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EXHIBIT 10.2
AMENDED AND RESTATED ROSLYN BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
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AMENDED AND RESTATED
ROSLYN BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
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(a) "Affiliate" means any "subsidiary corporation" of the Holding
Company, as such term is defined in Section 424(f)of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan
of Non-statutory Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Limited Rights, and Stock Awards.
(c) "Award Notice" means a document evidencing and setting forth the
terms of an Award granted under the Plan, in such form as the Committee may,
from time to time, approve.
(d) "Bank" means The Roslyn Savings Bank, Roslyn, New York.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" means a change in control of the Bank or
Holding Company of a nature that (i) would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Sections 13 or 15(d) of the Exchange Act; (ii) results in a
"change of control" or "acquisition of control" within the meaning of the
regulations promulgated by the Office of Thrift Supervision ("OTS") (or its
predecessor agency) found at 12 C.F.R. Part 574, as in effect on the date
hereof; PROVIDED, HOWEVER, that in applying the definition of change in control
as set forth under such regulations the Board of Directors shall substitute its
judgment for that of the OTS; or (iii) without limitation Change in Control
shall be deemed to have occurred at such time as (A) any "person" (as the term
is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Bank or the Holding Company representing 20%
or more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company and any securities
purchased by any tax-qualified employee benefit plan of the Bank; or (B)
individuals who constitute the Board of Directors on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by a nominating committee
serving under the Incumbent Board, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board; or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs in which
the Bank or Holding Company is not the resulting entity; or (D) a solicitation
of shareholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Bank or
similar transaction with one or more corporations, as a result of which the
outstanding shares of the class of securities then subject to the plan are
exchanged for or converted into cash or property or securities not issued by the
Bank or the Holding Company; or (E) a tender offer is made for 20% or more of
the voting securities of the Bank or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
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(h) "Committee" means the committee designated by the Board of
Directors to administer the Plan pursuant to Section 2 of the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect
to which the Participant qualifies for and receives benefits for under a
long-term disability plan of the Holding Company or an Affiliate, or in the
absence of such a long-term disability plan or coverage under such a plan,
"disability" shall mean a physical or mental condition which, in the sole
discretion of the Committee, is reasonably expected to be of indefinite duration
and to substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or Affiliate.
(l) "Effective Date" means March 22, 1999.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a share of Common Stock
may be purchased by a Participant pursuant to an Option.
(p) "Extraordinary Dividend" means a distribution to stockholders by
the Holding Company of earnings or stockholders' equity which: (i) exceeds net
earnings for the period for which the distribution is paid or (ii) such
distribution or any portion thereof will be treated by the stockholders
receiving such distribution as a return of capital for federal income tax
purposes.
(q) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in
question on The Nasdaq Stock Market then the Fair
Market Value shall be equal to the last transaction
price quoted for such date by The Nasdaq Stock
Market;
(ii) If the Common Stock was traded on a stock exchange on
the date in question, then the Fair Market Value
shall be equal to the closing price reported by the
applicable composite transactions report for such
date; and
(iii) If neither of the foregoing provisions is applicable,
then the Fair Market Value shall be determined by the
Committee in good faith on such basis as it deems
appropriate.
Whenever possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in The Wall Street Journal. Such
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determination shall be conclusive and binding on all persons.
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(r) "Holding Company" means Roslyn Bancorp, Inc.
(s) "Incentive Stock Option" means an Option granted to a Participant
pursuant to Section 7 of the Plan that is intended to meet the requirements of
Section 422 of the Code.
(t) "Limited Right" means an Award granted to a Participant pursuant
to Section 8 of the Plan.
(u) "Non-statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(v) "Option" means an Incentive Stock Option or Non-statutory Stock
Option.
(w) "Outside Director" means a member of the Board of Directors of the
Holding Company or an Affiliate, who is not also an Employee of the Holding
Company or an Affiliate.
(x) "Participant" means any person who holds an outstanding Award
pursuant to the Plan.
(y) "Performance Award" means an Award granted to a Participant
pursuant to Section 11 of the Plan.
