TOWN & COUNTRY CORPORATION 1995 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Town & Country Corporation 1995 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees and other key persons of Town & Country Corporation (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Cause" as such term relates to the termination of any person means the
occurrence of one or more of the following: (i) such person is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement which has an immediate and materially adverse
effect on the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, (ii) such person engages in a fraudulent act to
the material damage or prejudice of the Company or any Subsidiary or in conduct
or activities materially damaging to the property, business or reputation of the
Company or any Subsidiary, all as determined by the Board in good faith in its
sole discretion, (iii) any material act or omission by such person involving
malfeasance or negligence in the performance of such person's duties to the
Company or any Subsidiary to the material detriment of the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
which has not been corrected by such person within 30 days after written notice
from the Company of any such act or omission, (iv) failure by such person to
comply in any material respect with the terms of his employment agreement, if
any, or any written policies or directives of the Board as determined by the
Board in good faith in its sole discretion, which has not been corrected by such
person within 30 days after written notice from the Company of such failure, or
(v) material breach by such person of his noncompetition agreement with the
Company, if any, as determined by the Board in good faith in its sole
discretion.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.
"Committee" means the Committee of the Board referred to in Section 2.
"Disability" means an individual's inability to perform his normal required
services for the Company and its Subsidiaries for a period of six consecutive
months by reason of the individual's mental or physical disability, as
determined by the Committee in good faith in its sole discretion.
"Disinterested Person" means an Independent Director who qualifies as such under
Rule 16b-3(c)(2)(i) promulgated under the Act, or any successor definition under
said Rule.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by stockholders as
set forth in Section 16.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the related rules, regulations and interpretations.
"Fair Market Value" on any given date means the last reported sale price at
which Stock is traded on such date or, if no Stock is traded on such date, the
most recent date on which Stock was traded, as reflected on the principal stock
exchange or, if applicable, any other national stock exchange on which the Stock
is traded or admitted to trading.
"Incentive Stock Option" means any Stock Option designated and qualified as an
"incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an employee
of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock granted
pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 9.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Retirement" means the employee's termination of employment with the Company and
its Subsidiaries after attainment of age 65 or attainment of age 55 and
completion of 10 years of employment.
"Stock" means the Class A Common Stock, par value $.01 per share, of the
Company, subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company) in
any unbroken chain of corporations or other entities, beginning with the Company
if each of the corporations or entities (other than the last corporation or
entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the economic interest or the total combined voting power of all classes
of stock or other interests in one of the other corporations or entities in the
chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(A) Committee. The Plan shall be administered by all of the Independent
Director members of the Compensation Committee of the Board, or any other
committee of not less than two Independent Directors performing similar
functions as appointed by the Board from time to time. Each member of the
Committee shall be a Disinterested Person and an "outside director" within the
meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.
(B) Powers of Committee. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the officers, employees and key persons of the Company
and its Subsidiaries to whom Awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Dividend Equivalent Rights, or any combination of the foregoing,
granted to any one or more participants;
(iii) to determine the number of shares of Stock to be covered by any
Award.
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the Plan,
of any Award, which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards;
(v) to accelerate at any time the exercisability or vesting of all or
any portion of any Award;
(vi) subject to the provisions of Section 5(A)(iii), to extend at any
time the period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the participant and whether
and to what extent the Company shall pay or credit amounts constituting interest
(at rates determined by the Committee) or dividends or deemed dividends on such
deferrals; and
(viii) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan; to decide
all disputes arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(A) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 2,000,000 shares. For purposes of
this limitation, the shares of Stock underlying any Awards which are forfeited,
cancelled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares of Stock may be issued up to such maximum number pursuant to
any type or types of Award; provided, however, that Stock Options or Stock
Appreciation Rights with respect to no more than 500,000 shares of Stock may be
granted to any one individual participant during any one calendar year period.
The shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. Upon the exercise
of a Stock Appreciation Right settled in shares of Stock, the right to purchase
an equal number of shares of Stock covered by a related Stock Option, if any,
shall be deemed to have been surrendered and will no longer be exercisable, and
said number of shares of Stock shall no longer be available under the Plan.
