs for Cash. All SARs granted not in tandem
with Options shall be settled in cash. The Board shall have sole
discretion to determine whether, and shall set forth in the Option
Agreement pertaining to the related Option the circumstances under
which, payment in respect of SARs in tandem with Options granted to
any Optionee shall be made in shares of Stock, or in cash, or in a
combination thereof. Promptly after the exercise of an SAR for
cash, the individual exercising the SAR shall receive in respect of
said SAR an amount of money equal to the difference between the
fair market value (determined in the manner described in Section 9
above) of a share of the applicable class of Stock on the exercise
date and the Option Price of the related Option.
(f) Limitations. SARs shall be exercisable at such times and
under such terms and conditions as the Board, in its sole and
absolute discretion, shall determine and set forth in the Option
Agreements pertaining to the related Options or the SAR Agreement;
provided, however, that an SAR granted in tandem with an Option may
be exercised only at such times and by such individuals as the
related Option under the Plan and the Option Agreement may be
exercised; and provided, further, that an SAR may be exercised only
at such times as the fair market value (determined in the manner
described in Section 9 above) of a share of the applicable class of
Stock on the exercise date exceeds the Option Price of the related
Option. Adjustments in the number, kind, or Option Price of shares
of Stock for which Options are granted pursuant to Section 19 below
shall also be made as necessary to the related SARs held by each
Optionee. Any amendment, suspension or termination of the Plan
pursuant to Section 18 below shall be deemed an amendment,
suspension or termination of SARs to the same extent.
12. TRANSFERABILITY OF OPTIONS OR SARS
During the lifetime of an Optionee to whom an Option is
granted, only such Optionee (or, in the event of legal incapacity
or incompetency, the Optionee's guardian or legal representative)
may exercise the Option or SAR. No Option or SAR shall be
assignable or transferable by the Optionee to whom it is granted,
other than by will or the laws of descent and distribution.
13. TERMINATION OF EMPLOYMENT
(a) Employees. Upon the termination of the employment of an
Optionee with the Company or a Subsidiary, other than by reason of
the death or "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, any Option or
SAR granted to an Optionee pursuant to the Plan shall terminate
three months after the date of such termination of employment,
unless earlier terminated pursuant to Section 10(a) above, and such
Optionee shall have no further right to purchase shares of Stock
pursuant to such Option; provided, however, that the Board may
provide, by inclusion of appropriate language in any Option
Agreement, that the Optionee may (subject to the general
limitations on exercise set forth in Section 10(b) and Section
11(f) above), in the event of termination of service or employment
of the Optionee with the Company or a Subsidiary, exercise an
Option or SAR, in whole or in part, at any time subsequent to such
termination of service or employment and prior to termination of
the Option pursuant to Section 10(a) above, either subject to or
without regard to any installment limitation on exercise imposed
pursuant to Section 10(b) above. Whether a leave of absence or
leave on military or government service shall constitute a
termination of service or employment for purposes of the Plan shall
be determined by the Board, which determination shall be final and
conclusive. For purposes of the Plan, a termination of employment
with the Company or a Subsidiary shall not be deemed to occur if
the Optionee is immediately thereafter employed with or in the
service of the Company or any Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death of an Employee. If an Optionee dies while in the
employ or service of the Company or a Subsidiary or within the
period following the termination of employment or service during
which the Option or SAR is exercisable under Section 13 above or
Section 14(b) below, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right
(subject to the general limitations on exercise set forth in
Section 10(b) and Section 11(f) above), at any time within one year
after the date of such Optionee's death and prior to termination of
the Option pursuant to Section 10(a) above,to exercise any Option
or SAR held by such Optionee at the date of such Optionee's death,
whether or not such Option or SAR was exercisable immediately prior
to such Optionee's death; provided, however, that the Board may
provide by inclusion of appropriate language in any Option
Agreement that, in the event of the death of the Optionee, the
executors or administrators or legatees or distributees of such
Optionee's estate may exercise an Option or SAR (subject to the
general limitations on exercise set forth in Section 10(b) and
Section 11(f) above), in whole or in part, at any time subsequent
to such Optionee's death and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without
regard to any installment limitation or exercise imposed pursuant
to Section 10(b) above.