(z) "Performance Goal" means an objective for the Holding Company or
any Affiliate or any unit thereof or any individual that may be established by
the Committee for a Performance Award to become vested, earned or exercisable.
Performance Goals applicable to Performance Awards are intended to constitute
"performance-based" compensation within the meaning of Section 162(m) of the
Code and shall be based on one or more of the following criteria:
(i) net income, as adjusted for non-recurring items
(ii) cash earnings
(iii) earnings per share
(iv) cash earnings per share
(v) return on equity
(vi) return on assets
(vii) assets
(viii) stock price
(ix) total shareholder return
(x) capital
(xi) net interest income
(xii) market share
(xiii) cost control or efficiency ratio
(xiv) asset growth
(aa) "Plan" means the Amended and Restated Roslyn Bancorp, Inc. 1997
Stock-Based Incentive Plan.
(bb) "Retirement" means a termination of employment (i) from the
Holding Company or an Affiliate at an age and with employment service that would
entitle the individual to a pension under The Retirement Plan of The Roslyn
Savings Bank in RSI Retirement Trust if the individual were a participant
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in such Pension Plan or (ii) under circumstances designated as a Retirement by
the Committee. "Retirement" with respect to an Outside Director means the
termination of service from the Board of Directors of the Holding Company and
any Affiliate following written notice to the Board of Directors of such Outside
Director's intention to retire.
(cc) "Stock Appreciation Right" means an Award granted to a
Participant, alone or in connection with a related Option, pursuant to Section
10 of the Plan.
(dd) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(ee) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors or, in the case of an Employee,
termination of employment, because of a material loss to the Holding Company or
one of its Affiliates caused by the Participant's intentional failure to perform
stated duties, personal dishonesty, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or final cease
and desist order, as determined by the Board of Directors. No act, or failure to
act, on a Participant's part shall be "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or an Affiliate.
(ff) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.
(gg) "Trustee" means any person or entity approved by the Board of
Directors to hold legal title to any of the Trust assets for the purposes set
forth under the Plan.
2. ADMINISTRATION.
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(a) The Plan shall be administered by the Committee. The Committee
shall consist of two or more disinterested directors of the Holding Company, who
shall be appointed by the Board of Directors. A member of the Board of Directors
shall be deemed to be "disinterested" only if he satisfies (i) such requirements
as the Securities and Exchange Commission may establish for non-employee
directors administering plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act and (ii) such requirements as the
Internal Revenue Service may establish for outside directors acting under plans
intended to qualify for exemption under Section 162(m)(4)(C) of the Code. The
Board of Directors may also appoint one or more separate committees of the Board
of Directors, each composed of one or more directors of the Holding Company or
an Affiliate who need not be disinterested and who may grant Awards and
administer the Plan with respect to Employees and Outside Directors who are not
considered officers or directors of the Holding Company under Section 16 of the
Exchange Act.
(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and (iv) make all other decisions relating to the operation
of the Plan. The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the Plan
shall be final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be approved by the Committee. Each
Award Notice shall constitute a binding contract between the Holding Company or
an Affiliate and the Participant, and every Participant, upon
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acceptance of the Award Notice, shall be bound by the terms and restrictions of
the Plan and the Award Notice. The terms of each Award Notice shall be in
accordance with the Plan, but each Award Notice may include such additional
provisions and restrictions determined by the Committee, in its discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan. In particular, the Committee shall set forth in each
Award Notice (i) the type of Award granted, (ii) the Exercise Price of an Option
or Stock Appreciation Right, (iii) the number of shares subject to the Award,
(iv) the expiration date of the Award, (v) the manner, time, and rate
(cumulative or otherwise) of exercise or vesting of such Award, and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be issued
upon exercise of such Award. The Chairman of the Committee and such other
directors and officers as shall be designated by the Committee are hereby
authorized to execute Award Notices on behalf of the Company or an Affiliate and
to cause them to be delivered to the recipients of Awards.