(B) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards and Stock Appreciation Rights under the
Plan, and (iv) the price for each share subject to any then outstanding Stock
Options and Stock Appreciation Rights under the Plan, without changing the
aggregate exercise price (i.e., the exercise price multiplied by the number of
Stock Options and Stock Appreciation Rights) as to which such Stock Options and
Stock Appreciation Rights remain exercisable. The adjustment by the Committee
shall be final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the Committee in
its discretion may make a cash payment in lieu of fractional shares.
(C) Mergers. Upon consummation of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options and Stock Appreciation Rights: (i)
provide that such Stock Options shall be assumed or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options and Stock Appreciation Rights will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of a business combination under the terms of which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the business combination, make or provide for a
cash payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options and Stock Appreciation Rights in exchange for the termination of such
Stock Options and Stock Appreciation Rights.
(D) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers, and other
employees and key persons of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the Committee,
in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after the ten year
anniversary of the Plan's adoption by the Board of Directors.
(A) Stock Options Granted to Employees and Key Persons. The Committee in
its discretion may grant Stock Options to eligible employees and key persons of
the Company or any Subsidiary. Stock Options granted to employees pursuant to
this Section 5(A) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock covered
by a Stock Option granted pursuant to this Section 5(A) shall be determined by
the Committee at the time of grant but shall not be less than 100% of the Fair
Market Value on the date of grant in the case of Incentive Stock Options, or 85%
of the Fair Market Value on the date of grant, in the case of Non-Qualified
Stock Options. Notwithstanding the foregoing, with respect to Non-Qualified
Stock Options which are granted in lieu of cash bonus, the exercise price per
share shall not be less than 50% of the Fair Market Value on the date of grant.
If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110% of the
Fair Market Value on the grant date.
(ii) Grant of Discount Options in Lieu of Cash Bonus. Upon the request
of an eligible employee and with the consent of the Committee, such employee may
elect each calendar year to receive a Non-Qualified Stock Option in lieu of any
cash bonus to which he may become entitled during the following calendar year
pursuant to any other plan of the Company, but only if such employee makes an
irrevocable election to waive receipt of all or a portion of such cash bonus.
Such election shall be made on or before the date set by the Committee which
date shall be no later than 15 days (or such shorter period permitted by the
Committee) preceding January 1 of the calendar year for which the cash bonus
would otherwise be paid. A Non-Qualified Stock Option shall be granted to each
employee who made such an irrevocable election on the date the waived cash bonus
would otherwise be paid; provided, however, that with respect to an employee who
is subject to Section 16 of the Act, if such grant date is not at least six
months and one day from the date of the election, the grant shall be delayed
until the date which is six months and one day from the date of the election (or
the next following business day, if such date is not a business day). The
exercise price per share shall be determined by the Committee but shall not be
less than 50% of the Fair Market Value of the Stock on the date the Stock Option
is granted. The number of shares of Stock subject to the Stock Option shall be
determined by dividing the amount of the waived cash bonus by the difference
between the Fair Market Value of the Stock on the date the Stock Option is
granted and the exercise price per Stock Option. The Stock Option shall be
granted for whole number of shares so determined; the value of any fractional
share shall be paid in cash. An employee may revoke his election under this
Section 5(A)(ii) on a prospective basis at any time; provided, however, that
with respect to an employee who is subject to Section 16 of the Act, such
revocation shall only be effective six months and one day following the date of
such revocation.
(iii) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(iv) Exercisability; Rights of a Stockholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the grant
date; provided, however, that Stock Options granted in lieu of cash bonus shall
be exercisable in full as of the grant date. The Committee may at any time
accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.
(v) Method of Exercise. Stock Options may be exercised in whole or in
part, by giving written notice of exercise to the Company, specifying the number
of shares to be purchased. Payment of the purchase price may be made by one or
more of the following methods:
(a) In cash, by certified or bank check or other instrument acceptable
to the Committee;
(b) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the
optionee for at least six months, if permitted by the Committee in its
discretion. Such surrendered shares shall be valued at Fair Market
Value on the exercise date; or
(c) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the purchase price; provided that in the event
the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of laws.