(b) Disability of an Employee. If an Optionee's employment or
service with the Company or a Subsidiary is terminated by reason of
the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, then such Optionee shall
have the right (subject to the general limitations on exercise set
forth in Section 10(b) or Section 11(f) above), at any time within
one year after such termination of service or employment and prior
to termination of the Option pursuant to Section 10(a) above, to
exercise, in whole or in part, any Option or SAR held by such
Optionee at the date of such termination of service or employment,
whether or not such Option or SAR was exercisable immediately prior
to such termination of service or employment; provided, however,
that the Board may provide, by inclusion of appropriate language in
any Option Agreement, that the Optionee may (subject to the general
limitations on exercise set forth in Section 10(b) and Section
11(f) above), in the event of the termination of service or
employment of the Optionee with the Company or a Subsidiary by
reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an
Option or SAR, in whole or in part, at any time subsequent to such
termination of service or employment and prior to termination of
the Option pursuant to Section 10(a) above, either subject to or
without regard to any installment limitation or exercise imposed
pursuant to Section 10(b) above. Whether a termination of service
or employment is to be considered by reason of "permanent and total
disability" for purposes of this Plan shall be determined by the
Board, which determination shall be final and conclusive.
15. INCENTIVE STOCK AWARDS
(a) Grant of Incentive Stock Awards. Subject to the pro-
visions of this Section 15, the Board may from time to time
determine those individuals eligible pursuant to Section 4 above to
whom incentive stock awards ("Incentive Stock Awards") shall be
granted and the amount and terms and conditions of such Incentive
Stock Awards.
(b) Terms and Conditions of Incentive Stock Awards. Each
grant of an Incentive Stock Award shall be evidenced by a written
agreement (an "Incentive Stock Award Agreement") which shall be in
such form as the Board shall from time to time approve, and which
shall comply with and be subject to the following terms and
conditions:
(1) Amount of Award. Each Incentive Stock Award
Agreement shall state the number and class of shares of Common
Stock covered by the agreement which become payable if the vesting
provisions and/or performance criteria specified in the Incentive
Stock Award Agreement are achieved (in the event the Board decides
to establish performance criteria).
(2) Performance Criteria. Each time the Board approves
the granting of Incentive Stock Awards, it may, but is not
obligated to, establish corporate performance goals to be attained
by the Company or individual recipients, or both, and the date or
dates ("earn-out dates") by which such goals must be achieved for
the participant to be entitled to payment of an Incentive Stock
Award. Such goals may be subject to subsequent modification by the
Board, as appropriate, based on changes in business conditions. To
the extent that a performance goal is either not achieved or is
exceeded by the applicable earn-out date or dates specified in the
Agreement, the amount of the Incentive Stock Award to be earned
shall be determined by the Board.
(3) Disability or Death. No Incentive Stock Award shall
be paid for any period after the termination of the individual's
employment; provided, however, that if an individual's employment
is terminated by Disability or death, then the Board shall
determine the extent to which any shares covered by an Incentive
Stock Award Agreement, which are not yet payable, shall become
payable.
(4) Form of Payment. The Board shall have the sole
discretion to determine the form in which payment of the Incentive
Stock Award shall be made (i.e., in cash, in shares, or in any
combination thereof). Instead of distributing the number of shares
covered by the Incentive Stock Award Agreement as of the applicable
earn-out date, the Board may distribute the cash equivalent
determined on the basis of the Fair Market Value of a share at such
earn-out date for all or a portion of such shares.
16. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock
pursuant to Options granted under the Plan shall constitute general
funds of the Company.
17. REQUIREMENTS OF LAW
(a) Violations of Law. The Company shall not be required to
sell or issue any shares of Stock under any Award if the sale or
issuance of such shares would constitute a violation by the
individual or the Company of any provisions of any law or
regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations.
Specifically in connection with the Securities Act of 1933 (as now
in effect or as hereafter amended), upon exercise of any Option or
SAR, unless a registration statement under such Act is in effect
with respect to the shares of Stock covered by such Option or SAR,
the Company shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the
holder of such Option or SAR may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in
this connection by the Board shall be final, binding, and
conclusive. 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). The Company
shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or SAR or the issuance of shares
pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option or SAR shall not be
exercisable unless and until the shares of Stock covered by such
Option or SAR are registered or are subject to an available
exemption from registration, the exercise of such Option or SAR
(under circumstances in which the laws of such jurisdiction apply)
shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this Plan is to
qualify for the exemption provided by Rule 16b-3 under the Exchange
Act. To the extent any provision of the Plan does not comply with
the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Board and
shall not affect the validity of the Plan. In the event Rule 16b-3
is revised or replaced, the Board, or the Committee acting on
behalf of the Board, may exercise discretion to modify this Plan in
any respect necessary to satisfy the requirements of the revised
exemption or its replacement.
18. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend,
suspend or terminate the Plan as to any shares of Stock as to which
Options or SARs have not been granted. However, any amendment by
the Board shall require the approval by the holders of a majority
of the voting power of the Company's Class A and Class B Common
Stock, present in person or by proxy and entitled to vote at a duly
held meeting of the shareholders of the Company at which a quorum
is present and voting on the amendment, or by written consent in
accordance with applicable state law and the Certificate of
Incorporation and By-Laws of the Company, to the extent that such
shareholder approval is required by Rule 16b-3 of the Securities
and Exchange Commission, or is required by the Code in order to
preserve the status of Options as Incentive Stock Options. Except
as permitted under Section 19 hereof, no amendment, suspension or
termination of the Plan shall, without the consent of the holder of
the Option or SAR, alter or impair rights or obligations under any
Option or SAR theretofore granted under the Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of the class
for which an Option or SAR has been granted are increased or
decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration
by the Company, occurring after the effective date of the Plan, the
number and kinds of shares for the purchase of which Awards may be
granted under the Plan shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of
shares for which Awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest
of the holder of the Award immediately following such event shall,
to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options or SARs shall not
change the aggregate Option Price payable with respect to shares
subject to the unexercised portion of the Option or SAR outstanding
but shall include a corresponding proportionate adjustment in the
Option Price per share.
(b) Reorganization in Which the Company Is the Surviving
Corporation. Subject to Subsection (c) hereof, if the Company shall
be the surviving corporation in any reorganization, merger, or
consolidation of the Company with one or more other corporations,
any Award theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of
shares of the applicable class of Stock subject to such Award would
have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate
adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.
(c) Reorganization in Which the Company Is Not the Surviving
Corporation or Sale of Assets or Stock. Upon the dissolution or
liquidation of the Company, or upon a merger, consolidation,
reorganization or other business combination of the Company with
one or more other entities in which the Company is not the
surviving entity, or upon a sale of all or substantially all of the
assets of the Company to another entity, or upon any transaction
(including, without limitation, a merger or reorganization in which
the Company is the surviving corporation) approved by the Board
which results in any person or entity (or persons or entities
acting as a group or otherwise in concert) owning 80 percent or
more of the combined voting power of all classes of stock of the
Company, the Plan and all Awards outstanding hereunder shall
terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan
and/or the assumption of the Awards theretofore granted, or for the
substitution for such Awards of new options or stock appreciation
rights covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares and exercise prices, in which event the Plan
and Awards theretofore granted shall continue in the manner and
under the terms so provided. In the event of any such termination
of the Plan, each individual holding an Award (subject to the
general limitations on exercise set forth in Section 10(b) and
Section 11(f) above and except as otherwise specifically provided
in the agreement relating to such Award), immediately prior to the
occurrence of such termination and during such period occurring
prior to such termination as the Board in its sole discretion shall
determine and designate, shall have the right to exercise such
Option or SAR in whole or in part, whether or not such Option or
SAR was otherwise exercisable at the time such termination occurs
and without regard to any installment limitation on exercise
imposed pursuant to Section 10(b) above. The Board shall send
written notice of an event that will result in such a termination
to all individuals who hold Options or SARs not later than the time
at which the Company gives notice thereof to its shareholders.
(d) Adjustments. Adjustments under this Section 19 related
to stock or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding, and
conclusive. No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in
each case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Company. The grant of an Award pursuant
to the Plan shall not affect or limit in any way the right or power
of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or
to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
20. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Award granted or agreement
entered into pursuant to the Plan shall be construed to confer upon
any individual the right to remain in the employ or service of the
Company or any Subsidiary, or to interfere in any way with the
right and authority of the Company or any Subsidiary either to
increase or decrease the compensation of any individual at any
time, or to terminate any employment or other relationship between
any individual and the Company or any Subsidiary.
21. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the
Plan to the shareholders of the Company for approval shall be
construed as creating any limitations upon the right and authority
of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally
to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its
discretion determines desirable, including, without limitation, the
granting of stock options or stock appreciation rights otherwise
than under the Plan.