3. TYPES OF AWARDS AND RELATED RIGHTS.
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The following Awards may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Rights
(d) Stock Awards
(e) Stock Appreciation Rights
4. STOCK SUBJECT TO THE PLAN.
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Subject to adjustment as provided in Section 17 hereof, the maximum
number of shares reserved for Awards under the Plan is 6,109,994. Subject to
adjustment as provided in Section 17 hereof, the maximum number of shares
reserved hereby for purchase pursuant to the exercise of Options and
Option-related Awards granted under the Plan is 4,364,246. Subject to adjustment
as provided in Section 17 hereof the maximum number of shares reserved for Stock
Awards is 1,745,698. The shares of Common Stock issued under the Plan may be
either authorized but unissued shares or authorized shares previously issued and
acquired or reacquired by the Trust or the Holding Company, respectively. To the
extent that Options and Stock Awards are granted under the Plan, the shares
underlying such Awards will be unavailable for any other use including future
grants under the Plan except that, to the extent that Stock Awards or Options
terminate, expire, or are forfeited without having been vested or exercised (in
the case of Limited Rights, exercised for cash), new Awards may be made with
respect to these shares.
5. ELIGIBILITY.
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Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan. In addition, the Committee
may grant eligibility to consultants and advisors of the Holding Company or any
Affiliate.
6. NON-STATUTORY STOCK OPTIONS.
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The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Non-statutory Stock Options upon such terms and conditions as it may
determine. Non-statutory Stock Options granted under this Plan are subject to
the following terms and conditions:
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(a) Exercise Price. The Exercise Price of each Non-statutory Stock
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Option shall be determined by the Committee on the Date of Grant. Such Exercise
Price shall not be less than 100% of the Fair Market Value of the Common Stock
on the Date of Grant. Shares of Common Stock underlying a Non-statutory Stock
Option may be purchased only upon full payment of the Exercise Price in a manner
provided for in Section 14 of the Plan.
(b) Terms of Non-statutory Stock Options. The term during which each
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Non-statutory Stock Option may be exercised shall be determined by the
Committee, but in no event shall a Non-statutory Stock Option be exercisable in
whole or in part more than ten (10) years from the Date of Grant. The Committee
shall determine the date on which each Non-statutory Stock Option shall become
exercisable and any terms or conditions which must be satisfied prior to each
Non-statutory Stock Option becoming exercisable. Any such terms or conditions
shall be determined by the Committee as of the Date of Grant. The shares of
Common Stock underlying each Non-statutory Stock Option installment may be
purchased in whole or in part by the Participant at any time during the term of
such Non-statutory Stock Option after such installment becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee
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in accordance with this Section 6(c), Non-statutory Stock Options shall not be
transferred, assigned, hypothecated, or disposed of in any manner by a
Participant other than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit transferability or
assignment of a Non-statutory Stock Option if such transfer or assignment is, in
its sole determination, for valid estate planning purposes and such transfer or
assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.
For purposes of this Section 6(c), a transfer for valid estate planning purposes
includes, but is not limited to: (a) a transfer to a revocable intervivos trust
as to which the Participant is both the settlor and trustee, (b) a transfer for
no consideration to: (i) any member of the Participant's Immediate Family, (ii)
any trust solely for the benefit of members of the Participant's Immediate
Family, (iii) any partnership whose only partners are members of the
Participant's Immediate Family, and (iv) any limited liability corporation or
corporate entity whose only members or equity owners are members of the
Participant's Immediate Family, or (c) the Roslyn Savings Foundation. For
purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, spouse, children, grandchildren
and great-grandchildren. Nothing contained in this Section 6(c) shall be
construed to require the Committee to give its approval to any transfer or
assignment of any Non-statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-statutory
Stock Option or portion thereof. The transferee or assignee of any Non-statutory
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-statutory Stock Option immediately prior to the transfer or assignment
and shall be subject to any conditions proscribed by the Committee with respect
to such Non-statutory Stock Option.