(vi) Termination by Reason of Death. Any Stock Option held by an
optionee whose employment by (or other business relationship with) the Company
and its Subsidiaries is terminated by reason of death shall become fully
exercisable and may thereafter be exercised by the legal representative or
legatee of the optionee, for a period of 12 months (or such longer period as the
Committee shall specify at any time) from the date of death, or until the
expiration of the stated term of the Option, if earlier.
(vii) Termination by Reason of Disability.
(a) Any Stock Option held by an optionee whose employment by (or other
business relationship with) the Company and its Subsidiaries is
terminated by reason of Disability shall become fully exercisable and
may thereafter be exercised, for a period of 12 months (or such longer
period as the Committee shall specify at any time) from the date of
such termination of employment (or business relationship), or until
the expiration of the stated term of the Option, if earlier.
(b) The Committee shall have sole authority and discretion to
determine whether a participant's employment (or business
relationship) has been terminated by reason of Disability.
(c) Except as otherwise provided by the Committee at any time, the
death of an optionee during the period provided in this Section
5(A)(vii) for the exercise of a Stock Option shall extend such period
for 12 months from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.
(viii) Termination by Reason of Retirement.
(a) Any Stock Option held by an optionee whose employment by (or other
business relationship with) the Company and its Subsidiaries is
terminated by reason of Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for a
period of 12 months (or such other period as the Committee shall
specify at any time) from the date of such termination of employment
(or business relationship), or until the expiration of the stated term
of the Option, if earlier.
(b) Except as otherwise provided by the Committee at any time, the
death of an optionee during a period provided in this Section
5(A)(viii) for the exercise of a Stock Option shall extend such period
for 12 months from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.
(ix) Termination for Cause. If any optionee's employment by (or other
business relationship with) the Company and its Subsidiaries is terminated for
Cause, any Stock Option held by such optionee, including any Stock Option that
is immediately exercisable at the time of such termination, shall immediately
terminate and be of no further force and effect; provided, however, that the
Committee may, in its sole discretion, provide that such Stock Option can be
exercised for a period of up to 30 days from the date of termination of
employment (or business relationship) or until the expiration of the stated term
of the Option, if earlier.
(x) Other Termination. Unless otherwise determined by the Committee,
if an optionee's employment by (or other business relationship with) the Company
and its Subsidiaries terminates for any reason other than death, Disability,
Retirement, or for Cause, any Stock Option held by such optionee may thereafter
be exercised, to the extent it was exercisable on the date of termination of
employment (or business relationship), for three months (or such longer period
as the Committee shall specify at any time) from the date of termination of
employment (or business relationship) or until the expiration of the stated term
of the Option, if earlier.
(xi) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the shares
of Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock Option.
(B) Reload Options. At the discretion of the Committee, Options granted
under Section 5(A) may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(A)(v)(b) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with the same expiration
date as the original Option being exercised, and with such other terms as the
Committee may provide) to purchase that number of shares of Stock equal to the
number delivered to exercise the original Option.
(C) Non-transferability of Options. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may
provide in an option agreement that the optionee may transfer, without
consideration for the transfer, his Stock Options to members of his immediate
family, to trusts for the benefit of such family members and to partnerships in
which such family members are the only partners.
(D) Form of Settlement. Shares of Stock issued upon exercise of a Stock
Option shall be free of all restrictions under the Plan, except as otherwise
provided in the Plan.
SECTION 6. STOCK APPRECIATION RIGHTS.
(A) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock or
a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price per Stock
Appreciation Right set by the Committee at the time of grant, which price shall
not be less than 85% of the Fair Market Value of the Stock on the date of grant
(or over the option exercise price per share, if the Stock Appreciation Right
was granted in tandem with a Stock Option) multiplied by the number of shares of
Stock with respect to which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of payment.
(B) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
Rights may be granted to any eligible employee or key person of the Company or
any Subsidiary by the Committee in tandem with, or independently of, any Stock
Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem with
a Stock Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Option.
(C) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with an Option shall
be transferable only when and to the extent that the underlying Option would be
transferable. Stock Appreciation Rights not granted in tandem with an Option
shall not be transferable otherwise than by will or the laws of descent or
distribution. All Stock Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative.