(d) Termination of Employment or Service or Change in Control. Unless
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otherwise determined by the Committee, upon the termination of a Participant's
employment or service for any reason other than Disability, death, Retirement,
Change in Control or Termination for Cause, the Participant's Non-statutory
Stock Options shall be exercisable only as to those shares that were immediately
exercisable by the Participant at the date of termination and only for a period
of three (3) months following termination. In the event of a Participant's
Retirement, the Participant's Non-statutory Stock Options shall be exercisable
only as to those shares that were immediately exercisable by the Participant at
the date of Retirement and remain exercisable for a period of three (3) years;
provided however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that (i) all unexercisable Non-statutory Stock Options
held by the Participant as of that date shall become immediately exercisable and
shall remain exercisable for a period of three (3) years or (ii) all
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unexercisable Non-statutory Stock Options shall continue to become exercisable
in accordance with the Award Notice if the Participant is immediately engaged by
the Holding Company or an Affiliate as a consultant or advisor or continues to
serve the Holding Company or an Affiliate as a director or advisory director. In
the event of a Change in Control or, unless otherwise determined by the
Committee, upon termination of a Participant's employment or service due to
Disability or death, all Non-statutory Stock Options held by such Participant
shall immediately become exercisable and remain exercisable for a period of
three (3) years. Unless otherwise determined by the Committee in the event of a
Termination for Cause, all rights under the Participant's Non-statutory Stock
Options shall expire immediately upon such Termination for Cause.
(e) Maximum Individual Award. No individual Employee shall be granted
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an amount of Non-statutory Stock Options which exceeds 25% of all Options
eligible to be granted under the Plan within any 60 month period and no
individual Outside Director shall be granted an amount of Non-statutory Stock
Options which exceeds 5% of all Options eligible to be granted under the Plan
within any 60 month period.
7. INCENTIVE STOCK OPTIONS.
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The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock Option
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shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant. Shares
of Common Stock may be purchased only upon payment of the full Exercise Price in
a manner provided for in Section 14 of the Plan.
(b) Amounts of Incentive Stock Options. To the extent the aggregate
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Fair Market Value of shares of Common Stock, with respect to which Incentive
Stock Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate, exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The term during which each
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Incentive Stock Option may be exercised shall be determined by the Committee,
but in no event shall an Incentive Stock Option be exercisable in whole or in
part more than ten (10) years from the Date of Grant. If at the time an
Incentive Stock Option is granted to an Employee who is a 10% Owner, the
Incentive Stock Option granted to such Employee shall not be exercisable after
the expiration of five (5) years from the Date of Grant. The Committee shall
determine the date on which each Incentive Stock Option shall become exercisable
and any terms or conditions which must be satisfied prior to the Incentive Stock
Option becoming exercisable. Any such terms or conditions shall be determined by
the Committee as of the Date of Grant. The shares of Common Stock underlying
each Incentive Stock Option installment may be purchased in whole or in part at
any time during the term of such Incentive Stock Option after such installment
becomes exercisable.
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(d) Transferability. No Incentive Stock Option shall be transferable
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except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom it is granted. The designation
of a beneficiary does not constitute a transfer.
(e) Termination of Employment or Change in Control. Unless otherwise
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determined by the Committee, upon the termination of an Employee's employment
for any reason other than Disability, death, Retirement, Change in Control or
Termination for Cause, the Employee's Incentive Stock Options shall be
exercisable only as to those Incentive Stock Options that were immediately
exercisable by the Employee at the date of termination and only for a period of
three (3) months following such termination. In the event of an Employee's
Retirement, the Employee's Incentive Stock Options shall be exercisable only as
to those shares that were immediately exercisable by the Employee at the date of
Retirement and remain exercisable for a period of three (3) years; provided
however, that upon the Employee's Retirement, the Committee, in its discretion,
may determine that (i) all unexercisable Incentive Stock Options held by the
Employee as of that date shall become immediately exercisable and shall remain
exercisable for a period of three (3) years or (ii) all unexercisable Incentive
Stock Options shall continue to become exercisable in accordance with the Award
Notice if the Employee is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director or advisory director. In the event of a Change in
Control or, unless otherwise determined by the Committee, upon termination of an
Employee's employment for Disability or death, all unvested Incentive Stock
Options held by such Employee shall immediately become exercisable and shall
remain exercisable for three (3) years after such termination. Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause. Any Option
which, by operation of this provision, does not meet the requirements of Section
422 of the Code, shall be considered a Non-statutory Stock Option.
(f) Maximum Individual Award. No individual Employee shall be granted
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an amount of Incentive Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60 month period.
8. LIMITED RIGHTS.
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Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option. Limited Rights granted under this Plan are subject to the
following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable
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in whole or in part before the expiration of six (6) months from the Date of
Grant of the Limited Right. A Limited Right may be exercised only in the event
of a Change in Control. The Limited Right may be exercised only when the
underlying Option is eligible to be exercised, and only when the Fair Market
Value of the underlying shares on the day of exercise is greater than the
Exercise Price of the underlying Option. Upon exercise of a Limited Right, the
underlying Option shall cease to be exercisable and shall be terminated. Upon
exercise or termination of an Option, any related Limited Rights shall
terminate. The Limited Right is transferable only when the underlying Option is
transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
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promptly receive from the Holding Company or an Affiliate an amount of cash
equal to the difference between the Exercise Price of the underlying Option and
the Fair Market Value of the Common Stock subject to such Option on the
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date the Limited Right is exercised, multiplied by the number of shares with
respect to which such Limited Right is being exercised.
9. STOCK AWARDS.
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The Committee may, subject to the limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant. Stock Awards shall be made subject to the following terms and
conditions:
(a) Payment of the Stock Award. Stock Awards may only be made in whole
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shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates
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on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any installment or
portion of the Stock Award. Any such terms, or conditions shall be determined by
the Committee as of the Date of Grant.
(c) Termination of Employment or Service or Change in Control. Unless
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otherwise determined by the Committee, upon the termination of a Participant's
employment or service for any reason other than Disability, death, Retirement,
Change in Control or Termination for Cause, the Participant's unvested Stock
Awards as of the date of termination shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void. In the
event of a Participant's Retirement, the Participant's unvested Stock Awards as
of the date of Retirement shall be forfeited and any rights the Participant had
to such unvested Stock Awards shall become null and void; provided however, that
upon the Participant's Retirement, the Committee, in its discretion, may
determine that (i) all unvested Stock Awards held by the Participant as of that
date shall become immediately vested or (ii) all unvested Stock Awards shall
continue to vest in accordance with the Award Notice if the Participant is
immediately engaged by the Holding Company or an Affiliate as a consultant or
advisor or continues to serve the Holding Company or an Affiliate as a director
or advisory director. In the event of a Change in Control or, unless otherwise
determined by the Committee in the event of a termination of the Participant's
service due to Disability or death, all unvested Stock Awards held by such
Participant shall immediately vest. Unless otherwise determined by the
Committee, or in the event of the Participant's Termination for Cause, all
unvested Stock Awards held by such Participant as of the effective date of such
Termination for Cause shall be forfeited and any rights such Participant had to
such unvested Stock Awards shall become null and void.
(d) Non-Transferability. Except to the extent permitted by the Code,
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the rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell,
transfer, assign, pledge, or otherwise encumber
shares subject to the Stock Award until full vesting
of such shares has occurred. For purposes of this
section, the separation of beneficial ownership and
legal title through the use of any "swap" transaction
is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and
except in the event of the Participant's death or
pursuant to a domestic relations order, a Stock Award
is not transferable and may be earned in his lifetime
only by the Participant to whom it is granted. Upon
the death of a Participant, a Stock Award is
transferable by will
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or the laws of descent and distribution. The designation
of a beneficiary shall not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares of
Common Stock subject to such Stock Award may not,
without the written consent of the Committee (which
consent may be given in the Award Notice), be sold or
otherwise disposed of within six (6) months following
the date of grant of the Stock Award.
(e) Accrual of Dividends. Whenever shares of Common Stock underlying a
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Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.