(iv) No Stock Appreciation Right may be exercised for a period of six
months after the date of grant.
(D) Rules Relating to Exercise. In the case of a participant subject to the
restrictions of Section 16(b) of the Act, no Stock Appreciation Right (as
referred to in Rule 16b-3(e) or any successor rule under the Act) shall be
exercised except in compliance with any applicable requirements of Rule 16b-3 or
any successor rule. If a full or partial settlement in cash would result, (i)
such a participant may not exercise a Stock Appreciation Right or any related
Stock Option during the first six months of the term of the Stock Appreciation
Right or Option to be exercised; and (ii) such a participant may exercise a
Stock Appreciation Right only either: (A) during the period beginning on the
third business day following the date of release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date, unless a different period is specified by Rule
16b-3(e) or any successor rule under the Act; (B) pursuant to an irrevocable
election to exercise made at least six months in advance of the effective date
of the election, which election shall be subject to the consent or disapproval
of the Committee; or (C) pursuant to an election to exercise incident to death,
Retirement, Disability or termination of employment. Notwithstanding the
foregoing, Section 6(D)(ii)(a) shall not be applicable until the Company has
been subject to the reporting requirements of Section 13(a) of the Act for at
least a year prior to the exercise and has filed all reports and statements
required to be filed pursuant to that Section for a year.
SECTION 7. RESTRICTED STOCK AWARDS
(A) Nature of Restricted Stock Awards. The Committee may grant Restricted
Stock Awards to any employee or key person of the Company or any Subsidiary. A
Restricted Stock Award is an Award entitling the recipient to acquire, at no
cost or for a purchase price determined by the Committee, shares of Stock
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(B) Rights as a Stockholder. Upon execution of a written instrument setting
forth the Restricted Stock Award and paying any applicable purchase price, a
participant shall have the rights of a stockholder with respect to the voting of
the Restricted Stock, subject to such conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Committee shall
otherwise determine, certificates evidencing the Restricted Stock shall remain
in the possession of the Company until such Restricted Stock is vested as
provided in Section 7(D) below.
(C) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award. In
the case of Restricted Stock granted to an employee, if the participant's
employment with the Company and its Subsidiaries terminates for any reason other
than death or Disability, the Company shall have the right, at the discretion of
the Committee, to repurchase restricted Stock with respect to which conditions
have not lapsed at their purchase price, or to require forfeiture of such shares
to the Company if acquired at no cost, from the participant or the participant's
legal representative. The Company must exercise such right of repurchase or
forfeiture not later than the 90th day following such termination of employment
(unless otherwise specified in the written instrument evidencing the Restricted
Stock Award). Restricted Stock granted to a key person who is not an employee
shall be subject to such forfeiture and repurchase provisions as the Committee
shall specify.
(D) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." A participant whose employment is terminated for
reason of death or Disability shall become fully vested on his termination date
in any Restricted Stock he received as an employee to the extent such vesting is
otherwise contingent only on continued service with the Company. Where vesting
is contingent on attainment of pre-established performance goals, the vesting of
Restricted Stock in the case of death or Disability shall remain dependent on
the attainment of such goals and shall be determined as of such date or dates
specified by the Committee.
(E) Waiver, Deferral and Reinvestment of Dividends. The written instrument
evidencing the Restricted Stock Award may require or permit the immediate
payment, waiver, deferral or investment of dividends paid on the Restricted
Stock.
SECTION 8. UNRESTRICTED STOCK AWARDS
(A) Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at a purchase price determined by the Committee) an
Unrestricted Stock Award to any employee or key person of the Company or any
Subsidiary, pursuant to which such employee or key person may receive shares of
Stock free of any restrictions ("Unrestricted Stock") under the Plan.
Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such employee or key person.
(B) Elections to Receive Unrestricted Stock In Lieu of Compensation. Upon
the request of an employee or a key person and with the consent of the
Committee, each employee or key person may, pursuant to an irrevocable written
election delivered to the Company no later than the date or dates specified by
the Committee, receive a portion of the cash compensation otherwise due to such
employee or key person in the form of shares of Unrestricted Stock (valued at
Fair Market Value on the date or dates the cash compensation would otherwise be
paid). With respect to any employee who is subject to Section 16 of the Act,
such irrevocable election shall become effective no earlier than six months and
one day following the date of such election and the revocation of such election
shall be effective six months and one day following the date of the revocation.