(f) Voting of Stock Awards. After a Stock Award has been granted but
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for which the shares covered by such Stock Award have not yet been vested,
earned and distributed to the Participant pursuant to the Plan, the Participant
shall be entitled to vote or to direct the Trustee to vote, as the case may be,
such shares of Common Stock which the Stock Award covers subject to the rules
and procedures adopted by the Committee for this purpose and in a manner
consistent with the Trust agreement.
(g) Maximum Individual Award. No individual Employee shall be granted
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an amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60 month period and no individual Outside
Director shall be granted an amount of Stock Awards which exceeds 5% of all
Stock Awards eligible to be granted under the Plan within any 60 month period.
10. STOCK APPRECIATION RIGHTS
-------------------------
The Committee may, subject to the limitation of the Plan, grant a Stock
Appreciation Right ("SAR") to any Participant. A Stock Appreciation Right shall
entitle the Participant to the right to receive a payment, equal in value to the
excess of the Fair Market Value of a specified number of shares of Common Stock
on the date the SAR is exercised over the grant price of such SAR, which shall
not be less than 100% of the Fair Market Value on the Date of Grant of such SAR,
as determined by the Committee, provided that, in the case of a SAR granted
retroactively in tandem with or as substitution for another award granted under
any plan of the Company or an Affiliate, the grant price may be the same as the
exercise or designated price of such other award.
(a) Maximum Individual Award. No individual Employee or Outside
--------------------------
Director shall be granted a number of Stock Appreciation Rights which exceeds
the maximum number of Options such individual may be granted under the Plan,
pursuant to Section 6(e) hereof, within any 60 month period.
11. PERFORMANCE AWARDS
------------------
(a) The Committee may determine to make any award under the Plan a
Performance Award by making such Award contingent upon the achievement of a
Performance Goal or any combination of Performance Goals. Each Performance Award
shall be evidenced in the Award Notice, which shall
12
set forth the Performance Goals applicable to the Award, the maximum amounts
payable and such other terms and conditions as are applicable to the Performance
Award. Each Performance Award shall be granted and administered to comply with
the requirements of Section 162(m) of the Code.
(b) Any Performance Award shall be made not later than 90 days after
the start of the period for which the Performance Award relates and shall be
made prior to the completion of 25% of such period. All determinations regarding
the achievement of any Performance Goals will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon achievement of the Performance Goals but may
reduce or eliminate the payments as provided for in the Award Notice.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
(d) A Participant who receives a Performance Award payable in Common
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Award Notice. The Common Stock may be issued
without cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the attainment or
satisfaction of a condition or Performance Goal shall be distributed or
considered to be earned or vested until the Committee certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.
12. DEFERRED PAYMENTS
-----------------
Notwithstanding any other provision of this Plan, any Participant may
elect, with the concurrence of the Committee and consistent with any rules and
regulations established by the Committee, to defer the delivery of the proceeds
of the exercise of any Non-statutory Stock Option not transferred under the
provisions of Section 6(c), Stock Appreciation Rights, and Stock Awards.
(a) Election Timing. The election to defer the delivery of the proceeds
---------------
from any eligible Non-statutory Stock Option or Stock Appreciation Right must be
made at least six (6) months prior to the date such Award is exercised or at
such other time as the Committee may specify. The election to defer the delivery
of any Stock Award must be made no later than the last day of the calendar year
preceding the calendar year in which the Participant would otherwise have an
unrestricted right to receive such Award. Deferrals of eligible Awards shall
only be allowed for exercises of Options and lapses of restrictions on Stock
Awards that occur while the Participant is in active service with the Holding
Company or an Affiliate. Any election to defer the proceeds from an eligible
Award shall be irrevocable as long as the Participant remains an Employee or an
Outside Director of the Holding Company or an Affiliate.
(b) Stock Option Deferral. The deferral of the proceeds of
-------------------------
Non-statutory Stock Options may be elected by a Participant subject to the rules
and regulations established by the Committee. The proceeds from such an exercise
shall be credited to a deferred stock option account established for the
Participant. The proceeds shall be credited to the deferred stock option account
as a number of deferred shares or share units equivalent in value to those
proceeds. Deferred share units shall be valued at
13
the Fair Market Value on the date of exercise. Subsequent to exercise, the
deferred shares or share units shall be valued at the Fair Market Value of
Common Stock; provided, however, that at the discretion of the Committee, the
Participant may elect to have the value of his deferred stock option account
valued on some other basis of measurement approved by the Committee. Unless the
Participant's deferred stock option account is valued using a basis of
measurement other than Common Stock, deferred share units shall accrue dividends
at the rate paid upon the Common Stock credited in the form of additional
deferred share units. Deferred shares or share units shall be distributed in
shares of Common Stock or cash, at the discretion of the Committee, upon the
Participant's termination of service or at such other date, as may be approved
by the Committee, over a period of no more than ten (10) years.
(c) Stock Appreciation Right Deferral. The deferral of the proceeds of
---------------------------------
Stock Appreciation Rights may be made by a Participant subject to the rules and
regulations established by the Committee. Upon exercise, the Committee will
credit the Participant's deferred stock option account with a number of deferred
shares or share units equivalent in value to the difference between the Fair
Market Value of a share of Common Stock on the exercise date and the Exercise
Price of the Stock Appreciation Right multiplied by the number of shares
exercised. Deferred shares or share units shall be valued at the Fair Market
Value on the date of exercise. Subsequent to exercise, the deferred shares or
share units shall be valued at the Fair Market Value of Common Stock; provided,
however, that at the discretion of the Committee, the Participant may elect to
have the value of his deferred stock option account valued on some other basis
of measurement approved by the Committee. Unless the Participant's deferred
stock option account is valued using a basis of measurement other than Common
Stock, deferred shares or share units shall accrue dividends at the rate paid
upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.
(d) Stock Award Deferrals. The deferral of Stock Awards may be elected
---------------------
by a Participant subject to the rules and regulations established by the
Committee. Upon the lapsing of restrictions on such an Award, the Committee
shall credit to a deferred stock award account established for the Participant a
number of deferred shares or share units equivalent in value to the number of
deferred Stock Awards multiplied by the Fair Market Value of Common Stock.
Deferred shares or share units shall be valued at the Fair Market Value on the
date all restriction on the Stock Award lapse or are waived. Subsequent to the
lapsing of all restrictions, the deferred shares or share units shall be valued
at the Fair Market Value of Common Stock; provided, however, that at the
discretion of the Committee, the Participant may elect to have the value of his
deferred stock award account valued on some other basis of measurement approved
by the Committee. Unless the Participant's deferred stock award account is
valued using a basis of measurement other than Common Stock, deferred shares or
share units shall accrue dividends at the rate paid upon the Common Stock
credited in the form of additional deferred share units. Deferred share units
shall be distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the Participant's termination of service or at such other date,
as may be approved by the Committee, over a period of no more than ten (10)
years.
(e) Accelerated Distributions. The Committee may, at its sole
---------------------------
discretion, allow for the early payment of a Participant's deferred stock option
account and/or deferred stock award account in the event of an "unforeseeable
emergency" or in the event of the death or Disability of the Participant. An
"unforeseeable emergency" means an unanticipated emergency caused by an event
beyond the control of the Participant that would result in severe financial
hardship if the distribution were not permitted. Such distributions shall be
limited to the amount necessary to sufficiently address the financial hardship.
Any distributions under this provision, shall be consistent with the Code and
the regulations promulgated thereunder. Additionally, the Committee may use its
discretion to cause stock option deferral accounts
14
and/or deferred stock award accounts to be distributed when continuing the
program is no longer in the best interest of the Holding Company or any
Affiliate.
(f) Assignability. No rights to deferred stock option accounts or
-------------
deferred stock award accounts may be assigned or subject to any encumbrance,
pledge or charge of any nature except that a Participant may designate a
beneficiary pursuant to any rules established by the Committee.