SECTION 9. PERFORMANCE SHARE AWARDS
(A) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any employees or
key persons of the Company or any Subsidiary, including those who qualify for
awards under other performance plans of the Company. The Committee in its sole
discretion shall determine whether and to whom Performance Share Awards shall be
made, the performance goals applicable under each such Award, the periods during
which performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Shares; provided, however, that the
Committee may rely on the performance goals and other standards applicable to
other performance unit plans of the Company in setting the standards for
Performance Share Awards under the Plan.
(B) Restrictions on Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(C) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).
(D) Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of employment (or other business relationship), a
participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment by (or business
relationship with) the Company and its Subsidiaries for any reason.
(E) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 13, amend any or all of the goals, restrictions or conditions
imposed under any Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
(A) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or key person,
as a component of another Award or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant.
Dividend equivalents credited to the holder of a Dividend Equivalent Right may
be paid currently or may be deemed to be reinvested in additional shares of
Stock, which may thereafter accrue additional equivalents. Any such reinvestment
shall be at Fair Market Value on the date of reinvestment or such other price as
may then apply under a dividend reinvestment plan sponsored by the Company, if
any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a
combination thereof, in a single installment or installments. A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.
(B) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
SECTION 11. TAX WITHHOLDING
(A) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(B) Payment in Stock. A participant may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the participant with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due. With respect to any participant who is subject to
Section 16 of the Act, the following additional restrictions shall apply:
(i) the election to satisfy tax withholding obligations relating to an
Award in the manner permitted by this Section 11(B) shall be made either (1)
during the period beginning on the third business day following the date of
release of quarterly or annual summary statements of sales and earnings of the
Company and ending on the twelfth business day following such date, or (2) at
least six months prior to the date as of which the receipt of such an Award
first becomes a taxable event for Federal income tax purposes;
(ii) such election shall be irrevocable;
(iii) such election shall be subject to the consent or disapproval of
the Committee; and
(iv) the Stock withheld to satisfy tax withholding must pertain to an
Award which has been held by the participant for at least six months from the
date of grant of the Award.
Notwithstanding the foregoing, the first sentence of Section 11(B)(i) shall not
be applicable until the Company has been subject to the reporting requirements
of Section 13(a) of the Act for at least a year prior to the election and has
filed all reports and statements required to be filed pursuant to that Section
for that year.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination
of employment:
(A) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(B) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the Committee may,
at any time, amend or cancel any outstanding Award (or provide substitute Awards
at the same or reduced exercise or purchase price or with no exercise or
purchase price in a manner not inconsistent with the terms of the Plan) for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Committee to be
required by the Act to ensure that Awards granted under the Plan are exempt
under Rule 16b-3 promulgated under the Act, or that Incentive Stock Options
granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the Company's stockholders.
SECTION 14. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised and any
payments in cash, Stock or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise expressly determine in connection
with any Award or Awards. In its sole discretion, the Committee may authorize
the creation of trusts or other arrangements to meet the Company's obligations
to deliver Stock or make payments with respect to Awards hereunder, provided
that the existence of such trusts or other arrangements is consistent with the
foregoing sentence.
SECTION 15. GENERAL PROVISIONS
(A) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. No shares of Stock shall be issued
pursuant to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The Committee may
require the placing of such stop-orders and restrictive legends on certificates
for Stock and Awards as it deems appropriate.
(B) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(C) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 16. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority of
the shares of Stock of the Company present or represented and entitled to vote
at a meeting of stockholders. Subject to such approval by the stockholders and
to the requirement that no Stock may be issued hereunder prior to such approval,
Stock Options and other Awards may be granted hereunder on and after adoption of
this Plan by the Board.
SECTION 17. GOVERNING LAW
This Plan shall be governed by Massachusetts law except to the extent such law
is preempted by federal law.
DATE APPROVED BY BOARD OF DIRECTORS:
June 23, 1995
DATE APPROVED BY SHAREHOLDERS:
July 20, 1995