(g) Unfunded Status. No Participant or other person shall have any
----------------
interest in any fund or in any specific asset of the Holding Company or an
Affiliate by reason of any amount credited hereunder. Any amounts payable
hereunder shall be paid from the general assets of the Holding Company or its
Affiliates and no Participant or other person shall have any rights to such
assets beyond the rights afforded general creditors of the Holding Company and
its Affiliates. However, the Holding Company or any Affiliate shall have the
right to establish a reserve, trust or make any investment for the purpose of
satisfying the obligations created under this Section 12 of the Plan; provided,
however, that no Participant or other person shall have any interest in such
reserve, trust or investment.
13. PAYOUT ALTERNATIVES
-------------------
(a) Payments due to a Participant upon the exercise or redemption of an
Option or Stock Award shall be made in the form of shares of Common Stock.
Payments due to a Participant upon the exercise or redemption of a Stock
Appreciation Right or Limited Right shall be made in the form of cash.
(b) Any shares of Common Stock tendered in satisfaction of an
obligation arising under this Plan shall be valued at the Fair Market Value of
the Common Stock on the day preceding the date of the issuance of such stock to
the Participant.
14. METHOD OF EXERCISE
------------------
Subject to any applicable Award Notice, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash, Common Stock or other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying
broker-dealer, as the Committee may specify in the applicable Award Notice.
15. RIGHTS OF PARTICIPANTS.
----------------------
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Notice confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
16. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
15
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
17. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by reason
of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution, including an Extraordinary Dividend, is
made, the Committee may make such adjustments to previously granted Awards, to
prevent dilution, diminution, or enlargement of the rights of the Participant,
including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock or other securities that may underlie future
Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock or other securities underlying Awards already
made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive
and/or Non-statutory Stock Options, or any Limited Rights
attached to such Options.
Alternatively, the Committee may provide the Participant with a cash
benefit for shares underlying vested, but unexercised Options, in order to
achieve the aforementioned effect.
No such adjustments may, however, materially change the value of
benefits available to a Participant under a previously granted Award. All Awards
under this Plan shall be binding upon any successors or assigns of the Holding
Company.
18. TAX WITHHOLDING.
---------------
Notwithstanding any other provision of the Plan, Awards under this Plan
shall be subject to tax withholding to the extent required by any governmental
authority. Any withholding shall comply with Rule 16b-3 or any amendment or
successive rule. Shares of Common Stock withheld to pay for tax withholding
amounts shall be valued at their Fair Market Value on the date the Award is
deemed taxable to the Participant. Participants granted Non-statutory Stock
Options shall be responsible for any required withholding applicable to any
Non-statutory Stock Option which has been transferred pursuant to Section 6(c)
hereof, unless otherwise inconsistent with current tax law.
19. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect, prospectively or retroactively;
provided however, that provisions governing grants of Incentive Stock Options,
unless permitted by the rules and regulations or staff pronouncements
promulgated under the Code shall be submitted for shareholder approval to the
extent required by such law, regulation or interpretation.
Failure to ratify or approve amendments or modifications by
shareholders shall be effective only as to the specific amendment or
modification requiring such ratification. Other provisions of this Plan will
remain in full force and effect.
16
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) The Committee may amend any Award Notice, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.
20. EFFECTIVE DATE OF PLAN.
----------------------
The Plan originally became effective as of July 22, 1997. The Board of
Directors adopted and approved the Plan, as amended and restated, effective as
of March 22, 1999. All amendments are effective upon approval by the Board of
Directors, subject to shareholder ratification when specifically required under
the Plan or by applicable federal or state statutes, rules or regulations. The
failure to obtain shareholder ratification for such purposes will not affect the
validity of other provisions of the Plan and any Awards made under the Plan.
21. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after July 22, 1997; or (ii) the issuance of a
number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.
22. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
Delaware and applicable federal law.
23. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Notice. The Committee may rely on the descriptions, representations,
reports and estimates provided to it by the management of the Holding Company or
an Affiliate for determinations to be made pursuant to the Plan, including the
attainment of Performance Goals. However, only the Committee or a portion of the
Committee may certify the attainment of a Performance Goal.